A Closer Look

So far this week is pretty much playing out as expected with the combination of the Fed testimony and the upcoming Brexit Vote, but a comment by Tess in the chat area had me wanting to take a closer look at Precious Metals. Things are still exactly as expected, but a slight variation in cycle count may be in order. Lets have a review of our markets first…

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SPX– As expected so far

USD – We are seeing a fairly weak run out of the dcl, and it almost broke the lows today. If Day 6 remains the peak, this is going to roll over as left translated and will break down. If the dollar breaks down from here, it has a long way to go ( and Precious Metals should benefit).

My view on Oil hasn’t changed since yesterday and the XLE filled a gap and then caught a bid. The XLE remains bullish.

DNR and BTE are still good daily set ups, and as mentioned in prior reports, they look like they are breaking out of nice bases, so I thought that I would show 2 charts of their long term bases for the sake of the longer term investor.

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I mentioned MRO in a report, and it now looks very very good. High volume and set up to break out. It is still a buy.

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Now lets look at  GOLD, GOLD, GOLD, GOLD, SILVER and the 2 GDX Charts  🙂

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EDIT: Gold hit $1262 overnight, just above the 50sma.

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GOLD – I looked up Gold and that volume just doesn’t look correct, but I marked up the chart anyway. I wanted to show that a continuation of this dip that we are seeing is a 50% retrace at the 50sma.

GOLD – I checked the chart later and they corrected the volume. Again, a simple dip to the 50sma is possible, but with BREXITs vote ahead, I see many do not want to buy here or hold going into that vote. I hear talk of a test of the 200sma being in order, but Cycle count dictates that an ICL formed back in late May. THAT low cannot be taken out without serious implications.

I was asked about GOLD testing the 200sma.  Question: “Isn’t it normal T/A for the 200sma to be tested after it is broken?”.  Answer : Yes.  My thinking is…Does it have to happen right away? my answer,  No.

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GOLD – My idea of how this could play out as I expect it to, and still ‘test’ that 200sma (later).

GOLD –  At this time, this is how I see GOLD, with a tag of the 50sma (maybe even a break below as a shake out on Brexit slam down?) and then higher.

I showed this chart in my Monday report

SILVER – Silver could be forming a normal bullish consolidation called an inverse H&S. A drop to the 50sma here is also normal.

GDX –  This is how I have been viewing the GDX. Again, a test of the 50 sma is normal , and I try to imagine a ‘shake out’ below the 50sma and filling that gap, but the lows of May should not be broken.

In the comments / chat section,  TESS wrote ( and I commented) …

I do remember DCLs coming as early as day 14 on GDX after 2008, so I decided to look into that count a bit further.

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GDX has broken below the 10sma, it has broken a trend line, and it could drop further Wed & Thursday. Conclusion: Yes, this could be falling into an early DCL, and then we rally higher.  As I mentioned in that discussion with Tess, IF this was an early DCL that bottoms in this area, it is still an extremely right translated daily cycle.  Those lead to a break out to new highs. 

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So here we are on Wednesday of a rather tricky week, but so far things are playing out as expected. This is just one of those weeks that we basically have to wait until Friday to see how things really are going to play out.  After the Brexit Vote, the markets will likely become less sideways and more directional. By using Technical Analysis and Cycle Analysis, we are trying to gain an edge, and I am bullish Energy and  Precious Metals. 

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~ALEX

P.S.  Sidenote:  During the last drop when I started talking about buying Miners because I was expecting an ICL, many analysts ( and other cycle analysts ) were saying to get ready to buy at the tag of the 200sma.  It never happened.  Can you imagine if those ready to buy at the tag of the 50sma this time also never get the chance again?  🙂  Just a thought.