Oct 6th – A Closer Look

Today I want to take a closer look at Oil and Gold.

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WTIC – Oil made a new high today. Some of the trades mentioned here in the past few weeks are actually near new highs again or breaking out.  Read the charts. I continue to like the Energy trades and I believe that pullbacks can be bought. Usually I would expect the $50 area to offer some selling resistance, so maybe we get some pull backs to buy in Energy soon too.

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 GOLD and MINERS

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A quick look at Gold shows that we have eased the chances of putting in a swing low.  At day 23, we are within the timing for a DCL.  The selling has been serious enough to become an ICL. A break above $1279.40 is a swing, but a safer confirmation would be a close above the  ( I am changing it to) the 8 sma. I usually use the 10sma, but it is so much higher due to the steepness of that candle from Tuesday.  

I did want to point out that Gold could conceivably drop even lower next week like we saw in May as shown here.

It may or may not happen here, but I pointed it out because we are on day 23, and another week would lead us to day 30.  That is possible.

Even so, buying here paid off later with 6 straight weeks higher.  BUT…

GOLD WKLY – At 2 of the ICL’s pointed out in 2015, I just wanted to show that we didn’t see Gold shoot straight up out of the lows.  This allows traders time to watch miners begin ‘setting up’ and also one could look for divergence, etc.

MINERS– In this chart that I posted in August, I was pointing out how the recent steep looking sell off below the 50sma might be similar to the 2008 sell off below the 50sma.   I pointed out that the selling in August might only be part one. After a bounce, another sell off would take us to the buy-able lows  ( DCL / ICL). See MAGENTA WRITING.

We now have that 2nd sell off after the break under the 50sma and the bounce in August.  So we are on day 23, and that is also within the timing for a DCL. GDX actually reversed on support of the 200sma. Seems too easy, right?  Please read the chart.

Notice on the ABOVE chart that the ICL (lows) in May pulled a reversal at the 50sma, and then spent 5 more days at the lows ( breaking through the lows too).  If we spend 5 days at these lows, do you know what you will hear? Do you remember what we heard in May?  We heard, “I think that’s a Bear Flag, this is going to drop!”  It’s never easy to buy these lows, but it pays off in the long run if we remain in a bull market.  🙂

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I want to re-post a couple of charts from yesterdays report as reminders, since they are still valid.

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GDX – I want to remind us what we saw in July. Today we got a sideways type of move too. On day 23, we do still have time to dip lower, but things look favorable for producing a swing low similar to the one in May too.

GDX – With this chart, I pointed out here that price may linger near the lows like we saw in the blue box, or it could continue lower for a bit. Due to cycle timing, I honestly do think that adding a few small positions to Miners in this area should be fine in a week or two, but as mentioned in yesterdays report –  some cannot stomach watching their accounts lose money.  Know who you are and trade according to your own trading style. 

GDX –  These are 2 newer charts that show why possible further downside is possible if we dont get a swing low in place Thursday.

#1 – An equal sized drop to the one in August would have further downside and lead it to the 50 weekly MA. So we could continue to drop into next week.

#2 – This candle looks good breaking through and then re-gaining the 200weekly MA, but a 50% drop from the top would lead to that $ 21-$22, and the 50 weekly MA also.

Conclusion: I do believe we are close to, if not already at , a bottom that offers some good trades.  You can see that when the ICL is in place ( And I do think that we may be seeing one form here) the upside lasts for weeks and months.  Even a final  daily cycle low should also see some upside for 8-13 days. So at this point, each person must decide for themselves, which one of these statements fits me best. Be honest.  

#1. ” I do not like risk or experiencing draw-down, so I will wait for further confirmation of a low and a bit more upside before entering a position.  I dont care if I miss the very bottom when there is plenty of upside available.”

#2 ” I want to take a couple of positions in Miners, because I think that we are either at or could be near the lows.  I realize that if Miners do form a lower low from here, I will experience losses until the lows are in  place and the rally out of the lows begins.”

Its really just as simple as that.  I do not use tight stops in this case, because I expect that wiggles could happen and I expect a low soon due to the cycle timing.  I do not use leverage at this point without a confirmed ICL, and I don’t go “All in”.  I am still in a few energy trades and will either continue to ride those out, or I will flip the funds over to precious metals, depending on how things play out.

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FOR NOW, we need to continue to watch how Gold, Silver, and Miners sell off.  Will the recent lows hold? Will yesterdays highs be taken out, putting a swing in place? Will it continue higher and break above and close above the 8 sma? These are road signs for buying near the lows, and I will have some chart set ups when they begin to form in a more low risk manner. Lets see what Thursday brings our way. Happy trading!

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~ALEX

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This was yesterdays chart of TRX for an example of possible support areas holding up. It remains in this area, dipping down Wednesday and then closing green. I like the divergence.  A return to August highs is over a 100% move from here.  Many miners look to be seting up for good %-Gainers.  We will not miss much of these gains once we see how this sell off plays out 🙂