Mixed Monday

So far I think that the action in the markets today basically matched my weekend report, but they were received with mixed fanfare. Lets take a look and review expectations.

.

I was looking at SPX like this, trapped under the 50sma and 10sma. 

Today the Markets gapped open higher and the NASDAQ was up near the 2016 highs. Lets take a look.

SPX – You can see that gapping open to highs has not always played out to be a bullish break away gap.  As I mentioned in last weeks reports, the lows of September were taken out in October and that is a failed daily cycle.  This should sell off.

 NASDAQ – The NASDAQ  does look strong and several Tech stocks look good too, so that opening picture fits here to me. I feel like the Markets want to roll over and drop, while the Tech sector looks bullish.   There is a big divergence on the MACD , so this could get caught up in a sell off if the SPX plays out to the downside. Deep down, this looks Bullish, but I see the bearish side in the near future  ( Elections?).

USD – The USD continues higher, but it is overdue for a DCL.  Technically it looks like it wants to continue a lot higher.  Can you believe that Gold & Miners have bottomed and moved higher over the last 11 days with this move?

 .

WTIC – Oil dropped and recovered and the handle continues to form. It will seek out a dcl in the future, but the longer it goes sideways or if it runs higher from here, the dcl may not be a big drop.

.

GOLD & MINERS

.

There was an overwhelming amount of bearishness in the twitter-sphere and even in our own Comments section.  I tweeted out a chart of the USG & GOLD from the weekend report and got this reply from someone that I do not know. She called Gold a disaster today.

 Described as a “Disaster” today,  lets look at Gold.  It must have been down $40, huh?  🙂

.

 This was Gold, a “Disaster”.  Hmmm.  I am thinking that those words may come from someone who probably wasn’t prepared for the sharp sell off in early October like we were.  That person may have ridden that  sharp plunge down and now todays apparent weakness  was just disastrous to them, no doubt hoping to re-gain some of those losses back.

GOLD –  Day 11, so we do want to see some upside soon to keep this right translated. A close below the 10sma would be a bit concerning, and a close below the lows would be a tell that this is a late daily cycle and the ICL is not in place.

 So above , Gold held the 10sma ( So far).  Even if it didn’t, the lows were not violated.  These are areas that I am watching.  A break below the last DCL ( ICL) is a failure and another daily cycle down into an ICL.   So far, I believe that the ICL is in place,  since Gold is fighting the drop as the USD rises. Time will tell.

.

In Fact, this is GOLDS ICL in Dec 2015.  I should post this chart everyday, until we have lift off or a failure, because THIS is how bad it can get day -after-day. Our current Gold chart is better than this so far on day 11. 

C.O.T.  – This should have been in the weekend report.  We are in the same situation that we were at Mays Icl. 

.

SO THIS IS A GDX CLIP FROM MY WEEKEND REPORT. HERE I ACTUALLY SAY THAT WE COULD DROP TO THE 10 SMA / TAG THAT TREND LINE.

WE DID EXACTLY THAT, and yet many people wanted to sell.   This is acting fine so far.  Could this break down?  Of course anything can happen, but this is bullish with the Dollar rising day after day. GDX tagged the 10sma and bounced so far.

GDX – A BASIC VIEW, back testing the 200sma. Lets see what Tuesday brings.

Looking at the break down of GDX components.

.

ABX –  Tagged the 10sma and re-gained 26 cents to the close. If I drew a trend line, this has not broken out yet. 

NEM – NEM gained 28 cents off of its lows after testing the 10sma area. Also looking for a break out soon.

.

Some stocks like HL  did break out also dropped to the 10 sma and recovered.

IAG is above the 10sma and the 50sma. Basically just ran from $3.25 to $4.25.

.

I own AG and it went right back to where I bought it today, under $8. I took this chart at noon time when it was $7.87 and yes, that stinks. It closed back above $8, but you can see that it is at the recent lows.  I still see it as a bullish set up, but yes, they can try your patience. 

So you can see that the “Ugly, “Horrible”,  “Disastrous” day in Gold & Miners doesn’t really seem all that bad when you look at the charts.   Yes, it hurts when you look at how it is affecting your account, because some of the early gains that may have added up as we came out of the lows slowly evaporate on pullbacks.  Leveraged positions ( NUGT, JNUG, etc) take a good hit on days like this, but we do have a trading plan.  We waited patiently for and caught the recent lows ( ICL or DCL) and now we have to look for signs of it being a First daily cycle out of an ICL, or a final weak Daily Cycle that rolls over into the ICL.      If those recent lows get taken out, we would have to sell and endure 1 more daily cycle down into a final low.   I still think that the ICL is in place, nothing has changed so far, Gold resists the USD rise, but I would like to see some sharp upside action.   Look again at the Dec 2015 lows. THAT was a painful affair, dragging on and on, no sharp upside action, but the lows were in and they have never been violated.  If you bought then and held, you were very happy later.

.

Conclusion: So we wait, and we shall see, and time will tell.  A break of the recent lows is a failure and we would have to sell and endure another couple of weeks of waiting for that final ICL.  When the low arrives, you have to take it and see what you have. I advised taking only position size that you can handle coming out of the lows, and add on pullbacks going forward, maybe the next daily cycle low.   We took positions at or near the lows and now we’ll see.  A burst higher would be a relief and we would have several weeks or months of potential upside.   Lets see what Tuesday has to bring.

.

~ALEX

.

Additional notes:

.

NAK –  I added to my positions again in NAK & TRX on their sell off Monday.  I have core positions and added at recent lows and now I can use a tighter stop for my newer additions if I am wrong.  A break back under the trend line and I would sell Mondays addition. 

TRX – Some would say,  “Why buy this, it looks like a repeat failure”.   It is, but I think that it will break out when it builds up steam, plus…

TRX – I see it as bullish already and low risk since it is easy to place a stop on my new position a little below that trend line. If this wants to tag the 200sma…I am in trouble  🙂