I See More Than Just One Out There

Well Wednesday was pretty crazy in the markets to say the least. Nothing has changed in my analyses however. I still think that we are seeing several Bulls ready to run. Let’s get right to the charts and see what we can discern from the extreme moves that took place Yesterday.

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SPX – This is amazing when you think about it. We were expecting an ICL, and I mentioned that we had one in place.

This is the amazing part.  If you look at this chart a year from now, you may not notice anything out of the ordinary at this time period. It all looks like things are playing out as expected ( and they are), but as you now know, pre-market trading saw almost a 1000 point spread in the Dow, The SPX broke the lows in pre-market, etc. CRAZY.

USD – Are you kidding me? The USD dropped to the 200sma and then recovered back above the 10sma?  I was expecting the USD to roll over soon, we’ll have to give this more time to see how it plays out, but that was a pretty bullish looking move.

My OIL chart from Tuesday was mixed.  We had the timing in place for a dcl, but the move was rather muted and could be a bear flag. I only expect a bounce out of this dcl for reasons mentioned in prior reports. That has not changed. I wanted to see a move above the 10sma for confirmation of some strength. I did also point out that some Energy stocks were looking bullish.

WTIC – No change to speak of yet, but we did get a new low on day 35. I think that this bounce could get to the 50sma, but can it go much higher? I still think this is set up to roll over later, for reasons mentioned in prior reports.

On Nov 7th, I pointed out that some energy stocks do look appealing and the XLE is moving higher ahead of oil ( leading).

Nov 9th we saw follow through.  I then noticed that in the past, the XLE has been Popping & running, abut then rolling over.  No follow through, so I am watching for 72 to act as resistance.

My Oct 17th chart shows that we did drop to the bottom of this channel when we dropped to 67 last week, and now 72 -73 could be an area to watch for a top. XLE hit 71 yesterday. XLE is in an uptrend,  buy low, sell high.

Gold – Gold went crazy yesterday. It shot up to $1340 and dropped all the way back to red. Miners remained green again.

SILVER – This chart is not quite as extreme.  Silver has actually been climbing along the 10sma so far.

What about our Miners? I want to use this chart as a reminder.  Monday Nov 7th – when Gold dropped $25,  Miners held up. I think that they are trying to bottom here, I do not expect them to sell off very much if they do drop.

GDX –  This still looks like what we saw at Brexit ( Blue circle) . After Brexit, GDX went sideways for basically 5 days and then continued higher. GDX yesterday closed above the 200sma.  My point isn’t that we will now definitely go sideways like we did at Brexit.  My point is that with the strong surprising move at Brexit, we got a black candle that did NOT lead to a sell off.   People are saying that the black candle means Miners will sell off, so they sold everything.  I still expect higher price in time, and I do not expect a big sell off. 

Notice here that many Miners were higher.  Yes, it was disappointing when you wake up to Gold up $50 and see Gold eventually close red, but I’m not thinking that anything changed in our big picture. We kind of got what I have been expecting, but we got it all in one day and then it was sold off in the same day.  That didn’t change my outlook, it may have confirmed it.  I still expect a move higher in Precious Metals. I will explain a bit further.

Yes, Miners made some small gains, but look at other Metals stocks. I do hear some saying that Steel and Copper Moved higher because…  “It is because Trump won, and …” .    Wait. Weren’t we pointing out the bullish set up in Steel and Copper here well over a week ago, before anyone thought Trump would definitely win?  If so, the expected move may have simply sped up.  Also , if we see that kind of follow through, the expected move in Precious Metals may be right behind it too.

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Lets Review

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Steel tagged the 200sma and bounced in September. Steel stocks started to act bullishly

 COPPER – I pointed out over a week ago ( before a Trump win)  that Copper broke out from a solid base and had a Very Bullish set up.  The Metals were setting up like the Bulls in the opening picture.  Just kind of standing around for weeks, but they looked like they could get up & run at anytime.

COPPER –  This was also pointed out before the election. This break & run occurred all last week into this Monday.

COPPER –  And boom! The move started weeks ago, as you can see. Now the news says that “Copper surged, because trump….”  I love it.  The set up was there and the break out was already taking place too.

STEEL –  And Boom! Steel has been higher for 5 straight days.

AND BOOM!  I did NOT think that the steel stocks would do this, despite pointing out that they were moving nicely higher out of bullish set ups. These are crazy big moves for the steel stocks. So, can our Miners do this too?

So I have to wonder, are our Miners going to do this?

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I have a theory.  Disclaimer: I may be wrong, that’s why it is a theory 🙂

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The set up was already in place weeks ago,  as I have pointed out here. The moves were likely to happen to the upside over time, but they happened all at once with the Trump election.  Why? 

Is his election and his open hatred of the Fed a cause for concern that his policy would speed up future inflation? If this is a sign of Inflation, Miners should pop too.

Is this is a sign that Trumps policies ( Maybe with China) will affect trade and metals?  If so, Miners could still pop like this, or at least continue to move higher over the projected path in time.

Time will tell, but I do want to point one last thing out to you.

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I mentioned that the set up was already there. The move would have come to the upside anyway, a catalyst may have sped it up.  So now look at the set up that was there.

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This was Steel bouncing along the 200sma after a strong run higher and then boom!

This is Gold bouncing along the 200sma after a strong run higher. These charts are practically twins. I’m not selling my Miners.

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~ALEX