A Balanced View

It’s a holiday week in the U.S., and Monday didn’t bring much in the way of change since the weekend report.   On Wednesday we do have the release of the Fed Minutes however, and that may be the catalyst that we are looking for in one area. 🙂 To the charts…

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SPX – The S&P broke to new highs. I was thinking that it will take a rest, but have you seen the IWM? It looked similar to the S&P now, but it is just continuing higher each day. We may pull back soon, but it is also possible that light holiday trading may just keep it floating higher ( See the IWM). If that happens, it may be on the following week that we see a consolidation or a pullback.

USD – 10 straight days higher finally dipped lower today. This puts a swing in place (unconfirmed), and may be the start of a pullback. You can see how the dollar runs higher and then suddenly, seemingly out of nowhere, it just starts to pull back.

USD WKLY – We may or may not be starting a dip into a dcl.

WTIC – Oil looked rather good on Monday with the follow through out of the DCL. It has back tested the break down of the trend line. I have discussed my thoughts on Oil, saying that since it broke below the last daily cycle low, it should fail. It should not break to new highs. I do see many good looking energy stocks.  Some beaten down seriously since this summer look like they want to recover, others that I have outlined as my favorites in past reports ( CWEI, OAS, WPX, REI, RICE, etc) continue to hold up well and are even breaking to new highs.

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I commented this way at the end of the day.  You may want to look up some of these charts if you’re curious.  Along with Energy,  VALE, FCX, CENX, CLF, TGB, AKS, X, SID, HBM, and other stocks mentioned in prior reports look like they are putting in bull flags and consolidating for possibly another leg higher too. For now, I am focused on the Miners, since I believe that they are at the lows and have good upside potential. 

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NADL –  This looks like it may be coming up out of the lows after a prolonged sell off. I do think a ‘trader’ could ake a stab at it here with a a stop right under recent lows or $2.50. This could move very quickly.

OAS –  One of my former purchases, it continues to be one of the healthier energy stocks, or ‘buy the dip’ candidates.  It continues breaking to new 2016 highs.

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GOLD, SILVER, & MINERS

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Recall the Inverted Hammer candle that can show up as a reversal at the bottom of a sell off. It can act as indecision at lows, and start a move higher.

GOLD –  I see an inverted hammer in Gold & Silver now. Day 30 may be the lows. Look for a move above $1217.80 to surpass Mondays highs.

SILVER – Ditto, look for a move above $16.75 to surpass Mondays highs.

GDX – Gold sold off midday and GDX tried to fill the gap, then it recovered a bit. I am looking for a break and close above the 8 sma for additional confirmation that a swing low is in place. Should we be concerned about this low Volume lingering at the lows?  Let me show you why I am patiently waiting for this set up to play out.

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I am NOT worried about a lack of strong follow through and a lack of strong volume, because when I look at prior lows under similar conditions, I see the same thing. This seems to fool many people into selling, thinking that there is no strength.

MAY ICL – Lingering at the lows for 5 days with low volume. 

MAY ICL –  BYE BYE

So nothing has changed since my weekend report, there has been no damage to the precious metals charts. Cycle timing is calling for a low in Precious metals, I have many reasons to believe that we are putting one in at this time. I am patiently waiting for the Miners to make a directional move, and we continue to have a balanced view of things. The Fed Minutes are released on Wednesday, and that ( inflation talk?) may be the catalysts for a stronger move in Gold, Silver, and the Miners.  Enjoy your Tuesday trading.

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~ALEX

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An Idea for experienced active TRADERS

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I’ve been following many of the metal stocks that already took off and put in some great gains.  I was watching for a pull back and a low risk trade set up to form, but they are holding up very well, simply bull flagging.  If you look at a chart of VALE, you can see that it bull flagged to the 10sma, and then broke out higher again, even though it was extended. Then it dropped back down and back tested the flag. This is normal action, but it frustrates non-traders with the constant up & down movement.   I will show examples of what we are seeing in this area, and while it can be tricky to trade, experienced traders may find some set ups that they can manage on their own. I am focused on Miners at this time.

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HBM – There is a copper company that we traded last spring. It almost doubled on the recent run and has bull flagged. It looks extended above the 50sma, but it can run higher, because the 10sma has caught up to the flag. I can’t recommend it as ‘low risk’, because once extended, they can get ‘whippy’ and stop out the inexperienced traders or ones that cannot be in front of their screens all day.  See a 3 month chart of VALE for an example of ‘whippy’ .

HBM – The longer term potential is great, but how it gets there remains to be seen.   Again, if you want an example of the ‘whippy’ action, see a 3 month chart of VALE.

CLF – We traded CLF in the spring time, and after a quick run higher in November, it is also bull flagging. This is a bit of a low risk set up, because your stop is below the flag.   This is a good example of why BUY & HOLD works too ( from January), but it is very hard to do for many. Those sell offs in May & August  were brutal, but here we are nearing the 2016 highs again.

So experienced active traders may want to look at SID, CLF, CENX, VALE, AKS, etc. etc.  and see if they are setting up in a way that they are familiar trading. I do not have time to actively track them all with Miners set up the way they are.