FRIDAY NOV 24th – REVIEW
This is a Friday update on the Precious Metals Sector
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I want to start by saying that I’ve been looking at tons of charts in the precious metals sector, past & present. The recent charts show me that this sector was acting perfectly normal up until the election in the U.S. You may not believe this until you see it for yourself, but some of the things that I am seeing still look fine, but there are some things that I am seeing that also do not look quite right for a strong healthy bull market. This report will discuss a few things in this area for Fridays trading, and the weekend report will continue to try to sort things out.
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GOLD – Is Gold outright screaming that it has entered a Bear Market at this point like some are saying? No, but it could be breaking down, so we’ll be alert to that. Due to cycle timing, I still expect a low and a strong move higher any day now. Let’s discuss “Has anything changed?” Notice on the chart below that Gold through out September was absolutely bullish, riding the 50sma. Lets discuss this chart.
1. We saw a steep drop in Gold in early Oct which put in OCT lows. It broke the 50sma, but Gold has done that in the past bull markets. This fit an ICL in many ways.
2. Gold then moved higher into Nov and was still looking fine at that point. The Election night on November 4th saw Gold shoot up $50, and then drop sharply.
3. This pullback has taken out the May ICL, but the 61.8% level is at $1172.26. I did mention that the stops could be run on the May ICL level, and 61.8% retrace is acceptable, however, this needs to recover quickly. That is a rapid drop from the election onward and many things will need to be monitored going forward.
4. I expect a bounce and this should be an ICL/ YCL. Look at the rally out of May after that multi week sell off. A powerful rally like that would undo the damage seen over the past 2 weeks. I will be selling my positions if we get anything less, and re-examining this sector.
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GDX – GDX has also landed on the 61.8% retrace area. $19.81 is the exact number. Nov lows were not taken out yet.
I want to point out something that I am still observing in the Mining sector.
This is the part that puzzles me the most, so what do you think?
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I’ve thought to myself,
” If something fundamentally broke down with the election of D. Trump, then the steep drop in Gold since Nov 4th should be accompanied by a mass exodus to the exits in all of the Miners.” Miners get absolutely slaughtered in Gold & Silver sell offs.
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Can anyone explain this please?
GPL – October lows are still the lows. GPL closed green Wednesday, recovering the 200 and 50sma, and all losses from the post election sell off. Yes, all November losses are pretty much gone.
RGLD – RGLD is above the October lows, and has ONLY done a 38.2% retrace? It sold off 2 days after the election, but has been rising most of the other days. The bigger drop was in Oct, which I was expecting to be the ICL. In fact, it only broke those Oct lows briefly intra-day. RGLD is also still holding the 200sma too.
NEM – 50% retrace. Maybe 2 panic selling days after the election, and then it bottomed so far, despite the big selling in Gold this week. It did lose important moving averages and would need to recover those soon, but this is not bear market ugly at this point.
AUMN – October lows are the lows. Notice that there was no real selling with Golds big post election drop, and this one usually gets hammered down rapidly. It is riding the 200sma. Why is this holding up so well, if Gold is ‘all done’?
No, it’s not all bullish lookingin all of the Miners. Let’s look at a couple of other Miners that are not holding up as well.
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GG – GG has broken below the 50sma and struggled in that area ever since on each bounce. This stock affects GDX.
AU – Not pretty at all. They may have had bad earnings, I didn’t check, but this isn’t ” Ugly ever since the election”, this selling has been from August onward. This indicates that there is probably something wrong with the company.
GORO – Goro broke the uptrend and looks like a H&S that did break the neckline. Still holding up around the 200sma and is also still above the 61.8% retrace (support from the May – June highs is at the 61.2% line also) .
I’m NOT trying to be a die hard bull here, but some of these Miners are just not believing that the Gold & Silver sell off is the start of a bear market.
So is this just a massive shake out, with a bull shaking riders off, or is it the start of a real break down? That will still take a bit more time to know conclusively. If this Bull run in the Precious Metals is finished, I’ll be cashing out too, so let me explain what I see right now.
As mentioned in prior reports, I do still expect a low in this area due to cycle timing ( in fact, if we do not get one soon, then something has definitely changed). I bought JNUG for a trade 2 times and lost money stopping out both times. That said, the problem that I’m seeing in front of me is this. I also mentioned in the comments here that I bought or added to AUMN, GPL, MUX , and added to NAK at the Oct lows. As I see GOLD rocketing down after the elections in the U.S., my stops didn’t trigger from the Oct lows on any of those except for MUX & JNUG. That just doesn’t seem right to me if this Gold bull is done and crashing down. Like I pointed out, GPL has recovered all selling. Is that odd? Junior Miners always get smashed down, not accumulated during bear market sell offs. It is true that there are many miners that did take out the Oct lows, along with GDX, GDXJ, so I am just going to have to see what happens when we get that next ICL ( or we’ll say bounce). I will cover more in the weekend report.
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“Did something fundamentally change with the Election of Donald Trump in the U.S., and the introduction of his policies ?” I don’t know what that would be, but as always, Time will tell. Some Miners are just not believing this sell off for some reason. A reversal Friday would at least make these weekly charts look a little more promising. As I write, Gold dropped down and hit the fib number in the Gold chart of this report. Lets see what Friday does for this sector. We will figure this out, and we will have profitable trading going forward, be it here or be it in CLF, SID, FCX, AKS, X, and other bullish set ups going forward. If the markets change, we need to change with them, but at this point we still need to see what happens coming out of this sell off. Some Miners are still just not buying this sell off as real.
Thanks for being here, I sure do hope that Friday gives us a little more to cheer about, and wish you all a good weekend.
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~ALEX
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Reminder from Wednesdays report: Let hope prevail. We’ll look for pull backs in some of our other Metals stocks too. VALE, CLF, AKS, X, etc. These were current ideas.
Hi Alex. I hope you gave yourself at least some time off yesterday and enjoyed your Thanksgiving!? With US markets closed it was like watching paint dry in this part of the world. We might as well all have taken the day off!! But I did take the time to look back over nearly 50 years of gold price data and came to these conclusions, which I think closely align with yours in a number of key aspects. Since 1970 gold has seen what I would term four MAJOR bull markets, 71-75, 77-80, 01-08 and 09-11. I use EMA’s on my charts and in each of those bull markets once they were underway the 400 day ema was NEVER broken and the 300 day EMA VERY rarely. At the October lows we were sitting right on the 300 ema which made it look like a classic test before the next bull leg. That has now broken and we are now some $60-70 below that KEY BULL market level. According to my data this has NEVER happened in a prior bull market. So the way I see it is that either the bull run is over or like nearly every other market these days, none of the normal historic rules apply!! But if we do not recover and hold those key LT ema’s very soon, IMHO it will be very hard to argue we are in a major gold bull market no matter how much I want that to be the case!! Totally agree we are now due at least a rally and we need to see the price behaviour after that to make more concrete longer term and rational decisions. What a curve ball though!! 🙁
Absolutely. And my findings are similar. That is why this should be an ICL and it really needs to prove itself with 2 strong daily cycles higher. I’ll try to cover more in the weekend report.
You want to see something “Odd” using that method.
Look at your 5 yr weekly charts of CLF, FCX, X, AKS, HBM – the recent rockets with 300ema on a weekly chart.
They all miss the mark, Then look at RGLD, GPL, NEM, they actually look like their move is way ahead of CLF, VALE, X, etc.
Just a little side comparison that I was doing .
IF IF IF that $GC candle sticks by eod this MIGHT be the turn around. But to be honest not hoping anymore…it will have to prove itself first! Good luck all!
“Has to prove itself”.
It is that time.
Didn’t. 🙁
Thank you for the Friday report Alex. This election was unusual. I believe it has unusual consequences. It may be true what Cris wrote below that normal rules may not apply. Its very possible that after all of this…..we are still in a bull market. My personal plan is to read your reports and go from there. If I try to figure this out on my own, I will screw it up. My best plan is to let wisdom prevail. Go Alex! (No pressure here). Ha! Lol! 🙂
Thanks for the encouragement Johnny.
Bingo ! That’s what I plan to do as well Alex. Take one day at a time and follow your analysis. Thank you for helping us navigate through this challenging time !
why would gold be the buy when the SPX is headed to 2300 potentially, bought DUST day after the election and sold most but still holding small position… small caps have exploded and IWM could run much higher into Xmas rally year end.. stocks are the place to be for now as bonds have gotten killed as well…. Bull looks to be back again if SPX goes thru 2015…
Kind of a simple answer here. Gold looked to be emerging in a very strong way from a Bull market all through out 2016. It was the place to make great %- gains. We saw Miners double, triple, quadruple. It was a part of our regular analyses at Chartfreak. The real question is
:Is this pullback the change and start of a bear market sell off? Or is it real good shake out? TIME is needed to know. An ICL here should still lead to 2 daily cycles higher , unless something really did break down. Even the bear market rally in past Bear markets made good gains %-wise. We’ll see what happens here. If it is a shake out, these Miners will double & triple again. That answers that question of why bother. If this market has died, we move on.
The Gold bull run from Jan – Sept was perfect up until that point. The last 2 weeks is the sore spot. Gold was expected to dip into a yearly cycle low and ICL. Oct looked like that low to me, and the chart of Gold in this report shows that Gold was very bullish right into Sept. The question remains, has that changed. Time is needed to know for sure. I’m going to analyze that, because I still have subs that bought CORE positions in Feb and March and April. THEY NEED TO KNOW IF THIS BULL DIED.
The election seems to have affected this run l. When a person has a trading plan, and things begin to morph in a different direction than expected, one usually examines it to see if it died, or was altered slightly and remains in tact. Again, you cannot know for sure right away based on 2 weeks post election. For the sake of the readers and myself, I will see this through to the end. That takes time. IF GOLD is in a bull, these miners will double and triple again- that answers your question, “Why invest in Gold /Miners?” But some are still holding positions, and for me to just say….” Forget it, I’m done charting this sector, you’re on your own, figure it out” is just wrong. In fact, I was aksed that same question in January when investing in Miners at the lows, and then some ran up 500- 700% It takes time to analyze market change, that is what I am doing here.
You definitely can invest in the SPX anytime you want. I report on it almost every day. Some use calls, others UPRO, TQQQ, etc for 3xetf. If the Fundamentals for the Gold Bull have died, we will definitely be trading in other areas, there is always another trade.
I’m not being a smart -alec when I say this…..I’m glad you bought dust the day after the election, it was a good trade. Posting in real time is more helpful if you establish a consistent record with the readers here.
I hope that helps explain why I am continuing to cover the Gold Market. To just give up & walk away at this point is irresponsible on my part.
Alex, this was a very complete answer with good perspective. Thanks for sharing with all of us.
Very well said.
Thank u for ur tireless efforts in this regard. U r my compass in a stormy sea …… https://uploads.disquscdn.com/images/0e30e8f7041f85dfa76e65b3702438c144fcc83ae119153ab93ac46aef3e86c3.gif
As you pointed out Alex, there are some “unlike” characteristics associated with the price of gold during the current decline that raise some questions with regards to the validity of this being a normal ICL. Regardless of one’s status (BULL or BEAR) one thing that in my book is a “given”, we are about to rally. This rally is by far the most important with regards to the status of gold’s health. Price does not have to advance to new highs immediately to make this a “passable” rally but we should be getting up towards $1300 in relatively short order. IF we see a plethora of weekly gauges achieving overbought status and gold is still below $1300, then I am afraid we are looking at a different type of beast, one that may have a few more surprises to the downside than expected. It is not as if gold’s long term chart cannot support new bear market lows. On the other hand, as you have rightfully pointed out, the discrepancy among charts in mining stocks is glaring. Most stocks have very healthy long term patterns but GG as an example is a large institutional holding and index component so that one can easily drop down to new lows. All of this is speculation at this point so taking it one step at a time is paramount. Good luck to all, but IMO, Alex does have the right roadmap and proper thinking at this crucial time.
Agree with all of this Pankef – If something has changed, and there are cracks in the bulls armor here, it will be a sell the bounce out of an ICL and step aside ( or some may dust it up, I’m sure). We really need a move higher to be able to see if it is weanening and full of distribution, or good short cover & renewed buying.
GG, AEM, and a few others may be an obvious indicator that things are not all rosy going forward.
What has been so difficult for me has been expectation management. I thought we had the lows in Oct, so I didn’t sell enough after that few days run. But instead being a 4th DCL it was weak and rolled right over. Don’t even want to touch on post-election, crystal ball wouldn’t have helped here, that was not a predictable event. So then we have the Nov 14 lows and again think maybe it’s safe to come out of hiding and then got in the face with a hammer on Wed. So, been hard for me to be objective b/c every time it looks like we could start making that move up, we get schwacked and man that is tough mentally. Concur with everything I’ve seen here this morning. But clearly cannot just blindly keep a core holding anymore. We’ll need the bull to prove itself instead of assuming that is still the underlying case. Really need relief and SOON!!
In the spirit of Chris’ work below, a couple of weeks ago, expecting that we were soon to be embarking on a nice leg up, I went back to the Dec/Jan 16 bottom to see which gold/silver/metal stocks took off first. Using the 50wema as a measure, in retrospect, I would buy those stocks that broke up the 50wema as a plan for this upcoming leg up. Currently, GSV(own), GSS(own), RGLD, IAG(own), BTG(own), AKG, NAK, CLF, VALE, GPL(own), KLDX, AUMN(own), BVN, PAAS(own), CDE, FSM, HBM, FCX, TRQ, NSU. There may be some I missed. All of these that I own are underwater in my account as you might expect.
Besides Alex, who is my favorite, I watch McClellan, whose 13.5 month gold cycle is in a bottoming location, an EWT guru who believes that the market is topping and gold/silver are bottoming, a couple of sentiment indicators, and seasonality. These are all in agreement that a rally is coming (soon). The strength of that rally should determine the fate of gold shares in my opinion. I am still 50% in (now more like 45% in due to erosion) awaiting the rally. Gary 🙂
P.S. None of the pure gold/silver in my data base are above their 50dema at this point, but a few are close.
Good morning all….hope you all had a lovely Thanksgiving! I am thankful for all of you here for your input and guidance. Thanks especially this morning to Alex, and all of you who made such thoughtful observations. Much appreciated.
Thanks You Nancy,
I appreciate everyone here. I’m anxious for better trading days to come. I’m confident that they will, it just may be by focusing on another sector in time. Disappointing action post election in the precious metals, confusing that some Miners ignored the strong sell down.
Thanks for the reply. Just please keep us posted if that weakness materializes and you bale.
I will be watching it next week tick for tick : )
Honestly, if we get an ICL in place, even in bear markets it gives you 2 daily cycles ( 2 months) to watch it. This OUGHT to be an ICL forming in this area. Next week is pretty important in my opinion.
I can’t figure out why we can’t catch a bid here. The technical clues are there, as you said at least for an intermediate low and a BMR. I really thought at least some technical buyers might step in at some point. I’m going from disappointed to baffled. The other issue is now we have overhead supply. Folks (like myself!) are now looking to just bail on a bounce, not to continue to invest.
Finviz has gold low overnight at $1170.30
Hi Nancy. There was most definitely an overnight and very brief spike down in what I suspect were incredibly thin markets to that $1170 area. An almost perfect ‘kiss’ of the 61.8% retracment level. It would certainly be good to see that hold as the lows of this correction now!! 🙂
Yes, hold please! Chris, I would like to look at charts of my stocks to see where they are in relation to MAs [my charts are set up with SMA not EMA]…what time frame should I use?
This is all personal preference and I just personally prefer ema’s but no right or wrong here. Market convention probably weighs towards sma’s as Alex does. I would suggest experimenting a little and see what sits best for you. As a starting point though, on my weekly charts I use 13, 40, 60 and 80 week ema’s. On my daily charts I use the 22 day ema and the corresponding 66, 200, 300 and 400 day ema’s. On four hour charts I tend to use 20 period, 60 and 130 period ema’s but these are on continuous 24 hour charts such as gold/silver. For normal market period 4 hour charts (stocks) I would tweak these a little to 30 period, 60 and 130 period ema’s. But don’t be afraid to experiment a little and play with different periods and see which fit a particular stock or market best. But those should give you a decent starting point. Good luck. 🙂
Thanks for your answer. I just reviewed my holdings using the sma s I had and looked at 6 mos chart. Very interesting. I can see generally which are weakest looking and strongest. I may try out some of the other settings you suggest to observe the differences. Thanks again.
I’m (ideally) very much a longer term investor Nancy but I would suggest long or short term investor, its a good exercise to step back and look at long term weekly charts from time to time as it can help get some really good longer term perspective, which can be lost if we are always looking at nothing but short term charts. But just my opinion. 🙂
Sure, we’re not down for once but we’re gonna need some real strength to come in early next week so that this is more than just a bear flag. Low volume day, but I’d like to see a stronger move into the early close.
agree cason.. even tho its a slow holiday if this was the low the move off that low should have had alot more thrust in my opin…
I’m actually not so sure what we should expect on a 1/2 day of holiday trading after a complete day off. Many human traders take the 4 day weekend off ( Fund managers are away, etc).
I think next week will be a better gauge. The ICL is due – I do expect the shake below the MAY ICL to recover next week however. If we cannot get any traction next week, it seems that that would be a pretty serious sign of weakness.
Totally agree Alex. I wouldn’t personally read anything into today’s price action either way. As you say many will have taken the day off as well and trading I suspect will be horribly thin. Next week should be the real ‘tell’!!
Yeah Chris,
Volumes are pretty low compared to what I saw Mon, Tues, and Wed. There may be some of that automated trading, and some that got caught in selling may personally be selling a bounce, but I would imagine that Fund managers and heavy traders are taking a 4 day vacation. Since many travel to be with their family, I would think that they dont trade from their families basements.
Wait a minute…I do ! 🙂
Ah….but you are the ‘exception that proves the rule’ Alex!! Lol
LOL…Really glad you are watching out and commenting. Thanks.
On a different note…Mrs. Brady (Florence Henderson) passed away. crazy
I was a Brady bunch watching kid.
Just some thoughts.
TGB, TRQ, and a few others are still acting correctly, trying to break out ( Viewing them as Copper plays that have not become overly extended).
NSU tried to break from a downtrend and stalled, could be a buy. TGB was pointed out earlier in the week…breaking out today, but reversed to fill the gap. These can be ‘buy the dips” when they drop to the 10 sma if they do not get too extended above the 50sma.
GV is a very nice cup forming. SID is still pausing , as shown on the 2 charts in the report.
I will have to cover some of these as they set up on pullbacks, like I did when they began to bull flag. Those bull flags broke out ( And may get back tested too).
hey robert, you still own AMRS?
I sold some and got stopped out on that big drop ( So I do not own any right now).
Not sure what to make of that chart either. It looks to be recovering or forming a cup after that sell off, it did regain the 10sma, but that was a serious 1 day drop, so it needs to be held with stops in place.
Just glanced back at the last two ICL’s + YCL’s 4Q ’13 and 4Q’14 which were definitely in a bear market. As Alex has already metnioned more than once both of these ran higher for two daily cycles lasting between 2 and 3 months and saw gold rise between approx $175 and $205. So if that proves to be a guide then even under a bear market scenario we are likely to revisit the area of the July highs around $1350/1400 by late Feb ’17 If…IF… we do indeed form an ICL/YCL in the very near future. Obviously if this proves to be an especially severe ‘shake out’ in a new developing bull market then we could potentially expect a move potentially well beyond those prior highs in that same time frame. But these are ONLY reasonable expectations based on recent price history. We still need to see what actually happens and that is going to require time and patience for now!! But as they say…’all good things come to those who wait’!! 🙂
yes, but the big rise on election night could have been the top of the 2nd DC on day 1 and we are downhill from here. I am playing it safe and will look at next week for more info
Out of both time and patience!! Been waiting for 6 weeks already!! Ahhh….!!!!
I’m surprised that no one has pointed to the time period from October 2012 until August 2013. During that time period, gold miners went straight down and did not having a meaningful bounce. The daily cycles were even untradable, imo. That’s what has me sort of worried at this juncture because we are definitely due for a meaningful bounce but it doesn’t have to happen. I recall back then, people hung on because they were expecting a bounce but it never came. Sounds gloomy for sure but it is a possibility that at least has to be considered.
I think Alex has pointed out several pm shares that have resisted very well this time around: GSV, HL, RGLD, PAAS, GPL, NEM and so on, while others have not done as well. I have to agree with Alex that there is lots of strength in PM and lots of quick gain to be made if we actually are going to find the ICL next week.
None of the charts I’m holding have broken down. That’s a moot point unfortunately. If gold goes lower they will break down. Back in 2012, there were lots of great charts as well. Eventually they broke down because gold kept dropping – even FNV broke down- although it really was only in a bear for 5 months or so. I am still hopeful for the time being that this will be a meaningful low but I’ve also entertained the idea that something is very wrong – especially in currency markets. Gold is moving in lock-step with the Yen and the Yen has no earthly reason to go higher.
I hear you and as you see a few lines below. the big rise on election night could have been the top of the 2nd DC on day 1 and we are downhill from here. I am playing it safe and will look at next week for more info
That looks to be a very valid comment. The only thing I would add is that unlike the current period that severe bear market stage did follow a 1 year plus topping process following the major bull market peak around $1900 in Sep ’11. In that truly severe bear market stage the gold price could not even rally as far as a 66 ema on the daily chart. Something to at least be aware of in the current period for sure but clearly we can speculate all we want about what could/should happen from here but ultimately we have to wait for markets to reveal the future price action and then take action based on that. One thing’s for sure..there is absolutely nothing certain in markets…well except for that fact that ‘there is nothing certain’!!
Same response as Chris, that was coming off a huge topping process not off of a 4-year bear bottom. So, this *should* be different. The first 2 daily cycles back then (mid-April- June) were lightly trade able buto ultimately just proved to be great bounces to short.
Don’t get me wrong, I’m not making a prediction. Just flagging it as a possibility. In a world where new “firsts” seem to occur pretty much daily. I want to be open to all possibilities. The volatility in currency markets is pretty much unprecedented, so that’s a factor that gold traders need to keep in mind.
Simon, agree. Yes, bull goggles here have only resulted in hurt and loss.
CLF new 52-week high today. This is quickly turning into 1 of my best trades of the year. At least I got something right!
Me too, and already took profits on it back awhile. Thank goodness a few in my acct looked good…My FCX, Vale, HBM [yay copper!] and even some silver/gold NAK, FSM, CDE, AG, HL, IAG. Hope you have more than 1 good one.
Two. I have X as well. Had a monster trade on LABU post-election but booked those profits a week ago.
Have a good weekend all!
I’ll be back later tonight with some thoughts and analysis, but spending time with family and friends rest of the afternoon.
Alex it looks like your original call on oil a week or so ago may be playing out. The weakness in USO is chiming right in with what looks to be a rolling over of PSCE and OIH. I sold out of my oil stocks a bit early, but if I had them still I would be selling right now.
Ron do you or anyone else in this group follow the miner EGI I have a small position. They have almost no debt and enough cash for a few years of cash burn. They are trying to unlock value http://www.marketwired.com/press-release/entree-gold-committed-to-unlocking-the-value-of-its-copper-and-gold-assets-tsx-etg-2163310.htm
No I don’t Thomas.
I think its worth a look. I can send you more info if your interested
GV was mentioned below as one that is breaking out and defying the trend, but it is Gold in name only. This is a company that provides construction and maintenance of electrical facilities for utilities and industrial companies. I was in this when the hurricane hit hoping for a pop as they do lots of work in Florida. I was early in and out, but in any event they are not a gold miner as the name would suggest. SID is a tin producer.
Thx, but I’m not sure if you mean me…. or the record I didnt mention GV as Gold when I used it in my comment. re-read tht comment, you will see that I was pointing out good set ups to watch. . I knew what they do, they are an energy infrastructure play.
I listed them with VALE, CLF , SID, HBM, FCX type plays and mentioned TRQ & NSU as copper plays.
I was pointing out good chart set ups in that comment, that it was forming a cup was all that I said. I is on my watchlist as a good chart set up. . I didnt mention Gold once in that comment.
Alex- hope you had a nice holiday and thanks for all you do here. You are are so giving to so many here and I know I speak for our entire community in being thankful for this amazing group and your leadership and analysis!!
Yes indeed, well said! 🙂
Thx RM – I really appreciate that.
It has been such a flash of change in my opinion after the election, that it has been a little tough to get a clear grasp on ‘everything’. That takes time, but I’m trying to look for clues this weekend. I appreciate your kind words and the good group within this community!
🙂 https://uploads.disquscdn.com/images/27b2b854cdaa3b0a2cb187aef629732f579b01e03da743e0f5fa401b4a1c4ee6.png
Interesting to say the least.
The Contrarian side says a pull back might be coming- not so sure what kind of pull back though .