Nov 28th – What’s Next?

When you look at the flowers in the above picture, you cannot really tell what the future will hold at this point. It is hopeful as we begin to see growth, but the surrounding conditions are difficult. Will it remain too dry for growth or will some refreshing rains begin to nurture it? And even if all of the conditions exist for solid growth, will it avoid being trampled on? 

What does this have to do with the Precious Metals market? We’ll  compare this flowers future with the dry conditions that we’ve seen in that sector lately and discuss future prospects.

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After we quickly discuss Oil.

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WTIC –  Oil put in what looked like a vert strong bullish reversal Monday.  In the reports over the last several weeks, I have been cautioning about Oil and the set up there. OPEC meets this week, so this chart may be thinking that they will cut supply.

However, Look up the XLE and the energy stocks that have been doing rather well lately listed on the chart below and they all did THIS when Oil did THAT.  Interesting reaction to Oils bullish move.

NATGAS –  In the weekend report I was showing how a deep scary sell off into an ICL can flip and suddenly win back all of the losses.  I pointed this out, because we just had a sell off in precious metals that could possibly quickly recover if the Bull in that sector remains strong.   NATGAS continued higher today.

Can you imagine if Gold & Miners do what Natgas just did after a little time at the lows? It can happen. 

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Yes, it could happen, but many are very hesitant to enter positions now. Why? Partly because of the recent sell off, but also unfortunately a big part of that is apparently due to 1 person in the comments section last week spreading fear while replying to others comments.  There was an emotionally negative tirade, and now that time has passed, maybe it’s my turn to address it?  I was extremely disappointed for the sake of my readers and especially my newer sign ups to have to endure that when they may be looking for my help in the comments section during a difficult time period.  How unfortunate that this was their first time with us during a sell off into an ICL and this constant negative fear laced commentary by 1 person was their ‘welcome to Chartfreak’.  I apologize to them, it is not usually like that here, and it will not be in the future. Unfortunately, I find that this will need to be addressed further at the end of the report. GOLD IS DOWN pre-market, I need to avoid a repeat of last week.

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GOLD & MINERS

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GOLD – Day 34 is on the late side for a daily cycle low. Monday Gold put in an unconfirmed swing low, but this late in the cycle count, I would expect that the lows are in place. Miners  have actually already done a little base formation and added one more sign of life too.

GOLD -Back on Nov 17th, I did mention that it was a conceivable idea that Gold would run the May stops and hit the 61.8% level.

When Gold went there last week, 1 week later, there was panic.

GDX  went there too, and found support.

If you owned any 3Xx ETF  in the Oct time period, you definitely should have been stopped out. IF NOT, you still might make your money back if the bull remains in tact, but 3x etfs are not supposed to be held on to in a drop.

GDX MONDAY– GDX closed above the 10sma today and near the highs of the day.  This helps to confirm that a dcl is likely in place.  I believe that we will find that it is an  ICL when we get a weekly swing low and further signs of strength.   Looking at this chart we see that another solid day of gains could also bring us back to the Oct lows already.

 The question from the weekend report ( and raised again here with the opening theme picture) is , “Will this move continue to grow?” The answer is still unknown at this point.  In a future report, probably Wednesdays, I’m going to show how to analyze this daily cycle and protect ourselves as it unfolds. We should have at least a good week or two to do this with an ICL or even a dcl in place.  Look again at the October dcl, we had a few weeks of price action before the drop.

Did someone come along and step on the growth that we have already seen in this sector in 2016?  Some think that the Trump election has ended Golds bull run, but to me it seems that his spending plan would increase the risk of inflation.  I do not see why this bull should die. The weekend report explained some of what I am watching with the Yen too. We have a little time to watch this daily cycle unfold, and I will discuss what we are looking for in tomorrows report.  Tuesday is upon us, and I believe that Miners could be bought with stops below recent lows. I will explain a bit more at the end of this report too.  Enjoy your Tuesday trading, thanks for being here.

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~ALEX

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Trading review

Now let me explain what happens at these lows and what makes this part so difficult.  DCL’s are buying opportunities, but the drop causes fear of more downside, so they are difficult to buy.  1 comment was saying that buying the Oct lows was such a huge ‘horrible’ mistake.  Was it, or is that just an emotional reply? Look at the chart.  The move out of the Oct lows acted correctly for 3-4weeks!  It was a rapid 2-3 days sell off that did ALL of the damage. Look at the Oct lows.  Knowing that it was a DCL, I bought it.  Thinking that that was an ICL, I actually went in heavily at the lows, and then you have to watch how it grows from there.  These can take right off straight up and we’ve seen that in the past.  November highs had this chart looking good, and then we had the election results. A sudden sharp 3 day drop and then a base formed. In 2 days that damage could even be undone ( Remember the NATGAS chart).

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Now let’s look at that chart GDX again. Why? Some people have been frightened away from buying, and that is O.K. too. Waiting until we get further confirmation or even until we see if this is a continuing Bull or not is fine, however, we do need to discuss the reality and the perception of the Oct lows & Nov lows. Some want to enter a position but are still nervous from last weeks drama.  The selling was bad for those 3 days and we dont want to have that again, but timing is on our side now and using stops would prevent big losses. So notice that the reality is this…

Reality – October lows were $22.50 area.

Reality – Nov lows are above $20.

 The Drop from the OCT lows to the NOV lows was not much, and a stop would have cut losses.  The rest of the move was a multi week rise and fall of the Oct daily cycle. Not a death defying horrible ugly drop for 3 weeks like some are perceiving it to be. This is not a 3 week drop, it was a big surprise 3 day drop.   Especially if one was holding JNUG or leverage through that drop  would it be painful. Position size is reality too. Our ‘core’ positions were feeling the selling pressure.    Currently if we have a dcl, price should not break the lows for weeks, as seen in October.  One could buy, but you must use stops and honored them if it does.  It is a risk reward set up.  Lower risk, potential reward.

JNUG  and our sell off.

If you bought the OCT lows with JNUG and were stopped out with the first big reversal day, it saved you from losses. You actually had gains.  Selling 1/2 way through the daily cycle was even quite profitable, since it went from $9.50 to $15. I keep hearing that “Buying Oct lows was just horrible”by someone who bought JNUG.  The chart says hanging on from highs to lows was horrible, but buying at the OCT lows would have been fine with a stop.  The NOV lows trade could be good too, but I never recommend 3x etfs.  I’m pointing out that the trade actually could be huge if a solid ICL is in place.   Ignoring your stops will always pay the price. If someone decided to get cute and buy leverage later in the October daily cycle up near $13?  Yes, you got hurt. Its riskier to add leverage in the middle of a daily cycle, I usually sell there  ( I didn’t this time, because I expected an ICL in Oct.  I was stopped out).   Even if you didn’t sell, you may easily make that back soon if an ICL is now in place.

CONCLUSION concerning the constant negative posting Wednesday and Friday last week by 1 particular individual:  It was a personal choice to post those publicly, I choose to addressed it publicly. Gold is down pre-market, I need to prevent another overly negative highly emotional environment in the comments section.

I don’t wish to censor the posts, but I have decided that in the future if someone is constantly spreading unnecessary fear  to everyone honestly asking questions or posting comments – I will block them for the sake of my readers.  I was asked to do this last week and I didn’t, and I do regret it. There is absolutely no way to justify repeatedly replying to sincere posts with strong emotionally negative content. I do encourage discussion if you are worried, have concerns, need help deciding what to do.  It’s a great way to gather input from experienced traders, but that emotional rant went too far in scaring inexperienced traders out of  their positions with cries of absolute hopelessness in a difficult time.

I had always hoped that the comments section of my reports is where people could openly discuss in a mature helpful manner  various possibilities and trading strategies. It always has been, and we have a great group of traders and investors there.  It is very difficult to endure the selling during an ICL sell off alone, and many here hold core positions from February or March. They needed guidance and encouragement .

  Helpful talk like that can have a calming affect, and others may be able to chime in and offer help too.  I am also often there to help answer questions, but I couldn’t even stand wading through the verbal diarrhea that was being thrown around Wednesday and again Friday. Some newer viewers may have thought that this person was a good trader, and then when they saw reply after reply to others posts or questions thoughts expressing perosnal horror and extreme fear? They would be shaken from what the reports were saying.   Was this very encouraging for my new readers to see? Newer sign ups do not know the amount of profits and %-Gains that we all made in prior trading all through out 2016.  I had been receiving emails that peoples accounts doubled and tripled from the last 2 ICLs in Precious Metals and Energy, and now all they see is someone spreading fear and hopelessness taking the entire trading room down?

  I started to receive several concerned  emails asking me to block the poster Wednesday, so that those needing some help wouldn’t be scared out of holding.  Others bailed out of their positions when he expressed utter hopelessness, absolutely no reason to believe this selling will ever end.  My job suddenly became that much harder under the sell off, trying to reassure some without having to censor comments.  Finally I feel the need to discuss this in todays report. I will block extreme negative posters going forward, it is unhealthy and helps no one.   I’m not ‘ Ticked off ‘ or ‘Angry’, but I want to say that I was disappointed on behalf of my readers. I had way more than enough work to do last week without the added concerns that others experienced. I do not want an apology, I want a better future experience at an ICL, and I will make sure that we get that here.  Let’s help each other and make this a good trading community.  It is fine to express fear and uncertainty, but there is a limit and accountability.  We only get 2 ICLs per year on average, we can’t avoid that. Posting in a way that tears others down, or builds others up, or not posting at all,  is a personal choice.