Weekend report – See No Evil

This week has been another active week in the markets, lets see if all is good, shall we?

 

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SPX DEC 1st – Expecting a dip to a 1/2 cycle low, this bearish rising wedge was pointed out and is now playing out. Could it drop to 2160?

SPX WKLY –  I think that it could.

Here is something to keep an eye on that looks a tad more bearish than the S&P …

 

NASDAQ – The NASDAQ  actually gave up its recent break out and dropped pretty quickly. It rolled over as they say.

 

I had pointed out that the semi conductor index looked to be taking it especially hard. This was a serious looking drop, and it occurred in many f the semi stocks.

We now see that the SOX reversed at the 50sma, and that is encouraging for the bulls. The question still remains, will this market remain healthy or is this a Bull trap to suck the buyers back in?

 

Could this be a bull trap bounce? So far, if it is to be viewed as a 1/2 cycle low, it could be bought with a stop under the 50sma.   The drop was so sharp, however, that stops must be honored in case this starts selling off again.

 

USD –  The USD is due for a DCL. Using the chart  of the UUP, you can see a gap and the 50sma is quite a bit lower, so this is an area that the USD could drop to. The stochastics is overbought.

 

USD NOV 30 – above 101 stays on top of this blue & Magenta  support line.  The USD is currently at 100.66, and that is still at support as far as I’m concerned. A deeper drop could begin a new chapter.

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WTIC WEEKLY – This chart looks very bullish at this point. Oil is pushing for a break out with Big volume, it recovered its break down, and is early in the daily cycle. Plenty of room upside i the weekly stochastics too.

** I had been pointing out that I was puzzled that as Oil broke down below the trend line of the Intermediate Cycle on Oct 31, many energy stocks like OAS, AREX, WPX, etc were still setting up bullishly.  I even showed that the XLE was bullish while on various days , while Oil looked to be breaking down. That was odd.

The XLE has broken above its multi month up-channel. This could take on a steeper trajectory after a possible back test or bull flag here.  Energy stocks could out perform. 

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So lets discuss something else at this point, lets add Steel and Copper to the mix.

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STEEL – I had pointed out in September that Steel was shaping up after bouncing right off of the 200sma. This was Bullish.

STEEL absolutely took off when Trump was elected.  His ideas of rebuilding infrastructure and helping the economy has juiced the metals again ( Steel, Copper, Aluminum, etc). Last week was explosive, with Steel breaking to new highs.  We caught these metals companies in the spring using X , AKS, CLF, SID, STLD, AA, FCX, CENX, HBM, VALE, ETC ETC, and then they went into about a 6-7 month consolidation. This is now another area of interest again.

And Inverse H&S target is almost met (conservative blue) and has further to go with a stronger measured target (Magenta).

A look at COPPER

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Pre Election : Copper was trading around $2.10 on the week before the election, and I was pointing out that it was now breaking out at $2.20. I didn’t think that it would absolutely bust out, just that it was bullish.

POST ELECTION:  Copper hit $2.75 this week!  Boom after the election! This is a major break out foretelling much higher prices. Copper is bullish.

So let me mention this.  I see Copper move from $2 to $2.75 and predicting much higher prices.  We saw Steel take off like a moon shot and now steel prices are quickly on the rise. Is this a sign of inflation going forward? Isn’t that Bullish for Gold? Usually inflation is very bullish for Gold. I have to wonder if Big Money is dropping Gold price to ugly levels to load up as others sell everything they can.  When the selling stops and the shorts are forced to cover, will could see GOLD & MINERS Shoot up the way Copper and Steel just did, along with their stocks. Time will tell.

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GOLD & MINERS

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There is not much more that I can say here about what we are looking for in the near term.  I will just point it out here briefly again, and then I will discuss a few other things. Good, bad, and Ugly.

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GOLD –  I posted this to show the 61.8% retrace was hit, I’m expecting a rally soon, even bear markets have rallies out of the ICL.  Then we will monitor that rally as it unfolds. See the chart for a minor target.

GOLD – Thursday was day 38 with a new low, so Friday would be day 39 and we are very due for an ICL.  This should also be a yearly cycle low. If we prove to still be in a Bull Market, gains out of this low could be huge over time. 

 

GOLD FRIDAY – We see a swing low  (Unconfirmed), so this could be day 1, or day 39. Monday would be day 40.

 

The C.O.T. has a very encouraging Open Interest reading. This is very bullish, but I don’t use C.O.T. readings for “timing’ of lows. 

GOLD – We see the RSI 7  here showing divergence at the recent new lows, for the first time.  This is Bullish for Gold. We want to see follow though above the 10sma to add confirmation of our new swing low.

GDX – The GDX did close above the 10sma , this is a positive note for a swing being in place. GDX is still very oversold and the MACD is crossing higher. This is a buy signal for Miners and they have room to run.

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Time for the good, then bad, and the ugly

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I found something interesting, and It looks both Good and Bad, so I will simply point it out and leave it as another area that we have to allow time to reveal the true meaning.  Expecting an ICL, we have plenty of time to watch this. 

I keep going back using various indicators and settings to compare our current situation (in what seems to be a renewed bull Market in Gold) with the former Bull & Bear markets in Gold.   So, just using a standard Bollinger band setting on the Gold Weekly I noticed this…

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GOLD –  On the weekly chart Gold pretty much avoided the lower B.B. throughout the whole run from 2000 to 2008.  YES, it dropped below it for a tiny bit in 2004, and I will discuss that later. This is a strong run when it only broke the lower B.B. once. Please see the chart.

GOLD–  We know that 2008 was a big crash, and Gold dipped below the B.B. a few times. Once it recovered, Gold barely touched that lower B.B. 1 time. Please see the chart. In 2012 as the market topped, a B.B. break can be seen.

Taking a look at our current Bull run, the B.B. on the weekly chart of Gold has been broken. This is kind of concerning to me, and that is 1 more reason that I want to watch this coming out of the ICL.  In our Bull markets, this was hardly touched. During our Bear market sell off , the lower B.B. was broken repeatedly.  Is this going to start happening here? Is there any good news to offset this ugly looking chart? 

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I zoomed in on our current weekly chart with the B.B. break for 2 reasons. 

1. I’m showing that even in the bear market, a break of the B.B. in 2015 rallied for weeks and almost tagged the top of the B.B. too.   So I am expecting an ICL, a Rally in 2 daily cycles, this gives me time to see how things look at that point. I’m pointing out that this should still be a  very  trade-able  low.

2. Now I want to take a look at that 1 time that the B.B. was broken in a steep sell off within the bull market. Do you remember that I pointed out a break one time in 2004? It rallied for over 1/2 a year after that break. This is at least a point that we can look at and say, “It did happen during the bull market.” And look at this… 

This chart looks a little like the above chart at the B.B. – A little doji candle and hopefully higher next week.  We are overdue in many ways for a low, and the miners may be saying that we are on our way. The charts are somewhat similar.

The chart of the $CAD VS $USD was used by me at the 2016 lows.  Notice that when this broke out above the 20ma, Miners broke out in Jan 2016 (see the chart), it then climbed up that 20ma as support. Then notice the struggle currently, but we look like we could break out this week. Bullish for Miners. 

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How about 1 more chart of good news before we go?

This has been a rough and tough Sell off to try to ride over the past few weeks. Well take a look at this bumpy ride in 2007. We repeatedly saw ( blue arrows) a drop, a bounce,  then another drop to new lows, then a bounce, followed by another drop to new lows, etc.  Tiring! Ugly! Frustrating! Brutal! Each time new lows were produced, I’m sure that you can picture the screaming, the fear, and the loathing.Who wants to buy with all of this choppy action into July & August?

 

2007 – In hindsight, it never looks so bad, once that rally kicks in. The Bull ‘consolidations’ and ‘sell offs into ICLs’ always buck off riders at the lows. They always change sentiment from bullish to doubtful. People HATE miners at the lows. When everyone is afraid to hold on or get back on, they get left behind. Look at the rally that followed from July to November.

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So I am expecting an ICL in Gold  ( A deep tradeable low that should hold for at least 2 months without being broken) . Looking at Steel and Copper, I am hoping for that type of reaction higher, but we’ll have to let Mr. Gold tell us what will happen.   Miners look like they may be leading the way, because not only do we finally see a close above the 10sma, but we see several individual Miners not even breaking their Oct lows, and now moving higher.  If Gold sells off Sunday after the vote in Italy, I think that the downside is limited.  If Gold takes off higher Sunday night after the vote, we are probably looking at our ICL last Thursday. The Miners are ignoring Gold more and more, I think that the lows and some good %-Gains are right ahead. Enjoy the rest of your weekend! 

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~ALEX

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I do not have time to proof read and fix typos that may have been left behind, please excuse any that you find  🙂

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Take Note:  GPL, AG, SA, GORO, SAND, KGC, etc etc  daily charts look like they are starting to move.

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GPL WKLY –  I have been pushing this one for weeks.  Now the weekly chart is really looking bullish. It closed at the highs last week and the week before, with Silver getting sold off.

AG WKLY – $2 to $19? Wow. When it was at $19, people really wished they bought it below $10. It has now run up from under $8 to almost $10 – while Silver got slammed.

AG DAILY – What a beautiful chart, really.  I can picture an inverse H&S forming in the coming weeks, and then a run to back to the highs if this bull remains in tact.