Thursday – Dec 22 – Day After Day

Yesterdays reports called ‘Baby Steps’ discussed how the markets have been moving slowly along, and how that can eventually lead to a particular outcome.  Well, most areas of the markets continued that slow crawl yesterday. If you read yesterdays report, nothing has really changed in many areas, except for Natgas. Today we will briefly review and discuss a few of these areas again. 

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Did the Dow hit 20,000 yet?  It was only 13 points away when I pointed out this chart

No, the goal of hitting 20,000 on the Dow remains in front of us. So we’ll move on to the USD.

USD from Wednesdays report, we were on day 8. Read the chart.

USD day 9 saw the USD drop a bit lower. We could be seeing a rising wedge, which would indicate that the USD should be capped from a steep rise, but 105 could still be tagged over time.

WTIC from Wednesdays report – Day 25, but Oils cycles can go from 30 to 50 days. It is above the recent break out.

WTIC – Wednesday Oil dropped after the inventory report, but no technical damage was sustained and volume was rather light. Oil has dropped every 3 or 4 days, but continues to trend higher for now.  Oil above $51 is still holding the break out and can continue higher or sideways in this daily cycle.

NATGAS – Expecting a dcl soon, I said here in yesterdays report that I normally would take a position here and buy any further dip toward support ( the 50sma and Magenta line) , HOWEVER I didn’t recommend that approach to those that use UGAZ , because holding leverage in a dip that is as steep as this could be could hurt.

NATGAS took off  yesterday –  This indicates that the DCL is in place, this is day 1, and the last daily cycle out of the ICL was very right translated, so we should break to new highs over time.  This would be a buy, just keep in mind that it can 1. Pop & Fly higher, or it may also  2. Pop and drift a bit lower before breaking to new highs. It has formed a bullish cup & handle.

Let’s discuss (again) what a slow process bottoming can be!

REVIEW:

GOLD – No real change again from Yesterdays chart shown here. The Lows didn’t break, and the 10sma didn’t break. That is what I am watching at this point.  Day to day wiggles are just noise.

SILVER –  We saw this reversal candle, which can signal that lows are in place,  and it did not break yesterday.  In Silvers case, you are watching for the lows of $15.68 to continue to hold. It almost dropped there overnight, but again, the lows held.

SILVER BIGGER PICTURE – Silver ran stops on the May lows Tuesday and put in that reversal candle that I pointed out.  This could indicate that the lows for Silvers selling are in place on a weely chart,  IF those lows are not taken out. Many are calling the Silver bottom because of this candle alone. Time will tell.

GDX –  I mentioned a possible Island Bottom base forming, and so far it remains. A gap higher would be bullish, a continuation sideways would be possible continuation of a base building process.

In yesterdays GDX chart, I shows a change that took place. We haven’t seen the normal high volume follow through after breaking down, so I am watching for that to continue. That is why I mentioned a possible base building process.

This is becoming another sideways Yawn-fest.  A boring sideways move, so let’s discuss that now.

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I have shown the ‘bottoming process’ that took place at the Dec 2015 lows in past reports. I still hear traders look back at those lows and say how they would love to just buy that and hold and wait for the rally, as though it was easier than what we are seeing today.  ONLY IN HINDSIGHT does it look easy.  We were still in a Bear Market and many were crying and calling that move “Weak”. Trust me, I remember, since I was running this site.

Base building can lead to a solid launch, but take that Day-To-Day movement and  it can frustrate some traders.   Let me try to show how this can happen 1 more time, in case we begin to move sideways in this sector for more than just a few days.

GOLD Dec 2015 lows – We look at this chart and see a Beautiful Base, and easy to ride too, right?  Since the lows were not broken, this looks easy, just  1 month of sideways trading and then a LAUNCH! Looks easy now, but let’s adjust our perspective.

The same GOLD Dec 2015 lows – A different perspective.

This is day after day after day after day. Picture the end of Monday, then Tuesday, then Wednesday, then Thursday, then Friday,  on & on as the lows form, and price stays almost the same.   See the chart . Weeks go by and Gold basically does  NOTHING! People freak out. It bounces and goes back to the lows. The one watching this base wonders every single day,  “Will Gold break down today and start a sell off again?”  Posts in the comments section can get rather emotional.

In the above chart , I didn’t even include November, but the sideways chop started there. I also didn’t include the crying that you hear in public blogs,  “This sucks, Miners suck!  They are so weak, this will never get off the ground.  I give up,  it’s going to break down!  I Give up! The Bear market is back”.  You read that day after day after day and it can affect your resolve  (I ignore it).  Those same people hating these Miners keep buying JNUG and NUGT on each reversal higher and get stopped out on each drop.  What a shame, because this base building chop tears them up emotionally and financially.

I personally just focus on the lows.  Have they been taken out by todays lows?  If not, the drop that day means nothing to me, and I also block out the comments of emotionally extreme traders. Again, at this point, some Miners havent taken out the Oct lows yet, if I own them, I am still in ( GPL), if I get stopped out of another (  I am now out of AUMN for a while)?  I just watch to see if this is a bottoming process continuing. I wont keep jumping In & Out, unless I see a trade set up acting correctly ( started liking the Drd action as mentioned in the comments section).

The Lesson: If it gets choppy and we get stopped out, stay out until Gold moves above the 10sma at least.  Stay off of the leverage,  keep positions smaller and manageable.  Do not jump in and out, because the chop may continue.  Let it play out for a bit.   If this move is going to go a lot higher over time,  you will have plenty of time to buy good solid set ups in Miners later too.

Yes, sideways moves and long base building activity is boring and can be drawn out,  they can even quickly break down in a final shake out, but the eventual rewards for those that do not allow this process to make them overly emotional can be exceptional if conditions are right.  This is the stock market, sideways moves happen all the time, shaking buyers and sellers alike off to the side.   It’s O.K. to stay on the side and be patient.  The recent DJIA activity was similar , and no one remembers that now.  It’s all about  “How Bullish that DOW 20,000 run has been!”.  Nobody talks about that choppy Sept and October move was anymore, right? Look at August, September, and October, yet no one talks about that now.  The RUN is the focus. Miners may do that in the future too.

NATGAS WEEKLY REMINDER CHART #1-   I called for a drop in Natgas to about $2.41 and then a buy as an ICL

NATGAS CHART #2 –  It dropped to about $2.60  straight down, popped and crashed again lower to $2.55!  Dreadful, Horrible. Painful.

NATGAS  –  NO ONE was talking about that October double drop after mid November, people just wanted  to buy NATGAS.  Do you see what I am saying? Patience can pay off when market sectors are bottoming.

GDX had a long winding base after a November sell off last year. That built a base.  A quick sell off scared many, but honestly it just barely broke those Nov lows 1 day, and then it ran away without many of the emotionally distraught traders on board.  At Chartfreak, we doubled and tripled our Miners positions over the spring of 2016. I don’t want people to lose sight of that now. We may be in a bottoming process.

GDX TODAY-  This could be a base built in November, and a shake out move now, and an Island bottom.  If so, and it breaks higher, it could lead to a bullish run into 2017.  If it were to break lower and stop us all out of any Miners that we are holding?  If it does that  I will monitor and not re-enter until Gold breaks out upward and puts a confirmed swing low in place. We have not seen that yet, but we have seen some bullish looking Miners still holding above October lows. I think we are basing out here, and some Miners may be leading the way.  Yes, Time will tell.

In the meantime, I am trying to at least provide a few trades in other areas to off set boredom for our active traders. It may offer a different way to raise a little money by trading in areas that are set up properly.  CENX, AKS, NOG, WPX, OAS, WRN, TGB, and more have been helpful to some.  To be clear, I am encouraging  just using a small portion of your funds to trade in another area if you are an active trader  (not going “All IN”).   We can do this while monitoring the action in Precious Metals.  I still think that a bigger trade could be lining up in that sector.   The weekend report will cover more in this area, enjoy your Thursday & Friday trading!  I may have a small Friday report just discussing trade set ups.

~ALEX

TWLO – I found this chart and the volume indicates that this pop should be real and could have good follow through. That little 2 month base has tightened up in December and broke out nicely. When this was an I.P.O. this summer, it quickly ran from this area to $70.

PKD –  This also caught my interest when it popped Wednesday, because the weekly chart is just as bullish as this daily chart.  The daily is forming a rounding bottom or base. A long cup & handle consolidation after a major run higher last spring.

PKD WKLY

PACD UPDATE –  PACD moves quickly and in both directions. You can see that it actually just ran from let’s say  $2.75 to $7.00 in 1 month! HUGE.   It is pulling back and I wanted to draw a few charts to show that after a huge run like that, a normal pullback can be rather big also.  Possible support is in the $4.35 area?

PACD – $4.25 area? PACD is at $4.75, so that is a big drop, though it doesn’t look like it on the chart. It is not oversold yet.

PACD BIG PICTURE – It has a big trading range from $4 to $9, so it might try to get there if Energy continues strong.

PACD – I was hoping to see PACD close above $4.75 for a big picture break out. It may not hold this time, but it is building a long base and could try again sooner or later.