Jan 14 – 3 Day Weekend In The US Markets

It has been a great start to 2017, with various sectors bullishly marching higher and plenty of trade ideas to profit from.  For now it is time to relax on a 3 day weekend and just review where we find ourselves after last weeks trading.

VIX – I do like certain things about the set up of the General Markets, but the VIX is about as low as it gets before the General Markets form temporary tops. I don’t use the VIX to time a market top or bottom exactly, but it does often warn of volatility to come.  When the VIX hits the 11 area, we are alert to a possible top forming soon.

So let’s look at the SPX ..

SPX WEEKLY – Is that a rising bearish wedge on the weekly? If so, it doesn’t necessarily mean we get a crash, but it would mean that it will pull back soon and we might not tag that Dow 20,000 for a while.

USD – I see weakness forming in the USD chart. I expect the next daily cycle to roll over, AND I expect an ICL soon. The COT for the USD shows commercial traders are also very net short. They are smart money and this is good for Gold.

USD WEEKLY – An ICL should drop the USD below the blue line over time. This would be very good for Miners. If this break out breaks back down? Longs could bail out and shorts could pile on.

WTIC – I think that Oil can run to the upper blue line with a dcl in place, but we’ll see.  I’m not overly bullish on Oil at all. We discussed the COT for Oil weeks ago, and I repeatedly say that I take notice, but it is secondary for a while. It is not a good timing tool.  As an example: I had people telling me 3 weeks ago that due to the high smart money short positions in the COT, they have been shorting oil.  I commented in my report that The COT is not a good timing tool back then. I reminded readers that last spring the GOLD COT kept making higher smart money short readings, and Readers kept telling me that “so & so” was warning to sell. I heard this last Feb & March as our Miners continued to climb.  Our Miners were up 100-700% from Jan to July, with a sideways dip at the May ICL.

WTIC – Back test? So while the current COT shows smart money increasingly short, it was not a good timing tool for shorting 3 or 4 weeks ago, the drop finally came last week, was not that big and recovered. We still may see some upside before a deeper drop.

NATGAS –  Weekly Reversal

GOLD, SILVER, & MINERS

REVIEW – These are just a few charts from past reports thrown in with the current ones, to show some of what we had considered as possibilities, and where we are now.

GOLD –  On Jan 4th I mentioned that Gold could run up and pause in the $1200 area, since it was a multi resistance area including the 50sma. Magenta and Blue arrows

GOLD ran up to the 50sma – $1200 area and is pausing a bit. It may not pause for long. We are on day 19 and anticipate a daily cycle low soon, but so far we haven’t even started the dip down yet.  Coming out of an ICL, I do not fear holding Miners, since the 2nd daily cycle should bring us even higher.

GOLD –  On Dec 15th, we were seeing our drop into an ICL, I was hoping that we’d get a back test and a v-bottom off of the blue line.

GOLD –  The blue line held, and we are getting a nice move higher, so IF Gold doesn’t pause very much, we could actually get the V-Bottom recovery within 2 daily cycles. This chart shows that Gold has plenty of room to run.

GOLD WEEKLY – Still very oversold, we could pause and work up steam to break higher, or just continue higher at this point. Looking back at Jan – Feb 2016, Gold just went higher 4 weeks in a row at one point. Extreme sell offs can lead to extreme recovery, thus my report “Don’t Get Too Cute” was written as a reminder of possibilities.

And Please review reports from last week in you need a refresher on expectation.  For example Gold Jan 10 – GOLD can go higher to say day 22 and then drop into an early day 25  dcl remaining above the 50sma.  Or higher through Day 25, and dip down to a dcl on day 32 ( Just a few Bullish sample ideas, not a prediction).

And I said  if the USD bounces, we could see this drop. It is nothing to worry about, it is a BUY THE DIP occasion after a swing low is in place, if you have cash on hand.

SILVER DAILY – Pushing at the 50sma.

GDX – GDX looks great to me, this is a sideways consolidation and may be a bull flag.  It’s funny, on a down day I often hear how ‘weak’ miners are acting. At this point, I am not seeing weakness.

GDX broke above the 50sma and held there over a week ago, it was leading Gold. Gold just broke above the 50sma.

GDX : GOLD – This is a bullish set up, and it tells me that Miners are ahead of Gold. If we have a day when Gold is green and miners are red, does it mean that everything is rigged, manipulation, robots are fooling us? Or did Miners get a little ahead and are resting on a day when Gold is playing catch up?  I’ll let the reader choose to believe whatever they want.

CDE–  I have a friend that trades the Miners. A week ago he emailed me that he sold everything!  He sold his CDE, GORO, MUX, RGLD, GG, NEM, because when he saw the huge down day, he knew that it was breaking down. I look at this chart and I wonder where he will get back in.

That is your weekly wrap up.  Things have been playing out as expected so far, and our trades have been playing out very well too with some nice %-Gainers.  Again, I don’t want to overwhelm anyone with too many trade ideas, and I do think that the current set ups in Metals & Miners are a great place to be, but I also am seeing other areas that look to be setting up in a low risk manner too.  I will probably do a short report on that next.  Right now, it is time to relax and enjoy this 3 day weekend away from the markets, see you on Tuesday!

~ALEX

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NAK  –  NAK has been pretty amazing, and even after releasing news of ( now 2) Public offerings at $1.86 – it continued un-phased and marched on higher. SO I posted this chart in Fridays report.  I was pointing out the pattern that NAK has in place, where it goes…

1. Down for 1 week

2. then up for 2 weeks to a new peak

3. down for 1 week

4. Up for 2 weeks to a new peak ———– As shown

I pointed this out ( On this chart) weeks ago  when I said that I sold partials ( Maybe 25 to 33 % of my position) at peaks and re-entered on the dip, able to buy a larger amount of shares than I sold.  It has been very reliable.

SO let me show you what I was thinking when I posted this chart below last Friday. This chart was saying that we had the 1 down a week ago, and last week should be the first of the 2 weeks up . THAT MEANS that this coming week should see NAK higher if this pattern remains.  Let’s see what that could look like…

I was thinking that we just had the first week up of 2, and next week could do this to the next peak. $2.80 – $3.00? If the pattern repeats, anyone that added 2 weeks ago on the dip or even last week should see NAK a good deal higher before it peaks.

Eventually the pattern may change, but for now it has been one of the more reliable “Buy the dip, Sell the rips” stock in my portfolio.  And from what I’ve been reading,  I hear that it has been in many of your portfolios too!