Feb 8th – Still Chillin

I find that I’m still not making any changes to my thinking since the weekend report. Let’s review the markets.

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SPX – I’m watching the green trend line, and that will let me know when the general markets are ready to drop into a dcl.  Even though we do have a break out, the SPX has basically moved sideways since early December.

SPX WKLY from my weekend report. I’m not expecting a strong continuation higher before we roll over.

USD – This is my USD chart from the weekend.  I didn’t expect a lot of strength coming from the next USD rise. I’m watching 101.50 .

USD – So far I have us on day 3 and each rally has sold off into the close. We’ll see if the Dollar gets to the 50sma and struggles. The USD was up .82 and Gold didn’t really react negatively, so GOLD & MINERS are ignoring USD rallies at this point.

WTIC – Oil has been  going sideways for weeks, but Oils inventory report is due out on Wednesday. Tuesdays drop may continue to move lower if supplies are abundant. Volume was high on Tuesday and this actually looks like the first time that Oil shorts could succeed. A break down with a day 16 daily cycle high should lead into an ICL.  That would be a lot lower from here with 30-50 day cycle lengths.

As I mentioned in a report a week or 2 ago,  the XLE is breaking down and there was a time when it was leading Oil higher. I said back then that I think the XLE is leading the way lower too.

NOTE –  I had said a few times in reports in January that I am no longer in any Energy stocks at this time,  I was focusing on Miners since the December lows.  I had been trading energy stocks in November – DECEMBER and the set ups were acting correctly, but I checked my account and I only owned 1 energy stock in Jan besides Uranium stocks and that was LGCY.  My last Energy trade before that was getting stopped out of PACD in mid December for a small loss.  I still posted charts for WPX, OAS, and AREX around Jan 5th, but set ups started to weaken in that sector.  I switched the focus  to Uranium & precious Metals in January .   When an ICL comes in Precious Metals, you can easily make double & triple digit gains.  I start really focusing in that area.   Others have asked me to continue to cover NATGAS and OIL though, so I do.

So this XLE  is a chart that I posted in my end of Jan report, and it is an obvious warning.  Anyone that was still trading in an OIL/ ENERGY  stocks would have to honor stops if they drop (or just sell), because I mentioned that XLE leads Oil at times and was now leading the way lower.  Bullish above the 50sma, but XLE was breaking down. Read the chart.

OAS CURRENTLY – We see that the OIL STOCKS that I we traded in November & December are now drifting downward, even breaking below the 50sma at this point. TRADERS SHOULD HAVE BEEN STOPPED OUT OF MOST OF THESE POSITIONS with small gains or minimal losses depending on their entry points.

Lesson  : It is not a matter of whether or not you are an ‘experienced trader’, all traders must learn to use and honor stops to protect funds.  Would you ever tell ‘inexperienced’ tightrope walkers not to use a net?   What will happen to anyone that gets attached to or simply refuses to sell at a loss if a trade goes against them?  That person could continue falling without a safety net.  We must assume that holding a trade that goes negative for extended periods of time could lead to extended losses. Taking small losses and riding larger gains is a winning strategy. Riding a trade that goes against your stop is a losing style that eats up your account.   Please always use and honor stops in a losing position. There is always another trade and you can make those losses back in a bullish trade. Holding losing trades as they drift lower and lower has psychological affects too. It is discouraging. Find the winners and ride them.

NATGAS – The inventory report is released on Thursday. I see many trading NATGAS, so I cover it, but I’m not recommending it. I would wait for a move above the 10sma, this could still be the H&S that I called out .

JAN 24 – This is the H&S that I called out.

GOLD, SILVER, & MINERS

GOLD –  The set up is still Bullish.  It could dip and back test the break out if the USD bounces as shown, but so far GOLD ignored the dollars strength.

GOLDs JAN RUN HIGHER IN 2016 – Notice that Dips were MINIMAL, and tags of the 8 ma were common as the move really ramped up and left traders behind. I cannot say that that will happen today, but…

GOLD NOW VS THEN –  This run also looks strong and  what happened once it tagged the 50sma in 2016?  No 1/2 cycle low, no deep dips, we just enjoyed the steady climb higher.  I’d like to see the same on the way to the 200sma, and then break it and keep going.  Time will tell.

SILVER – Silver is lagging a bit, but remains bullish. The only reason I drew a dip first is because if we get a dip, I want you to see that it is not damaging.

GDXJ –  I wanted to point out the 2 day pause once GDXJ finally broke through that 200sma.

GDX  could be doing that 2 day pause now.

GDX – We could look at it this way

Revisiting 3 recent trade ideas

TRX – TRX sells off and is red in my account each day, and then it moves higher into the close. It has closed higher 5 days in a row now. This is bullish action and TRX is 50% off of its Dec lows. This can run a lot higher once it gets going.

This was the BIG picture when I was buying it last summer at this same price area before the big pop & run to $1.50.

VGZ – VGZ is starting the break out type move that I have been expecting ( once it finishes that long base).  That base may be complete.

AUMN – This is a personality stock, and the personality is that of a cheetah when it gets running. I am expecting AUMN to move higher too, but this comes with a small warning.  It is due to release earnings soon.

Expectations remain consistent so far as this week unfolds. That could change with Oil soon, since Oils inventory report is due out on Wednesday, and Oil started selling off with higher volume Tuesday.  So Oils drop may continue lower if supplies are abundant.  Precious Metals remain on track.  Enjoy your Wednesday trading!

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~ALEX