March 3- Behind The Beauty Cracks Appear

This week we saw the Markets continue to fly higher and even Gold and Silver were making new highs. What happened to the Miners? Behind all that beauty, cracks appeared, and that is going to be the focus of the weekend report. I have a LOT to discuss, so lets get right into it.

.

SPX – We are very due for a dip into a dcl, but this is strong. Look for a break of the 10sma, please read the chart, I do not think that a dip will mark the top.

 

USD – We do have a peak so far on day 19  ( R.T.) and are due for a dip into a dcl at any time. A break of the trendline will help to identify it. Being right translated daily cycle, we would expect a higher high than day 19 on the 2nd daily cycle. Then we approach the FED DAY.

WTIC – When this breaks, it should lead to a big move ( SPX was doing this sideways consolidation before its big move). Smart money says it will break lower, they are short.

NATGAS – With a swing low and a move above the 10sma, it was a low risk entry last week. It could blast higher, but the problem is that the 200sma may be resistance and then it could roll over into another drop to an even  lower dcl. This looks like a LOW last November and a strong run, and the a couple of failing daily cycles with lower lows. I am not sure that that pattern is done yet or not.  A buyer could stop out below the 10sma or recent lows if it rolls over, but it is a good long set up at this point.

.

GOLD , SILVER, & MINERS

.

What can I say?  I have done a TON of research here, but I don’t really think that it is helpful to share all 40 or 50 charts that I have gathered at once. It is too much information all at once. I have some that give us bullish implications, and others that are more neutral to bearish, so for now I will share some of the important research here, we’ll let the charts tell the story.

 

Review for starters:  FRIDAYS report pointed out the obvious dilemma.  1. Gold and Silver were holding up at the highs, in very right translated daily cycles.  2. Miners took a dive.  3. I actually pointed out a while ago, even before this recent dip in Miners, that GOLD & SILVER made obvious dips to the 50sma into a dcl.  Miners made a series of higher lows and did NOT dip to the 50sma, may be putting in one strong long extended daily cycle that now has eventually crashed down.  Lets pick up from there.

 

GOLD – We all know that Miners took a beating this week.  Gold looks perfectly normal.  That raises questions like,

1. ” Will Gold now follow that crash course that the Miners took?”

or

2. ” Are the Miners being slammed down to shake everyone out, and will Miners then continue higher when Gold moves higher?”

Good questions, next week will probably reveal it.  Please read the chart and we’ll move on.

SILVER – Just looking at GOLD & SILVER, you would not say that they are in a bear market, you would see 2 very bullish charts from December to now. Silver did experience a stronger drop than Gold. It could tag the 50sma.

GDX from Fridays report– Way steeper sell off than the precious Metals. A ledge of support from November to the left and a 61.8% retrace level is where we find ourselves now.

GDX – All by itself, this chart is not too bad, but when Gold was at the highs and Miners plunged, we saw something that does not make sense.  Also a break below the 50 & 200sma DOES need to recover sooner than later.

Also we have seen individual Miners like PAAS, CDE, EGO, etc that were strong , get clobbered. So we do have concerns, earnings have been concerning.  Is the Bull alive? Has this happened before and if it did, what was next? Is there a safe way to still play the precious Metals sector?  ( Yes there is).   What are we looking for going forward?

I would like to see something  like this going forward, but I will discuss alternate ideas too. Lets say for now that Gold does continue to hold up and Miners are being shook out, to rattle the weak hands and allow bigger buyers to step in at lower price. This would be a shake out below the 50sma. HOWEVER- I have had other ideas too, I’ll discuss later.

Here is another idea that I mentioned before. Clear drops to the 50sma in Gold, clear dcls. Miners did NOT drop ot he 50sma, they made higher lows at that time.  Id THIS 1 strong cycle of Miners, and this is their first dip to a dcl? Maybe GOLD & SILVER are doing the cycles thing, and Miners are just fluctuating on their own path of sentiment, bullish to bearish, overbought to oversold?

GDX waving good bye –  Of course, this is a very bullish way of looking at the recent drop, and how it could still fit into the big bull picture,  IF THE DROP STOPS HERE NEAR 2.  I’m actually getting less of a feel for this, and I have other ideas that deal with a consolidation , as you will see. What if the drop in Miners doesn’t stop here? I have bearish views also, based on what just happened, but I want to show you something else that may surprise you.

 I have had readers write to me and already say that “This drop in Miners is not bullish, and I know now that the bear market returned last August to December. Maybe it was the Trump Election,  I dont know why, but there is no way that Miners can drop any further and still be in a bull market.”  Have you heard that too?  Is that a fact? The Miners cannot drop any further and still be in a Bull Market?

  History proves that statement wrong as you will see. Charts dont lie, so let’s take a look.

 

 Did you  know that we had a solid beautiful Bull run in Precious Metals from 2000 to 2012 ( With a big blip in 2008)? Of course you did.   Maybe you traded it too. I rode that bull and traded it a lot, and I remember puzzling and unpredictable moves in that run too, so let me show you some things similar to what we are seeing now.

.

EARLY IN THE BULL –  HUI WEEKLY CHART – Do you see the big run higher with the Magenta lines $35 to $80?  Then a pull back to the first blue arrow and everyone expected a push to new highs in this early bull market.  Next you see a solid run higher with 2 daily cycles and then it rolled over and had a slam down, Just like we just had after a run higher in 2 daily cycles. After another daily cycle, it had another slam down and actually broke the lows of the first blue arrow.  That is what it could look like if Miners bounce after the recent slam down, and then pull all the way back to December lows and double bottom.  This was a double bottom in Miners in a Bull Market. It remained a bull market and ran higher.

The POINT?: I’m not saying we will see this, but it needs to be looked at as a possibility, it happened early in the Bull of 2001. And when you hear someone say, “This is NOT bull market activity. Miners are done!”  Ask them for proof, because I hear emotional stuff like that a lot, and yet I see facts that say otherwise.   THIS IS A CONSOLIDATION PHASE IN A BULL MARKET. 2 daily cycles higher and 2 lower back to the lows, and it looks like 2 big slams down on the weekly chart.

Let’s see another interesting run. Gold looked healthy and strong in the 2004-2005 stage of the bul, right? Do you like this chart? Would you like to invest in May and ride it?

 

A close up shows that Gold was making higher lows and moving higher daily cycle after daily cycle. Look at the Blue line and the Green line though.  That daily cycle almost hit the lows of the prior one. This was s till a strong bull run. What did Miners do at that May 2004 Bull Run??

WHOA!  Miners sold off to new lows in August as a shake out ( Or consolidation phase) and then followed Gold higher.

 

This was a cycle failure – but remember that Gold didn’t have one, it had the highr low when we loked at the blue line & Green line in the gold chart above.   SO I have often said,  I use the underlying Metal over the emotional Miners at times.  I would then have to label this…

  Using cycles this would actually be a FAILED 2nd daily cycle, undercutting the first dcl, but this was really just a ‘bullish consolidation phase” and it followed Gold higher later.

Here is one that you won’t believe unless you see it too.  After that same steep sell off into an ICL in May 2004, we saw a rally and a break out of the trend line  ( THE BULL IS BACK BABY!), back to the 2003 highs!    Then it rolled over in 2005 and sold off until it put in a double bottom that actually back tested that break out a year earlier. I’m sure that many were yelling ” The Bear is back baby, I’m shorting this thing!”, during 2005 too.   A strong rally and back to the former lows became a huge 2 year consolidation and a double bottom in a bull market.

Does the above chart help you to see what we may be dealing with  (unfortunately) if this is just a consolidation phase? Look at that above chart, that had great bull runs out of ICLs, and steeper drops too, and that gets unpredictable. THIS IS WHEN STOPS SAVE YOU. Look at the above chart during  April 2003 to April 2004.  1 year of consolidation in a Bull Market.  If we had a 1 day slam down last Monday and some follow through, and you hear people screaming that there is no way this can be a bull market-  they have a lot to learn. Be careful who you listen to, follow the charts of Bull market action.  If you have been here for a while, you may recall that I have used GOOG, AAPL, IBM, NVDA, etc charts to show my readers that BULL MARKETS are also tough to ride, though they look easy in hindsight.

 

It’s easy to ride the consolidations in hindsight, but these slam downs look as ugly as GDX right now, even making new lows. Here goog was $573, today GOOG is at $829, but it is not all straight up.

 

You should have a look at the HUI during the 2006-2007 Bull run in Gold. I’m almost afraid to show you the chart that follows…

 

This was the HUI during Golds bull run 2006-2007. A HUGE consolidation that most likely would have killed JNUG & JDST traders. Very frustrating.

So the good news is that these LONG consolidations like we are seeing in 2007  are a breather after a Longer run higher.  This one was 6-7 tears after the bull started, so we are NOT likely to be seeing a consolidation of that size yet. Could we be seeing consolidation within a bull market though?

Look at the consolidation that we looked at in 2002 in this chart?  That was about a year after the big run up, and that is close to where we are now after th 2016 run higher. All I am saying is that what we are seeing can still be Bull market activity, but it is less predictable and tough to trade at times. look at that SLAM down in what looks to be Aug 2002. Brutal, but those lows were never tagged again in this run.

If you wanted the absolute safest way to profit from Miners, buying the ICL and holding for a 2 – 3 month period of time is the safest.  EVEN BEAR MARKET ICLs produce 2 strong daily cycles higher. 2 months of good gains in most cases.

GOLD ( Ignore the writing, its an old chart where I was hunting for the ICL).  Look at the magenta lines those are ICLs.  Even buying bear market ICLs was good for several weeks of gains/ bounce.

So now do we step aside and wait for the next  ICL?  If you want to be ultraconservative, you could. If you bought the DEC lows that ran until February, you made Great gains.  You can do that again at the next ICL if you are patient. They usually are due about 5 or 6 months after the last one .  We had one in Dec ( so May-ish?) The above chart shows that they were spread out about 5-6 months, and OCCASIONALLY 4 months ( April-ish?).

 

This chart told us that Miners COULD sell off or be weak until March 15- showing a double bottom and then a strong move higher even though Gold didnt make a double bottom.

This chart showed us that Miners on a weekly basis also slammed down 1 week in OCT 2001, bounced for a couple of weeks, and slammed again to a double bottom low and then took off higher. That looks like 2 ICLs double bottom only 4 months apart after a huge run up. Anything can happen and keep it a Bull market.

CONCLUSION: This report is designed simply to help you to see that BULL MARKETS can move in ways that you may not expect them too.  Right now I personally am seeing signs of inflation (bullish for Gold) , talk of a Fed Rate hike in March ( Gold has an initial reaction that is whippy after a hike, but then moves higher. You can see how this happened after the  Dec 2015 and Dec 2016 rate hikes.  Gold ICLs formed then).  So going forward, this CAN still be a bull market, with a consolidation awaiting the Fed or other factors.   I will be watching that USD closely going forward.  It could put in a left translated 2nd daily cycle, and that would be bullish for Gold too.  SO I am not going to stop trading this sector with the March Fed Meeting approaching, but I am monitoring things for more clues along the way.  I will look in other sectors too, for those that want trade ideas outside of Miners until the next ICL.  Some readers looking for the safest play may just want to wait for the next ICL to catch a strong move for a few weeks again out of those lows.

As you can see from this report, Miners in the past have sold off deeper than Gold. Miners also have sold off much deeper than what we just saw, yet remained in a bull market,  they even double bottomed in 2004.   We should expect anything, and with the Fed Meeting approaching, isn’t it possible that this 2nd daily cycle is a confusing consolidation and then the next could run higher?  Time will help us to see how things may unfold.

 

The last part of this report was all big picture reporting. Past consolidations proved tricky, and that may be where we are.  If you wonder what the short term possibilities are, I did mention it in the first charts of GDX and GDXJ , so you can scroll back up and we’ll see that  …

1. The USD peaked on day 19, should soon roll over into a dcl.

2. Maybe Miners bounce from here with that?  Those thoughts are above in this report.

I DO have more big picture research to share at a future date, for now this is sufficient to answer the most common question that I am getting,

” Does this slam down in Miners mean that the Bull Market is done?” What did the charts tell us?

 So I have more to share from my research, but it is Sunday night and I really need to release this information tonight to give people time to review it. Let’s see what next week brings and again, we’ll try to benefit from the signs that we get along the way with the USD , GOLD, SILVER, and the MINERS. We may get a nice bounce next week for the traders still in this game.  At times we need patience and clarity, so I’d keep positions small at this point. Enjoy your Monday trading!

 

~ALEX

.

I really want to release what I have on Sunday night, instead of Monday morning, so I am finishing  this report here.  I dont have time to proof read,  so you may find some TYYYPOS and MIIIIStakes.  Please overlook them. I really wanted to release this for the sake of time. Thanks!