Knee Jerk Reaction Or Chain Reaction?

/111 Comments/in /by

The short term unknown …

 

Let me repeat the story of where we are.  Basically I cannot chase this move under these conditions. You must decide for yourself whether or not you want to try to take a trade here.   The story is this, and it has been this for the entire 3rd daily cycle…

 

1. GOLD MADE 2 Right Translated Daily Cycles.  I have said that that usually indicates that it can make a new high on the 3rd daily cycle too, before rolling over and dropping into the next ICL.  So from here Gold could have run to $1300.

2.  Miners have been the problem child. They PEAKED in early February, so that was a Left Translated Daily Cycle. Those are not expected to make a new high in the 3rd daily cycle. They could tag the 200sma as mentioned repeatedly.

3.  So far, this has all been playing out , and we were now on day 19 of Golds 3rd daily cycle.

 

SO …

 

GOLD April-6  DAY 19 – So we had Gold rejected again at the 200sma on day 19 and so far the peak was still ‘in’ from  the 2nd daily cycle, even though this set up allows for a peak in the 3rd daily cycle.  Even so,  I would be expecting this to roll over into a dcl (  or ICL) In the very near future.  THEN THERE WERE AIRSTRIKES & GOLD SURGED.   See the chart below.

 

After the Airstrikes in Syria started, Gold as a ‘Safe Haven’ started being bought up, it was up $18 when I first saw it.  Is it a short lived Knee Jerk Reaction?  Or the start of something bigger?  Well,  we now have our 3rd daily cycle new high.

.

 

Or will this quickly run to $1300 and then drop down?  Think about this.  From 1265,  Gold can have two $20 days and be above $1300. In that Time, MINERS still may only tag the 200sma area, which was also always in the cards.

 

GDX – This late in the daily cycle and after peaking in early Feb,  I expected this to be the end of this run, before dropping into a dcl.  GDX struggled at this 50sma.

GDX –  If Gold surged with two $20 days and peaked around day 22-24,  Miners may just do this,  since they were not expected to run to new highs. We expected this possibility all along.

 

And this chart was in a report earlier this week, so it has been 1 of our possibilities all along.

 

Again,  the short term question is,  “Knee Jerk Reaction or Chain  Reaction?”  You must decide for yourself if you think that you are missing a move here, but I also want to remind the readers here that in the past we have seen these very real looking moves become a fade away move.  At times they suck in the Gold Bulls and take them to the slaughter.

 

GOLDEN REMINDERS – The last two huge ‘News” events Popped Gold, but it wasn’t the start of a multi month run. Do you remember Gold on the TRUMP ELECTION EVE?  Up $50 overnight, and that was it, it dropped into a deep ICL.

 

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Enjoy your Friday trading and your weekend!

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~ALEX

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 Final thought –  If THIS overnight POP of $19  doesn’t push Gold into a solid run higher to $1300, by encouraging the Bulls to load up and take control, while the shorts run for cover,  then that should tell us something about where this is going as we go through the day 23, 26, 28, etc period of this 3rd daily cycle.   Right? If the buyers cannot take control here, the Bears most likely will.

 

EDIT:  7 a.m.   I am not afraid to “Miss the move” here.   This is a very risky set up to me, due to the uncertainty of the situation that brought it about.  I can always trade in the coming days after I observe what I see actually unfolding.   This report was written around Midnight Eastern time. This morning , this is what GOLD currently looks like as it consolidates the rapid move higher. It is still a tricky set up , because of the uncertainty that caused it.  Will it run to $1300?  Will it pop & drop , sucking in Gold Bulls and then dropping into the next dcl?   Are there more bombings on military areas in Syria scheduled for next week, and that will push this higher?  Has Gold just used up all of its steam to run higher?  Usually there is a reaction in Gold at 8:30 Eastern Time, we may get the short term answer at that time.   I cannot go long at this point with the current cycle set up. The ‘timing’ is still late in a 3rd daily cycle.   In hindsight we may see that this was the final pop and best shorting opportunity before a good sized drop. If it is the start of something bullish  ( less likely) , I will be able to trade that as time goes on.

 

111 replies
  2. Maria
    Maria says:

    very good :o)
    tx .. could defffffintely still be that expanded flat ‘throwover’ to suck in bulls … .. selling that jnug and sitting tight… thx very much CF :o)
    Good Day All ….

    • chartfreak1
      chartfreak1 says:

      Yeah, I’ve seen throw overs in the past,
      very hard to read ahead of time, more of a hindsight thing.
      We’re going to need to see where Fridays close puts things to get a better view I would imagine.

  4. dialogueuser
    dialogueuser says:

    I’m thinking of using GDXS instead of DUST when I’m ready to short. This is a 2X rather than 3X fund, so might be easier to handle. Anyone else have experience of GDXS?

  5. Brian
    Brian says:

    Just an observation… Gold’s daily chart since 1/17/17 has been met with a Neg Divergence on the TSI… last nights move hasn’t changed that as of yet. Also I was surprised to see JDST still inside the channel @ $13.39 when I woke up…. Let’s see what the jobs report @ 8:30 brings us.

    • chartfreak1
      chartfreak1 says:

      Hi Brian –

      I’m seeing an early Feb peak on TSI, about the same time that the Miners peaked, but I don’t know what setting you are using.

      I know that you are not declaring a ‘peak’, your pointing out a ‘divergence’ – but I wasn’t seeing it myself until TSI peaked in early Feb, and Gold Peaked later in Feb – that is what I was seeing .

      As for JDST – Yeah, I expected to see GDX up about 70 cents & GDXJ up $100 this morning with GOLDs reaction last night. I see GDX currently up 30 cents. GDXJ up 60 cents.

      That puts GDXJ at $37.30, and doesn’t even put GDXJ up to the 50sma yet ($37.72) . It should be interesting to watch how MINERS act during this move by Gold today . See if GDXJ can get above its 50sma ( GDX is ) .

  6. zig-zag
    zig-zag says:

    Alex thanks for the detailed report.
    Here are some of my thoughts:
    You have been very open about the conflicting action with some of the miners doing well, AAU, HMY, EGO, etc. Others like GDX and GDXJ (etf’s) just sitting there. Recently I have posted what to me looked like some short term (2hr charts) breakouts in cup and handle formations. GDX and GDXJ also have them but they have not broken out.

    A lot of times I look for symmetry and I see something of interest on the weekly charts. $GOLD:
    http://schrts.co/Nu9Zme

    For AAU the leader of the pack; but others include EGO, HMY etc. (you’ve mentioned them)
    http://schrts.co/pkLIO0

    From an EW perspective it doesn’t look broke either, even for a laggard like GDX, it looks like a 1,2 (I) (ii) as shown here:

    http://schrts.co/ulewJd
    This chart also shows the cup and handle pattern I mentioned earlier. These 1,2 punches are brutal, indecisive.
    In the end trend rules, I’m going to follow a moving average with a recent swing low . There certainly has been a battle back and forth over the 10 DSMA.
    Hope the links work!
    GLTA

    • chartfreak1
      chartfreak1 says:

      Hi Zig – I did have a chance to read at your posts in the past, and the links do work. I can’t remember
      if I didnt respond because I was in a hurry , trying to get caught up after being away all morning or what.

      It is odd to see some miners doing well and some just look very weak. The strong performance in some must be based on individual fundamentals. The charts have been strong the whole time.

      I liked ( did not trade) SGSVF, AAU, SBGL, SA,

      One thing tough to ignore has been that SILVER has looked bullish and healthy, but some silver stocks are just now coming off of their lows. AG, CDE, FSM, EXK – these were all at or below Decembers lows. They have done well this week, but are still at Dec lows, so there is real weakness and real looking strength.
      If someone was a buyer in this 3rd daily cycle…It has been important to pick the right stock at this point in time. .

      Thx

        • chartfreak1
          chartfreak1 says:

          MAYBE 1300 – but it is really hard to tell. On a daily chart Gold looks ready to run, but I keep an eye on the intraday too, to see if the move looks to be dying or continuing.

          So far, It’s all over the place. Gold in the chart above Popped to new highs and is selling off again.
          Bulls need to take control and drive out the shorts for price to continue higher
          ( But UP $16 is a huge start, as long as it doesnt just roll over like we have seen in the past).

          refresh for updated chart of the POP after the jobs report, and the drop that followed. Buyers need to step in here , or shorts may gain some control again.

          BASICALLY – I WOULD DAY THAT GOLD NEEDS TO CLOSE FRIDAY OVER $1264

          click to enlarge

          https://uploads.disquscdn.com/images/9b95dc9ef093d90ed9fe909f0f5de0a9ab1b51ae3592bbbbe536ecd99d44d356.jpg

          • pankef
            pankef says:

            and therein would set the trap (IMO); A new high close over $1264 would be an intermediate danger signal according to my work. It is at these type of scenarios where I like paying attention to cycles. There is no doubt, both bulls and bears must be very careful here

          • deshy
            deshy says:

            certainly would be very painful to suck most bulls in on a friday…only to get a sunday plunge!

          • pankef
            pankef says:

            I don’t believe it will plunge right away. A strong close today could bring about a couple of inside days early next week or minor new highs and then, I suspect, will be when things really get interesting. For starters, I am looking at the March lows (1194) to be taken out. What this does to the miners it is hard to say, but the March lows are definite candidates there as well. Of course a “good” trader/investor must have a strategy ready when his/her hypothesis has been disproved, and although those levels are quite distant from here, I am prepared to switch “teams” if conditions warrant.

  9. Ken
    Ken says:

    With this gap up in Miners this morning I am more confident in my count until proven differently. GDX in a wave 3 of iii of major 3 with the next DCL due in late April which would be the corrective wave 4 of iv. With an ICL due in June / July that might be the low of the corrective major wave 4.
    I am still holding my core and will most likely add in June/July.

    • Cason
      Cason says:

      Considering air strikes, the move in gold overnight, and a disastrous headline number in the Jobs Report, JNUG 6% is actually disappointing. I’ve be pretty upset if I was still long (I do have core holdings, I do not have JNUG).

      • chartfreak1
        chartfreak1 says:

        I do see a lot of Miners up 2 % at this point ( Often up 7% on a good day).

        I do see some good and some not so good still. It is a mixed bag of “Stuff”.

        I thought to myself, I want to watch some of these SILVER stocks that were lagging.

        so AG jumps the 50sma – looks good. CDE stalls there, and FSM just went red. – EXK jumped near the 50sma and now gap filling at break even ( AND these are still at DEC lows, so I dont feel Like I’m MISSING a great move here. …..MIXED STUFF AGAIN.

      • Bill
        Bill says:

        Im still expecting higher gold, but miners to disconnect and drop. I am looking to buy JDST around $13

  11. DrGold
    DrGold says:

    CF, at one point you were pondering if cycles were stretching out to a longer time frame. If I am understanding your recent reports, we are in the third daily cycle count for both gold and miners. Is it possible we are in the second daily cycle for each?

  13. chartfreak1
    chartfreak1 says:

    So there are FCEL, BLDP, CBAK, and PLUG in a group that I used to watch….kind of a cleaner energy group.

    I took a trade in FCEL a few days ago & mentioned it , based on how PLUG & BLDP have been acting, and FCEL was consolidating under the 50sma and now popped above and slowly continues higher.

    Other than that, I am pretty light on new tradse

    • Geurt.
      Geurt. says:

      Dear friend….. thanks for all your doing for me. (us) I know it’s difficult which direction PM will go…. Are you still in JDST Alex? I’m temporally in both, a bit more in JNUG then JDST. Keep up with your excellent work !!!!!

      • chartfreak1
        chartfreak1 says:

        Hi Guert, I’ll explain it this way so that everyone can remember it in the future no matter what happens, in case I am not around to answer questions.

        My JDST was purchased when GDXJ tagged the 50sma, so my JDST will not stop out unless GDXJ breaks above the 50sma . That was my defined risk / reward. GDXJ did not break out above the 50sma yet.

        So If you see that it does break above the 50sma , and I am not here to answer any questions, I would likely be out of JDST.

  14. danyo
    danyo says:

    Alex – excellent analysis on gold/miners as always. I’m adding to JDST today – I agree gold is due for a fall, bringing miners down with it and the airstrikes are artificially propping both up for the time being.

    Question on OIL though…do you still think it’s shortable? Or does this action look like the start of another intermediate cycle?

    • chartfreak1
      chartfreak1 says:

      Hi Danyo

      Oil is tagging a back test area, so it could be a low risk short, but 1 thing concerning about OIL is that the energy stocks are breaking above their 50sma and looking bullish. That could indicate that the ICL was at that double bottom low.

      See the attached chart if that was the case. So shorting may be a quicker trade than I originally thought that it would be.
      Hope that helps.

      https://uploads.disquscdn.com/images/3e178ee9ceffaf193d50d938d4f1d997802cd0d622f4bd4f8b370e05a9979c99.jpg

      • danyo
        danyo says:

        Totally makes sense. I’ll look for a quick(ish) short scalp at the backtest area then. Thanks Alex!

        • chartfreak1
          chartfreak1 says:

          Ur welcome & use a stop in case any geopolitical events surge Oil, now that the LOWS could be in.

          Also, the name DAYNO is newer here, so thanks for posting.

          I see you have your brave JDST face on 🙂

          I’m still holding too. I posted a comment at the top of the comments if your sort by newest post.

          many Miners still down near March lows or even DEC lows. EXK , FSM went red, etc etc It just doesnt feel like one of those STRONG RALLY in MINERS that we’ve seen with GOLD up $15.

          Looks like there may be a few good trades long in miners, but many are just “reacting” to Golds pop, but lack a little conviction. We’ll see how today ends in that area.

          Have a good weekend

        • chartfreak1
          chartfreak1 says:

          Hey DANYO – I was just looking at OIL – It looks like it broke out today, that has the look of an ICL in place. Just wanted to let you know in case you trade after hours, you can make any adjustments if you want to. It broke above the 50sma, and SWN OAS etc broke above and are sitting on at the 50sma. They look rather bullish.

          • danyo
            danyo says:

            Thanks for looking out! I’ll keep an eye on it when trading resumes on Sunday…I’ve also been shorting NatGas since Thursday for a quick scalp – that one has been working out nicely, but plan to exit in a day or two. Not pushing my luck 🙂

  15. chartfreak1
    chartfreak1 says:

    Thinking out loud, please look up the charts mentioned for yourself for further confirmation that today isnt such a great thing in Miners overall. I’m using 5 or 6 month daily chart

    Still seeing weak Miners, and some still at Dec lows , LIKE PZG today, up 5% , but still at the lows.

    EXK & FSM just went RED, still at December lows. SO we are not missing a great move if these play catch up later, but they look weak.

    Then SA, SAND – sitting up there above the 50sma, looking good, but no big follow through today?

    GG , NG, NGD, NEM etc – sitting at March lows, no upside strength.

    So this dosnt look like a rip your face off rally in Miners the way we know they can be.

    Then KGC, breaking above the 50sma, looks like it wants to run to the 200sma with strong volume. That would be a scalp trade that I would take. A stop is right on the 50sma, low risk, some reward.

  16. dialogueuser
    dialogueuser says:

    I’ve just gone with a starter position in GDXS, to test the waters. Just 2X leverage on this short.

      • dialogueuser
        dialogueuser says:

        OK. I might try a small position in DUST as an experiment, but I don’t think I’ll add that just yet. When I do, I’ll add more GDXS at the same time so that there’s a meaningful comparison. Might be Monday. I’ll try to remember to post my experience when I sell.

        • Cason
          Cason says:

          Certainly don’t change your plan for us. But if you have info to share next week, Im sure many will be happy to listen.

    • nancytheartist
      nancytheartist says:

      I’d be interested too…I am trying DUST and JDST to hedge my longer term holdings in miners….they do move fast.

      • Cason
        Cason says:

        There are a few things you can do with options as well. I can share more if you are interested some time.

  17. chartfreak1
    chartfreak1 says:

    Probably not a whole lot going to happen today, maybe until the final trading hour.
    I’m going to go get some things done, maybe come back by the close of trading.

  18. Brian
    Brian says:

    Alex, I tweaked the TSI to be more sensitive. I use it with the CRSI at the end of cycles to pick bottoms on the daily charts. Gives a timely signal when combined. Still haven’t found any real good combination for tops though.

    • Glenfidd
      Glenfidd says:

      The geopolitical days in gold are almost always disappointing. Still riding the Jdstr and actually enjoying this.
      9/10 times I’d be long and pulling my hair out.
      Is it too much to ask for negative 2% on Gdxj? Lol

  20. Cason
    Cason says:

    C.F., FUEL may be an interesting short-term trade in the future? It just did a NAK – went straight up, now pulling back finally. I sold earlier in the week just a bit above $5. Meant to post this earlier but also did NOT want to recommend at what could be a frothy top and have someone get in at the wrong time. Pulled back right to the 20-day so far.
    Don’t let the name confuse you, online advertising space, not energy! 🙂 https://uploads.disquscdn.com/images/28d64b863a504896023bd05d0069fc43fe927b2e0ac5ab28a4705c2aff8704c9.png

    • Cason
      Cason says:

      Nuts! I missed that until you guys all started posting. I’d be so pissed if I bought JNUG early (which I never contemplated).

      • Cason
        Cason says:

        Ok, I ended up selling yesterday. It’s not really trading with gold but base miners aren’t hot, PM miners are sloppy, market is undecided, etc. I had a BIG gain right after that pop and gave most of it back waiting for more. So, I sold while I still have some green!! A win is still a win. Maybe 7-8% I think.

  23. chartfreak1
    chartfreak1 says:

    GOLD UPDATE — I mentioned if we close below $1264 – I think its a fake out POp. REFRESH

    – Late in the 3rd daily cycle

    -MIners not responding.

    – I added to JDST because of low risk as GDXJ is back at the 50sma

    – BE VERY CAREFUL, markets are still choppy . Dont follow me to follow me, but sure….do put on a trade if you feel that this is topping Gold looks heavy & Miners are not up 7-8 % Like they should be with GOLD up $15

    *** Warning : This can still shake us out in both directions

    https://uploads.disquscdn.com/images/6f34e1585c9a0a7145091d992703bb5d394533140c74e76ff32729aed77691e1.jpg

    • YS
      YS says:

      thanks, Alex. I really learn a lot these days. if I’m not here, this morning I definitely would have jumped in again. 🙂 still wait for the right moment.

      • chartfreak1
        chartfreak1 says:

        Ur welcome YS

        I know it look bullish.
        I’ve had a few tell me they were buying JNUG today because Syria as a possible hot bed & Russia involved, no way gold will drop.

        At this point, I’m just seeing weak MIners ( they were up 2-3% , most of them) with GOLD up $20 in overnight. GDXJ tags the 50sma and cant get through with Gold still up $15.

        The USD did a shake out move & took off higher too, I forgot to mention that.

        Some miners started to go RED, and other things that I posted here today. Fridays are always tough to take a trade – Sunday could see Gold doing anything (Again), but there will be time to either play for more downside, or grab the next DCL / ICL if that is what one waits for. That will be great when it comes along. No more of this sideways chop action. ugh 🙂

        Late in cycle timing, but those not using cycles will see a bullish set up.
        I just think that it is too late. We’ll see / Always have stops in place 🙂

        • YS
          YS says:

          somehow I just couldn’t pull the trigger on DUST this morning when I saw it’s $26.60. God, I just love gold too much. 🙂

      • Cason
        Cason says:

        Right there with you. In the past would have bought this as a potential breakout. But have plenty of restraint right now!

    • YS
      YS says:

      silver is always the notorious one. I sold uslv a month ago when it crashed, and still hesitate to get in.

    • Cason
      Cason says:

      Yeah, I didn’t realize how bad it was until I went back to silver chart today. The afternoon drop was 2x the overnight pop vs gold where they were essentially equal. I’m fully hedged with regards to silver exposure. So, I’m ready to stop messing around – let’s just usher in the next low so I can cash out my protection and look to go long into the cycle!

  26. Hawaiifive0
    Hawaiifive0 says:

    Just curious Alex and probably best to explain this in a report and not here. But what will help you determine whether the next low is another DCL or the ICL?

    • chartfreak1
      chartfreak1 says:

      Just the other side of the coin:
      Looking at GLD , if it closes a little lower, it is a massive bearish engulfing, that broke below the 200sma

      GDXJ has one already, I just dont know if it’ll hold into the close, but it is a bearish engulfing on a day when Gold POPPED $20 .

  28. Shermo
    Shermo says:

    Things I have learned since joining CF. Technical buy/sell signals when used with cycle theory are powerful and when used alone can give false signals. A sell signal on a 3rd daily cycle high is treated differently than a 1st daily cycle high. I’ll short the 3rd but use the 1st to hold through or buy more. Thanks Alex…this one understanding lesson in the markets can mean success or failure….the lesson that will keep on giving. Have a good weekend all.

  29. Ann
    Ann says:

    I’ve been holding URRE for a while and not really looking at the daily chart much, but it looks better than I would have thought.

  30. Steve Tytler
    Steve Tytler says:

    I am not chart expert like Alex, but I noticed something interesting on my charts today. Last week I drew a support line under JNUG when it was still in an uptrend. I have not looked at the chart for a few days and I just noticed that my support line from last week seems to have become resistance. I don’t know if this means anything but I thought I’d pass this along. I’m still 100% in cash, the choppy market in stocks and miners kills my trend-following system. I tried to jump on TQQQ a couple times when it looked like it was getting ready to bail out, but as I posted previously I was on a tight leash ready to bail if my charts turned bearish, which they did. Good trading to all and have a great weekend!

    https://uploads.disquscdn.com/images/47acc077f702c1ccce701eed034be2b5d95a768d3a6364bf3ccfa90535d2bd16.png

      • Steve Tytler
        Steve Tytler says:

        Weird. I don’t see my first post when I look at this web page and in my profile it says it was flagged as “spam.” I clicked the link that says “this is not spam” and I don’t know what happens after that. If you can delete one of the post so there is no duplicate that would be good.

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