May 18th – Change

Wednesday brought along some changes, so let’s take a look at what we have…

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LONGER TERM VS SHORT TERM

SPX #1 – We are due for a DCL & and ICL in the bigger picture, so I had posted these charts on May 4th showing possible ICL targets …

And MAY 13th for the weekend report,  a possible dcl target

However, shorter term the markets have been very strong & BUY THE DIP mode kept kicking in, so I actually looked for 1 more push higher.

SPX MAY 17- However this looks like time is up.  That drop into the next dcl is likely taking place

This adds to the story…

I have been warning about the possibility that Financials are a warning. With weak financials, the markets can continue higher, with the buy the dips taking place.

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XLF – This was a swift and sharp drop , with the financials unable to recover the 50sma all month.

BIG BANKS REFLECT THE UGLINESS

WTIC – I have been saying that this bounce in OIL is not bullish to me yet, so I am not in Energy stocks. Well OIL reacted bullishly to the inventory report,  Energy stocks did not.  I view that as a warning and I have mentioned that I do not think that Oils ICL is in place yet.  So while OIL is still under resistance…

XLE – Energy stocks were not enjoying the rise in Oil. The XLE actually closed a little below this area and again, was rejected at the 50sma earlier in the week.  See also  VLO, OAS, TEX, WPX, RES ( OIH, XLE) & many others.  They ended the day with reversals in the red.

Then look at ERY & ERX – 3x etfs – bear energy etf reversed higher , Bull energy etf closed lower.

NATGAS – The pullback on NATGAS has landed on the 50sma, but Thursdays bring the inventory report, so we’ll see how NATGAS reacts to that report.  The 200sma is right below, but with the COT being bearish, I would keep a stop in place.  I was stopped out on Tuesday.

GOLD – Gold had a very bullish looking break out above resistance.  I admit that it is convincing, but it broke out in April and didn’t follow through very much after that.  So lets look at Silver & GDX, since GOLD was strong in the last 3 daily cycles and Silver & the Miners were weaker.

SILVER – Silver had a strong surge on Wednesday too, but you can see that it lost 1/2 of that move by the close. That isn’t necessarily bearish, but Gold held the highs, so Silver was weaker.

GDX – Miners also sold off into the close. I got emails asking me if I went short.  No I did not.  Gold is on day 6 and even though Miners are on day 9 out of their lows, I am not in a hurry to short this strong bounce. My targets have not been met yet anyway. Notice that the RSI looks fairly strong. This move has been strong.

GDXJ – GDXJ did break above the 50sma a couple of times in the last daily cycle, and I am watching for that possibility here.

GDX:GLD shows that the Miners were not as strong as Gold, as it starts to curl over.  Will it continue? That is another Change that I will be looking for before I go short.

I wanted to point out again that GDXJ & GDX did have a pretty strong & convincing surge in the last daily cycle, but it went sideways immediately after that, so strong out of the gate did not mean an ICL was in place.

I want to mention again that as I look through many Miners, some are at December lows , yet some are really looking good. Usually during an ICL sell off, no Miners escape the draw-down, HOWEVER, if you see certain Miners acting well right now, those may be the better performers coming out of the ICL.  With that in mind, I am looking at a few and taking note.

CDE – So when I look at a stock like CDE, it is at December lows right now, but it actually broke down in March well below the Dec lows and recovered.  I am thinking that for CDE,  THE LOWS may be in place as of March and during an ICL sell down,  CDE may just double bottom.  We’ll see.

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SO at this point, we see some changes in the general market, Oil is in a bounce yet the Energy Stocks are not believing it, and NATGAS is on watch with todays inventory report.   Gold put in an impressive surge yesterday, but it did look as though Silver & the Miners sold off into the close and maybe they are finally slowing down.  For me, it all still needs watching, and I’m trying to be patient for the better trades ahead.

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~ALEX

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WHAT IF …

I always get emails when Miners bounce out of a DCL asking, “What if the ICL is in place?”  I will entertain that question with a simple answer and 3 charts…

GDX #1 WEEKLY CHART – we would only be on week 2.  Many here did throw on a long trade for a week or 2 at the dcl, so you missed nothing.  Others would have only missed up to week 2.  The move out of week 2 is just starting Please read the chart & look at week 2 out of other ICLs. Plenty to go.

GDX #2 – SO I am still expecting this and the real move is still ahead.

GDX #3 – But for the sake of that question above, if this was week 2 out of the meaningful lows, we would still have plenty of upside.

IPI –  Here is an old friend that could be putting in a flag. With the market sell off yesterday , IPI held up rather well, and insider buying in March was pretty big.  One of our readers, Chuck, mentioned the insider buying to me. Thanks Chuck 🙂