Weekend End – Sept 24

Last week was the week of the September F.O.M.C. Meeting. Let’s review how the week played out and ended.

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SPX – We find the SPX on day 23 and that is within the timing that it could start to seek out a daily cycle low.  I am pointing out in this chart that recently when the daily cycle has been in the 20’s plus count, it has merely gone sideways, so upside may be limited here.

I did notice a few other interesting things with the General Markets however.

NASDAQ –  The Nasdaq has suddenly crashed, seemingly out of nowhere, after reaching highs in June, July, and then it sold off in August.  On the current run, The SPX made new highs, The NASDAQ has gone sideways, and the DOW JONES INDUSTRIAL AVERAGE has actually rallied. I have to wonder if the NASDAQ upside is limited here too. I would use a tight trailing stop now, if I was long.

RUSSELL 2000 – Now look at the Russell 2000 and it crashed down in August, only to recover in a very bullish V-Bottom rally. The XLB & XLF have also rallied to new highs, out of V-Bottom sell offs. The General Markets have been quite mixed in this way. It could be a form of sector rotation that we are seeing.

USD – As the USD continues to fall over the last several weeks (and is VERY OVERDUE for an ICL), I see inner strength. It seems that the USD does want to put in a bottom here, but that doesn’t match up with what I am seeing for the Precious Metals sector, since they usually run in an inverse manner.  Will they both move higher for a while together?   Time will tell on this one, but let’s look at the Weekly USD chart too.

USD WEEKLY – I mentioned that a close over $93 would begin to help the USD bullish case. SO far the USD broke down & remains down. MIGHT IT just go sideways and bounce around for weeks before continuing to drop? It might ( blue rectangles),  we have seen this sideways consolidation out of lows in the past. Prior yearly lows have been broken and can signal future weakness and a drop later on.

WTIC WEEKLY – Oil remains bullish this week as discussed in prior reports.

NATGAS WEEKLY – Natgas got rejected at resistance, but it has not turned longer term bearish, though it may be seeking out a daily cycle low. I am rather neutral until we see this sell off put in a dcl.

XLE –  SO we have been monitoring the move by XLE, since it looked bullish again. We saw a false break out in late July, but this one looks quite real, with a 50sma and a quick back test and rally on.  This looks like short cover and buyers stepping in. So we have discussed energy stocks ( OAS, RES, ERF, AREX, AXAS, OAS, SN, SM, WPX, etc) in several  recent reports.  Read this chart …

AXAS –  For example of some Energy stocks still basing, I had some Energy stocks in Fridays report that were still ‘setting up’, others are breaking out.  This was AXAS in Fridays report.

AXAS by the close. With a nice long base, this has plenty of upside over time. SO I will continue to look at Oil / Energy stocks that are ‘setting up’ bullishly. The sector looks a lot safer at this point, though individual risks still come about with some company balance sheets , etc.

GOLD, SILVER, & THE MINERS

Golds COT did not drop significantly, so I didn’t include it.

GOLD From Friday, we are looking for a DCL and are in a support or back test area at this time.  Gold had finally reached an area commonly mentioned as oversold.

GOLD- Fridays chart has Gold at the 50sma.  You and I well know that this could be a low or a set up for a ‘shake out’ after drawing in some buyers. SO read this chart…

GOLD – A quick shake out of the 50sma could be the 50% retrace.  This reminder will just help us to be aware of that, if we see Gold down Sunday night.

GOLD WEEKLY- Normal drop so far. We saw 1 & 2 week drops in JAN, FEB-MARCH, APRIL Into MAY, etc

SILVER – I have Silver on day 32 & at the 50sma. It would be R.T. if it puts in a low here.

GDX WEEKLY – Just a Back test, so far.

DOJI CANDLE  –  I pointed out this doji candle known as a gravestone doji in the middle of a low.

GDXJ –  And mentioned that GDXJ could be seeing a similar one here on Thursday. I mentioned that maybe the Miners would do a shake out & recover that 50sma.

GDXJ – Friday GDXJ went higher and recovered that 50sma.  Was that just a shake out? GDXJ has put in a swing low ( Unconfirmed) ,  GDX just missed taking out the Thursday high.   No confirmed swing low in place yet, but it looks to be setting up for one soon.

GDXJ – Possible back test of the recent consolidation & 50sma.

With the USD trying to put in a significant low, That does NOT seem Bullish for Precious Metals.  I just wanted to look at individual miners and see if they look set up to fall further or possibly turn higher. Here are just a few that I looked at.  Others are more bullish, others are rather neutral, but notice that price is currently above the Fed Wed Close on most Miners.

DRD –  DRD still has not been able to fill that gap during this sell off  ( that seems bullish to me). It is now reaching oversold yet the drop has been minimal.

GG – As GG bounces along recent lows, it looks oversold & ready to move higher.  If GG rallies,  that should help GDX to move higher.

NEM – Another larger component of the GDX. We have a back test ( but a tag of the 50sma may be in the future too).

GSS – A mini shake out may have taken place, but notice that GSS has been making higher lows and higher highs since July. Many stocks have.

IAG –  IAG could drop further, but this has doubled since putting in it’s May lows and more than that since the Dec 2016 lows were in place.  I cant see this back test as anything but normal at this point.

So after the Fed Mtg Wednesday, not much has really changed in our expectations.   I still view things as playing out as expected in the above mentioned sectors.  Deep down inside I may have expected the DCL for Miners to possibly come in around the F.O.M.C. Meeting, but that remains to be seen.  Was that a ‘shake out’ in GDXJ, with a drop under the 50sma and a recovery?  Possibly. Think about this however, we didn’t see much more of a drop since the FOMC.  Actually, as mentioned above, most Miners are currently higher as of Fridays close than at the close on Fed Wednesday ( see all 5 of the above charts of DRD, GSS, IAG, GG, NEM).  We just dont know if those lows will hold yet, without a confirmed swing low in place.  If those are not the dcl lows in place, and they very well could be, then I  believe that we are almost there.

Enjoy the rest of your weekend, and we’ll eagerly look forward to what next week has to bring in the Precious Metals market.

~ALEX

While I was away I got stopped out of LIXXF under the 50sma for a loss, and sold HOS at $4.23 as it moved above the 50sma and tagged an upper trend line  ( Mentioned in the comments). I do still own loner term buys of IPI, MBOT, ENPH, NAK, DRD, etc.

I DO NOT RECOMMEND buying 3x Etfs , especially before a confirmed DCL is in place, but I did start a SMALL position in JNUG and added a bit more later to lower my cost average to under $19.  Why? I explained how I view the GDXJ.  I see a possible gravestone type doji candle,  I see a possible shake out at the 50sma & recovery.  I see most Miners NOT below the FOMC mtg close, but higher.  These are what I see for my personal conviction that I could try a position in a 3x and a possible DCL will follow soon. THIS IS NOT A LOW RISK TRADE, please do NOT follow me just because I mentioned that I did it.   People always ask me if I took a 3x trade yet, so I am saying that I did and why,  but these are FAST &  I can not guide you through this trade if it drops.  Any email that says,  ” I bought JNUG  (or NUGT), and I’m down 10-15% , what should I do?”   I will have to just say, “Get out”, no matter what the chart looks like.  It could lose 10+% or more / day and is high risk.