Oil & GOLD

One trading day after the weekend report and expectations have not changed, except that almost everything improved, so let’s take a look…

 

SPX –  No change from our expectations

 

$WTIC #1 – There must have been people shorting oil, because it popped and broke higher by 3%

$WTIC #2 –  As I have mentioned, it is hard to know if this was a 1/2 cycle on day 25 or a dcl. IT does not really matter, since OILS CYCLEs can run from 30 – 50 days.  Oil is at $57 and would probably run to the $60 area and start to slow down, maybe go sodeways, and eventually seek out a dcl. Either way , this could end up Right translated. Either way this could begin to dip into a dcl after tagging $6o – we will just keep an eye on it.

XLE – This was a big break out too. You may recall in a report early last week, a few people were asking me where to short this, and I said not to. These consolidations can actually be 1/2 way marks and this is still not overbought.  I have encouraged buying for a couple of weeks now, and I have mentioned how I trade this in many of the past reports. Break outs, Earnings, pullbacks, etc were important parts of this.   I wrote a special report on “Pull backs” , because that was when people wanted to short, and I mentioned that we buy the pull backs.  I will explain a bit more at the end of this report again.

 

USD is possibly starting to pull back into a dcl now, so …

 

THE EURO – The USD is dipping down, so the EURO should bounce with GOLD, but then I expect the USD to move higher maybe 1 more time in a 3rd daily cycle.  That would sink GOLD into an ICL, and the EURO would probably drop to support as shown here.  It is a solid set up for the bigger picture.

 

I WANT TO SAY HERE THAT, JUST LIKE WE SAW LAST SPRING, GOLD SEEMS TO BE HOLDING UP BETTER THAN MINERS.  WHEN THAT HAPPENED,  I USED CYCLES A BIT & TECHNICAL ANALYSIS TO GUIDE US THROUGH.  REMINDER: GOLD LOOKS RATHER STRONG HERE AND I WILL DICUSS THAT, BUT A PUSH HIGHER IN THE USD WOULD PROBABLY CAP GOLDS PROGRESS.

 

GOLD – Gold held up stronger that Miners. The 1262.80 lows were not broken. The day 15 lows were not broken. Did we start a new daily cycle breaking above the 10sma and trend line?  I wouldn’t think so, but this needs watching. Remember that I have repeatedly mentioned that “Triangles form and throw off cycle counts” in my experience.    Please read the chart, this is an odd set up though, let me show you why…

GOLD –  GOLD never broke the Oct lows, but the Miners did by a lot.  That makes Gold look pretty bullish with a higher dcl, but it still is Left Translated, so I would not expect a strong rally. I do NOT expect Gold to break the 1308.40 highs. If it did, we would need to really take a look at Miners.  Let’s take a look at miners now, because they have lined up bullishly in more than one way …

 

HUGE IMPLICATIONS

 

GDX #1 – Compared to GOLD, you can see the weakness that lead to the recent low.

1. Miners peaked in early September, and then dropped to the 200sma.

2.  After a day 9 peak, they then broke the early Oct DCL as expected, and on Friday they broke the recent lows too. Now we see a possible swing low, close above 10sma, and trend line about to break?

3. Since the drop was not very deep,  we are already at the intermediate trend line.  That is usually Bullish when it breaks.   GDX looks, at this point, like it wants to break that Downtrend line, because it is out of room.  This gets tricky, because Price is already very close to that day 9 peak.  If that gets taken out, this would indicate to me that an ICL was in place, even though it is pretty early time wise.  Let’s look closer …

GDX #2 – Using Technical Analysis, I would normally buy a  break of the 10sma, but only if we had a break of the down trend line.  This is the trend line that also indicates an intermediate cycles boundary, and a break above usually indicates that the down trend is over.  Volume increased today, GDX is quite oversold, and it looks like that 200sma would not hold Miners down, but we’ll see.  Currently we are making good %-Gains in Energy, so we have not missing anything here yet, but I want to watch this closely, because the expectations are that Miners should NOT break above that day 9 peak.  Realistically, we should have another drop after a bounce here, but that 50sma needs to hold price down.

 

So how could this play out with an ICL still ahead of us?

 

 

GDX – GDX should roll over, or it could bounce to the 50sma area, start to crawl along it drawing in buyers, and then roll over like this. It would be a break out of the trend line, and a back test. If that was an ICL, then those lows should not be taken out on the back test.  It would be a sideways move at first, and then take off higher.  This break out seems early and is a bit odd though ( 4 months from July).

 

GDX back in September,  I pointed this out as possibly 1 long daily cycle from Oct to Dec as a double back test, or 2 short sideways daily cycles. It basically rolls out sideways like we saw in March to May to July.   This really does seem to have bullish implications on a daily & weekly basis now, it needs to break down to play out as originally expected.

 

GDX WEEKLY –  Here I see a Triangle break out & back test ( blue arrows). As oversold as the July Icl. A break out higher really has me feeling that this is a series of higher lows, and we’d see a higher early ICL. I expected this to break down, now I am watching this area a bit more closely, to see how it plays out.

I want to mention again before I sign off and move on to some trade ideas,  that SOME MINERS actually have been resisting the sell off that we had in Miners. We have strength in some Miners, but   others were getting slaughtered.  I mentioned this before pointing out that SA  is still up near 2017 highs vs EGO getting crushed.  Notice that this is EGO today, so I have remained cautious…

REVIEW :  SO GDX put in its Highs in early September, then broke down for 3 weeks to lows in Oct, bounced for 9 days and sold off again to new lows.   While this happened,  SOME miners like  SA & NSRPF remain near the 2017 highs and this was FNV today. Not exactly bearish.

 Since we saw EGI, NSRPF, and a couple of others holding up well too,  it is becoming a mixed bag here. I am not buying at this time, I want to continue in Energy trades until I see exactly how this wants to play out.  My expectations are still for one more dip down in Miners after a bounce here.   I will, of course watch this day by day and report what I see.  If you wanted to buy FNV or you want to buy NSRPF to get a starter position,  that is up to you,.  They certainly have resisted the bearish selling that Miners usually get in these conditions. Bullish Miners like FNV  also seem to recover quickly when the time is right.

 

Enjoy your Tuesday trading, I know that Monday continued the treat of owning Energy stocks. I will discuss things a bit more after signing off here,  thanks for being here at Chartfreak!

 

 

~ALEX

 

 

MINI-LESSON –  I had a lesson about ‘pullbacks’ and not selling or shorting this sector, but maybe buying the pull backs instead. Lets address that again. 

OAS on Nov 2 – I called this a buy down at the 50sma ( 2) , and as it approached the 200sma, I showed how it could continue to play out bullishly after just a pause at the 200sma. The idea was that , like BTE, some of these may not finish the ‘3’ at the 200sma, they may just pause, bull flag, and continue higher.

OAS- So on NOV 3, I drew it as a bull flag hugging the 200sma and it could POP over and have more upside.  This is how bullish things looked to me.

AND OAS BROKE OUT AFTER A 2 DAY BULL FLAG and continues higher.  That said…

 

THAT SAID-  I sold 1/2 of my WLL at the200 sma today, because that was my PLAN when I entered the trade.  Now that I see what OAS  and BTE did, I think that this may also just stall & keep going.  I’m glad that I held on to the other 1/2.  If it bull flags I may add, if it breaks out tomorrow I will just ride the other 1/2.   Now that other 1/2 in cash at this point needs to be deployed 🙂 ,  so …

 

WG – What a powerful run WG had, and it has not finished consolidating yet. It is finally getting oversold, and nearing the 50sma.  Earnings come out Wed after the bell, THIS is on my watch list.

WG WEEKLY –  This is a BIG BASE consolidation.  These can fly!  Do I buy before earnings at the 50 and take a chance?  Maybe, I haven’t decided.  I did that with WTI and…

WTI – Initially it dropped on earnings, but has been higher for the next 2 days.  I think that this is going to continue higher too now, so I added to my position Friday.

1. I started small before earnings  2. Let it prove itself  3. Added since it does seem to want higher price 4. See the weekly chart that follows

WTI –  This is a very long base too, and it looks like Price is riding Above the base. Even $3 to $5 is a good trade.  $3 to $5 is over 65%.

I had LGCY in the weekend report as a buy with 3 charts, and below are 2 of the weekly charts.

LGCY – SO I posted this in the live comments area and added at $1.72.  It was showing me that it would push right through the 200sma.

LGCY – And here is how it closed.  If this continues to follow through, scroll back up to the weekly chart to see how Bullish this could get. This looks like an inverse H&S now too.

NAK – NAK was in the weekend report too.  It held the line, reversed back above the 50sma.

NAK – SO I posted this in the comments section pointing out that a break of the down trend line is bullish. This is oversold, but still making higher lows, higher highs.

NAK – NAK closed bullishly, I think that it is ready to run again.

CHK – Earnings were released last week, and this looks ready to go as it breaks from a downtrend. My WLL $$ might go here in the morning,  I haven’t decided yet.

 

MBOT–  MBOT looks to be dropping inside of a descending wedge.  A break higher could be all it needs.  What I look at on this is the difference between volume on the way higher and selling volume. I own it, but I wouldnt buy it unless it breaks out first.

CTRV  BY REQUEST – No change on this one, but because the trend line slants down, price continues to drop down too. It is oversold and a break above the 10sma would be bullish and could lead to another strong pop. 

I actually sold mine to buy energy stocks a week ago. As an active trader,  that is what I do when the action is across the street, I take a walk across the street.  If I still owned this,  I would have a plan.  That means that I am waiting for it to pop, but I would have to have & honor a stop, or I would sell it ( like I did) simply to put the money in an Energy set up that looks ready now.