Weekend Report – Changes

It comes as no surprise that markets can evolve and change over time, so when a change appears, it is best to listen.  It may or may not amount to anything in the long run, but we take note of any changes anyway.  That said,  I have seen ‘changes’ in the markets this week in a couple of areas, so we will listen, discuss, and prepare. As I mentioned, they may not amount to anything permanent, but we still need to listen and prepare, so let’s discuss some changes in the weekend report.

 

SPX – No change here, but I wanted to point out that in the past, the SPX did visit the 50sma a couple of times before moving higher. These were areas of ICLs that did not sell off as deeply as the ones in the past  (see JULY & NOV 2016). So, will the markets just continue higher, or are we coming due for one soon?…

 

 

SPX – If we are going to make that drop to the 50sma, the SPX may have just done a break of the current channel and a back test.  A push higher above the red line is bullish,  a struggle here could drop to the 50sma, similar to the drop, bounce, drop seen last August  (blue box). Let’s look at the weekly chart.

SPX WEEKLY – In the past, the weekly 10 ma was tagged or even slightly broken.  This drop was close enough, but past drops did break through, so we’ll keep an eye open for such movement sooner than later.

THE IWM Weekly (Or RUT) – The markets are all acting differently. We also saw a reversal on the Russell 2000 and it closed above the 10sma after a 5 week sell off. It may be ready for its next leg higher. Note that the SPX & DJIA have just recently started to pull back. The RUT & TRANNIES have been pulling back for weeks.  MArket sectors are not all in sync.

NASDAQ –  And the NASDAQ broke to new highs Thursday. The NASDAQ had been consolidating while the DJIA & SPX ran straight up recently, so it too seems to be on its own Timing. It looks like day 2, but the MACD is not agreeing with this move higher.

The NASDAQ  has been in a strong bull run higher on a weekly basis, with new highs last week.

 

USD – I have been saying that I expect another run higher out of a dcl, a 3rd daily cycle that then rolls over and Gold can then rally.  So far the USD appears to be acting as expected.  However, when we discuss GOLD – We will discuss interesting change this past week.

USD WEEKLY – Last week was a pretty big down week for the USD.  It is on support, let’s see what next week does. If this were to break down and bounce lightly only back testing this support within the next dcl,  that would be a change here too, but so far the USD is acting as expected.

 

WTIC WEEKLY NOV 17 –  Oil had no unexpected change with a pull back here, but The XLE definitely did change. I had been thinking that OIL would back test the recent break out area and it actually did and recovered, as seen here…

 

WTIC DAILY – 2.5% reversal, that is impressive, and so Fridays move looked real, but the dip didn’t break the Blue trend line, so we dont have a dcl here.  Oils daily cycle can last well beyond 30 days, so we’ll watch this play out  ( Note: The XLE doesn’t seem to believe this move higher in Oil).

 

WTIC –  I did mention a possible a-b-c type drop, but if price moves much higher, this will not be an a-b-c drop. The COT picture for OIL actually looks like it calls for a deeper pullback. I am not buying Oil stocks here.

 

WTIC –  Big Picture I think that Oil will move around and eventually dip into a dcl & Icl.  Let’s look at OIL / Energy stocks.

 

XLE – This is where 1 Big change took place just over this past week. And with Oils big reversal, the XLE was only up 33 cents. Count the candles back 5 days, and you will see that as of Monday, this still looked fine. SOMETHING CHANGED.

 

XLE WEEKLY – Last week the XLE just fell apart, and that was a BIG change from what I was expecting. This price bar broke & closed below the 10 & 50sma, despite oils big reversal higher Friday, so I am not buying the dip personally. It remains overbought despite that drop.

 

PRECIOUS METALS

 

So this is another area that is Changing, and we should take note, though it may be a Bull Trap.  The major Change  pretty much only took place as of Friday.  Is it lasting?  I can’t know for sure due to common market ‘break outs’ and ‘fake outs’, but it is noteworthy, so let’s take note. The COT still seems to be calling for lower Gold price, but the action Friday was very noteworthy.

 

GOLD 1 week ago – Over a week ago I was pointing out that the ‘set up’ in Gold was actually Bullish Looking.  Gold did NOT break the OCT lows, while Miners did by a lot. The MACD was also rising.  I pointed out the EURO as starting to look more Bullish too, and will review that as well.

 

A bit confusing

 

GOLD WEEKLY – THIS trend line break is not really expected at this point, and Gold closed above the 10 week MA too.  It looks like a week 6 burst higher, since the Oct Lows were never broken for Gold.  Recent lows for Gold were OCT, and the ICL was July – so it seems that that time period is too short for an ICL in Gold.  I think that this could be a low for now, but it still doesn’t look like an ICL, so THAT gets confusing. IS THIS A BULL TRAP, OR WILL THIS HAVE FOLLOW THROUGH?

 

GOLD WEEKLY – So using technical analysis, I mentioned last summer that I thought we’d get a break out from a triangle and the back test could be the ICL,  but I expected that back test in Nov or Dec. So far, we DID get a break out & we did get a back test, but that back test was that Oct low.  It does not look like an ICL, so I started to mention possibly 2 back tests after a bounce.   Will the Next ICL be a 2nd back test?   That could be…

 

GOLD – So I’m still watching that 1308.40 mark.  I would think that a break above that would be very bullish.  I also want to point out that if you remember our last dip into an ICL in December 2016,  MINERS PEAKED IN FEB, and made lower highs from then on into the July 2017 ICL.  It was different for Gold.  Gold made higher highs in April & then again in June, as seen here.   So GOLD & MINERS traded out of sync.  Now lets look at GDX.

GDX – Compare this chart with the Gold chart ABOVE.  Gold was making higher highs in 2017, and Miners peaked in Feb & made lower highs as seen here.

 

GDX WEEKLY – SO we see that Miners had a break out & back test too. Maybe that is even a double back test, like I was expecting.

 

ON THURSDAY,  I MENTIONED OB THIS CHART THAT THIS SET UP LOOKED BULLISH – We may have put in a dcl at the red arrow, so this would be day 9 and it looked bullish.  The timing was still late in the intermediate cycle so I wasn’t “buying’ here, but that trend line break was bullish too.

GDX DAILY –  Now we see that GDX broke the downtrend decisively Friday too.    I posted this in the comments at 1:30 p.m. on Friday afternoon to show that.  GDX made a new low 2 weeks ago, a DCL?   So  with this POP on day 10, WOULD IT HOLD INTO THE CLOSE?

GDX – It did sell off a bit going into the close, but remained over the 10sma & Volume picked up. Do Miners want to break out higher like Gold, or is this a Bull trap, drawing in buyers before really selling off?   I will add this thought,  as a trader – you COULD buy a starter position as long as you dont mind getting stopped out,  knowing that this could roll over as a bull trap.  Let’s look closer…

 

GDX WEEKLY – A descending wedge, oversold,  and breaking out? This also looks bullish. Next week will add to this story, right?  We should see follow through as a Break out or a drop back & a break down.

So let’s just say this,  “What if Miners just break out & run from here?”  It has not been what the set up calls for using cycles, but the good news is that if it were to take off higher, Price is still at the lows.  Miners have traded here for 4 weeks,  we haven’t missed anything, according to the chart below.  The next run should be strong, and we would catch most of it, but is this an ICL? That question remains unanswered for now.

 

GDX –  GDX has actually been trading in this area for a month now.  Buying with a TIGHT STOP is one method, knowing that it could drop.   If you are wrong going ‘long’, you will be stopped out.  If it continues higher, we can watch the progress and figure out what is going on here.   Let’s continue a bit further…

 

GDXJ –  GDXJ has now pushed higher too, and I posted this at 1:30 in the comments section.  GDXJ put in a new low 4 days ago  (This week), so this could be day 3. Interesting.

GDXJ – And GDXJ did close above that down trend line & the 10sma.  That is usually a buy signal for me. This means that GOLD, GDX, and GDXJ  are not really in sync again,  timing-wise.  BUYING here could work out for a short trade, but a TIGHT STOP at recent lows would be needed.  A sell off could still go wrong quickly, with plenty of time to drop.  Let’s discuss the short term  a bit further.

 

GG – SO GG looks like it might want to break higher, and if so, it would do that this week.  GG is a big part of GDX.

ABX – ABX was slammed down a few weeks ago, it has based out, and it too looks as though it may want to run higher too,  next week.   It could be just a bounce, but ABX is also a big part of GDX, so if it runs higher next week, along with GG & NEM, I would expect GDX to move even higher.

 

REVIEW EXPECTATIONS LAST WEEKEND

 

GDX #1 – Last weekends report showed Big Picture analysis like this.  I expected a break lower, but key points were pointed out with circles.

GDX #2 – I honestly expected this run of the lows, and it very well could still happen.  Friday, however,  we saw a down trend line break out, so  I must remain open minded, and listen to changes as they pop up,  and see what happens when it comes to follow through.

I went back through the BULL MARKET RUN in GOLD & MINERS and I did find a couple of instances when the ICLs seemed to be 8 months apart, even 10 months apart,  and they also were higher lows, not simply ‘Stop runs”.   These also looked like MILDER ICLs , don’t they?  You do not see a galring sharp drop on some of these points that would be ICLs.   The dips into the ICLs did not seem to be extremely steep, but do seem visible on the charts.   This chart raises a couple of questions to me.  What is the ICL from July forward came 10 months later? What if the ICL makes a higher low?  SO we examine the historical precedence and keep these things in mind. This was a BULL MARKET RUN in Gold.

 I will close here, simply saying that we really did see some big changes all in one week …Last week. The XLE looked great as of last Friday Nov 10 , or even Monday, but suddenly it just sold off and the weekly chart now looks a bit ugly.  Oil looks fine, but the COT does look bearish for Oil and I would expect a bit more selling eventually into an ICL here too, even though we got a strong reversal on Friday.

  I’m watching the USD closely since it is on support and due for a DCL.  I would think that the USD higher would drop Gold & Miners.

  GOLD , SILVER, & MINERS started looking more bullish internally a week ago, and I have pointed that out, but expectations were for a DCL/ ICL drop in the near future.  Suddenly Friday we had a down trend line broken to the upside in GDX & GDXJ, price was seen as closing above the 10sma, and possible early cycle counts in the Miners after breaking to new lows and recovering.  That downtrend line looks bullish, but it doesn’t look like we had an ICL.  How do we handle that?

1. Patience to allow a little more time

2. Watch for the parameters to be broken of not

3.  Take a small position  KNOWING that you could see this play out as a ‘Bull trap’  a ‘False break higher’ and you could be stopped out?  I will obviously be covering this area in the next report, after we see what Monday trading brings our way.

  I’ll sum it up by saying that we definitely did see some ‘changes’ taking place last week.   Whether they are short term blips, or longer term trend changes remains to be seen, and next week should give us a better idea of what these changes mean.  I will discuss even more changes below after signing off, so Stay Tuned and Stay Frosty!  Thanks for being here at Chartfreak, and enjoy the rest of your Sunday 🙂

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~ALEX

 

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XEU LAST WEEK –  Last week I mentioned that the action in the Euro needed to be monitored. It looked Bullish, Like a day 5 break of the 50sma, which would hinder the USD  ( And might be bullish for Gold). That alone was an interesting  ‘change’, has this changed?

 

FXE – Day 8 and The EURO  is holding up and not selling back off. It seems to have negated or nullified a H&S pattern, and again has closed above the 50sma, so…

YEN – Please read the chart, this looks like day 16 and a new peak. Isn’t that quite bullish?  Last week I noticed that The YEN broke out of a descending wedge pattern, but I didn’t think much of it.  I thought that it would ‘back test” and Gold would put in an ICL in a few weeks when it did.   Last week, the Yen  continued higher out of its’ lows, now on Friday it closed above the 50sma, and I usually see the YEN leading Gold. These changes are adding up.

So when this happens, I need to keep track of the changes, and try to anticipate how they do or do not affect our big picture.  Short term, various areas that I expected to be ready to sell off seem to be holding up or even breaking out higher.  FALSE BREAK OUT?  REAL BREAK OUT? Only time can tell at this point, but it is noteworthy that it isn’t just 1 area changing. I noticed changes in the YEN & the EURO last week,  and now Gold & the Miners had a few changes in character.

Please read the opening paragraph again.  That really sums it up .  STAY TUNED!