Wednesday July 11th- Finding Support
Let’s review some of yesterdays market action…
QQQ – During yesterdays trading, I was noticing the divergence as the QQQ reached prior highs. This concerns me a bit. It may simply lead to a handle on the cup or just a small sideways drop , allowing the MACD & RSI to rise under normal conditions. We are getting late in the intermediate cycle though, and but this late in an intermediate cycle, it is often a sign of the strength waning. I have been mentioning this since the DCL as a cautionary note ( Tighten stops as you ride it higher).
CONCLUSION: It is still early in the daily cycle, but late in the intermediate cycle, so the General Markets may get choppy, the strength is slightly weaker.
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USD FROM YESTERDAYS REPORT– My thinking was that the USD would bounce, but not have a dcl yet on day 16, so it would have to bounce and be held down by the 10sma. It could then drop to a lower low for the real dcl.
USD – The USD was held down by the 10sma so far. We’ll see if this continues.
GOLD COT – Improved and at prior ICL levels
GOLD – It looks like the DCL/ICL is being confirmed, but GOLD sold off over $10 in pre-market. It slowly clawed its way back, so this raises a question: IS THIS A SIGN OF WEAKNESS? If this was day 4, is this dip concerning or abnormal for an ICL? No. This looks like a totally normal ICL.
REMINDER: GOLD DEC 2015 ICL – I show this chart all the time at ICLs. This is how the bottom or ICL looked before the huge rally in 2015 / 2016, so here is my new saying to help people to remember this. If Gold doesn’t take off like a rocket- there’s still no need to mock it. 🙂 BOTTOMS CAN BE A ‘PROCESS’, as stated in many past reports. In Dec 2015, it took WEEKS to get going higher. Drops in price can shake out new ones.
GOLD – I drew this for the comments section to show that it just looked like another ‘stop run’ yesterday. A break of the recent support low areas to try and stop out recent buyers. It then recovered.
SILVER – Silver was acting in a similar manner, breaking recent lows .
SILVER – And Silver reversed and recovered too.
GDXJ – I had drawn this up on Monday Midday, to show that a dip in Miners to a confluence of support was not going to damage anything.
HUI – And that is what we got with the HUI. By Midday I was pointing out that with GOLD selling down $10, $HUI & $XAU reversed at their support and had already turned Green, and GDX & GDXJ reversed too.
GDXJ 5 MINUTE CHART HEADING INTO THE CLOSE – GDXJ ramped up in the last 1/2 hr of trading. I think that the ‘bears’ that jumped on to short the miners were squashed by the buy the dip crowd. That is 300,000 shares in 5 minutes and 350,000 in 5 minutes.
GDX – Nice bullish looking reversal off of the 50sma , so far.
ABX – ABX, GG, GORO, IAG, KL, etc reversed off of support too. This looks like a normal back test of the recent break out and closed up 14 cents.
CDE #1– Do you recall the 3 CDE charts in my weekend report where I mentioned that CDE is set up to leave people behind. I used these 3 charts
CDE #2– Step back
CDE #3– Step back further
CDE TUESDAY– Well, Tuesday it continued higher, even with Silver slamming down.
KL – Reversal off of the 10sma
So I am not worried about the Miners, there has been no damage at this point. They are acting bullishly. It was mentioned that ” This doesn’t look anything like the 2016 rally, I still see some miners still at the lows.”
1. We don’t even have the ICL confirmed in Gold, they should be at the lows with Gold selling off to lows, but actually many miners are not. Let the rally get going and we’ll see where things are.
2. Even during the strong rally in 2016, several Miners were at the lows for weeks and months and then took off like rockets.
This is TRX- it was at the lows for Months, January to April, then went from 20 cents to $1.50.
We can’t catch the exact lows or sell at the exact highs of all Miners, but think about this: A $1000.00 investment on TRX at 20 cents would have given you $7,500 in 4 months. A $2000.00 on TRX at 20 cents would have given you $15,000. $3000 on TRX would have given you $22,500 (IN 4 months).
Here are a couple of stocks in the STEEL/ COMMODITY area that seem to be ‘setting up’ for a break out higher.
AQMS – Maria mentioned this in the comments yesterday. You can see that this one runs VERY strong for a few days, and then has gone sideways for a few months. That makes this is a better trade than buy & hold, if you can catch it breaking out.
CLD – This looks like it may try to break out, but it also has the 200sma to contend with.
X (& a few other steel stocks) – This seems to be breaking a down trend after holding support at th 200sma. You want want to check your watchlist for Steel stocks. I looked at Copper & Aluminum stocks , and they don’t look quite as good yet.
AKS – This may break out, but so far it is forming a trading range base.
Sidenote: CVSI – I still own this and it found support at the 10sma, but it could drop further to the 50sma.
Today is Wednesday and we get the Oil inventory report. The XLE & the Energy stocks that I showed yesterday remained a bit choppy in their consolidation (OAS, WPX, RRC, etc). They Popped higher, but then sold off again, so this sector is still a bit choppy with indecision. The oil inventory report may give Oil & Energy stocks a bit more direction, it has been going sideways at the prior highs. We’ll find out at 10:30 A.M. Eastern time.
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Enjoy your Wednesday trading!
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~ALEX
