September 5th- What Is Going On?
The theme picture that I drew up speaks for itself. I will address that after a market review…
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SPX #1 – The general markets sold off Tuesday, but bounced into the close. The 10sma (I have the 8 ema on this chart) acted as support, but I am not expecting a very strong surge higher, I am expecting this to roll over into an eventual ICL . I have discussed this in past reports. If the markets just break out higher & run without a visible ICL, that will form a different scenario, but for now I expect a dip in the future.
SPX #2 – Notice that the SPX has NEVER broken above the RSI 70%, so I dont expect a break out rally here, I expect a dip eventually. IF IT BREAKS 70% & WE SEE A RALLY? We’ll re-examine the set up.
XBI – The LABU trade lives on, but Tuesday did see LABU sell off all day and then recover. This was XBI. Can it break out? That is the hope, but use stops in case Biotech gets caught up in the selling. Let’s look at LABU…
LABU – Very similar.
TRXC – This was one of our trade ideas from 2 weeks ago, and it continued higher. This run is similar in length to the July run, and is on very light volume at the June highs. I personally would sell it. Volume has dried up.
SESN ( and SENS) – This crawl under the 50sma looks similar to my ZIOP trade, so I am hoping for this type of a break out. I like this run higher, but if LABU pulls back & the general markets pull back, it may pull back too. Read the chart.
ZIOP – I own this set up as it broke above the 50sma. It dropped Tuesday and recovered. A close below the 50sma would concern me at this point. Compare this set up at the 50sma with SENS chart above, and you’ll see what I am looking for.
UUP – The USD popped on day 4, but started to pull back into the close.
GOLD – Gold dropped. You can see GOLD as a possible back test of the trend line, but Gold can drop lower, especially if you look and see what GDX GDXJ did.
SLV – Silver got beaten down. We discussed Silvers extreme set up ( COT), and I feel that the drop by SIlver & the Miners should be limited. Maybe a fake break down as the USD puts in a daily cycle low.
COPY/PASTE FROM THE WEEKEND REPORT
GDXJ – GDXJ did not do a slight undercut yet, but GDX has.Volume was about 1/2 of the selling that we saw during the flush out, and that often calls for a reversal shortly after.
The THEME PICTURE tells the story. The bullish set up should catapult Miners higher, but they are acting heavy. This is not what we expected in the near term, but we have seen this unwelcome guest before. Lets discuss miners further…
GDX #1 – GDX broke to new lows and closed there. It only sold off on about 1/2 of the volume as the recent flush down lows. Since I called Feb the ICL, I count forward from there and I see 3 rather normal length daily cycles and the last one (4th) was very long & extreme. Is it possible that we get a short 5th final daily? Yes, but Gold doesn’t have to follow Miners down, it didn’t in February. NOTE: This is day 12 and I have seen short, 14 day or 16 day daily cycles, so this could be a shorter 5th daily cycle, but Miners have been doing their own thing anyway. I use cycles as a ‘timing ‘ structure, but I still like to use GOLD for the Main Cycle counts. The rally out of the Dec ICL in Gold looked VERY REAL in Miners too. They are just doing their own thing frustrating, their own frustrating dance…
GDX #2 – The above chart showed a possible long 2nd daily cycle followed by a short 3rd one, and this one shows a shorter 2nd daily cycle and a long 3rd one. Either way, I am trying to point out that the 4th Very Long daily cycle, could be followed by a very short 5th one here.
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IMPORTANT: The analysis still stands as very bullish for the bigger picture, with extreme COT readings, extreme negative sentiment, High short positions, and so on, but it surely hasn’t been easy at all! This set up will apparently try to knock the bulls off of their trading game too. All we can do is continue to analyze the set up as things roll forward and be ready for the rally when it takes hold. This is a major league bullish set up….delayed. Unfortunately we cannot force it to follow our expectations. This bottoming process is dragging on.
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Review: So the Buy in GDX or GDXJ came about as it closed above the 10sma, and now a stop could have been triggered. That is how trading works. It should be a small loss until another set up develops. It should not be an overly emotional situation that causes distress, right? The trade didnt work out, that happens all the time in trading. Wait for another set up or move on if you hate the sector, but this is an exceptionally Bullish set up in the long run.
If this makes you overly ’emotional’, your positions may be too large or leveraged. Please consider this as Kind friendly advice- Maybe some are playing this beyond their own trading ability. Let me explain. Please stop buying JNUG or NUGT. If you can’t stop yourself from buying JNUG, please keep position size small if you attempt another buy, and know who you are as a trader. We have some traders that swear at every ICL that they will never buy JNUG again at the lows,they will wait for a trend. Then they do buy it again, and again, and again. Remember the emotional result when things do not play out as anticipated, and trade according to your own ability. Fear Of Missing Out is not a balanced trade approach if you cannot handle any draw -down.
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Just like that major rally that took place in 2016 that went almost straight up, the set up is designed to keep riders off of that Bull. ‘Miners’ were hated in 2016, and it was very hard to get some traders to re-enter the trade by the time that Jan 2016 false break down in Miners took place. That was a ‘Complex Consolidation Pattern’ in Gold and Miners and Miners took a final dive to stop out new buyers back then. It caused ‘shorts’ to pile in for the next leg down- and they got caught in a short cover rally. These lows are likely designed to frustrate people also and knock them off of the bull. Gold is still $30 above the lows, but Silver broke the lows and should have stopped people out. GDX broke the recent flush down lows too, while GDXJ held the lows ( SO FAR).
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Let’s just take a look at a few Miners
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CDE – I grabbed a copy of this reversal with almost 1 hr left in the trading day. In the final hour another 1.5 million in volume poured in and it closed even higher. This looks like a shake out, not a legitimate break down.
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I mentioned HMY, SBGL, GSS, and a few other Miners as holding up rather well. Did they survive yesterday?
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HMY – Believe it or not, it closed higher, bouncing off of the 50sma. GSS also held up above the 50sma and closed green too.
SBGL – This closed higher than shown here at $2.47 ( I took this at 2:41 p.m. Eastern Time.
PLG – PLG popped above that 50sma too. This has turned into a long base and I still own it. I actually like this long base a lot.
The above charts offer hope that this is not as bad as it looks in the entire sector. We need to watch how this plays out over time. The USD is on day 4 of a new daily cycle. I would expect it to be left translated, it could dip and then pop and peak on day 8? Gold is holding up fine for now, Miners are playing games. If you got stopped out, wait for the next set up to come to you, I wouldn’t be eager to just jump back in for fear of missing out. Gold may dip down and follow Silver & the Miners, and that may be when Miners show some strength.
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Again, this is the 2008 lows, and GDX dropped back to those lows into day 19. It didn’t really go anywhere in the first daily cycle, and this daily cycle may linger at the lows too. Once things got moving higher, there was plenty of time to jump in. I am still holding my initial position ( JNUG) but I could get stopped out if GDXJ breaks the lows.
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I am not any less bullish. The set up overall remains extreme, and is viewed as extremely bullish in the Big Picture, but it is a matter of time. Unfortunately, because of the way this is acting ( Silver & Miners separately from GOLD), We need more time as this bottoming area plays out. Try not to get too emotional, that causes revenge trading, frustration, loss of focus, etc. Some Miners like HMY, SBGL, GSS, etc are holding up so far. Improvement in Miners is due to come about, since selling has 1/2 of the volume as the last flush drop.
When a lion is stalking its prey and is hungry, it may make its first move toward that meal, but the meal could get away. Does that Lion just sit there and decide to go hungry for the rest of the year? No, another set up presents itself, and it looks for the opportunity to stalk the next possible meal. This sector is still very bullishly set up, and there will be another opportunity in the near future. If you got stopped out, please be patient.
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~ALEX
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If the general markets pull back, I am not sure if the medical marijuana companies will pull back too or will they resist, but so far this area has been on fire. Be cautious if the general markets pull back, but I wanted to review these stocks here to answer questions of “How high can these go?” and what we could expect if things continue to behave bullishly in the sector.
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APHQF – I want to show this trade to point out ‘The Set Up’ and how it plays out, because there are other MJ stocks that are set up this way. We can learn a lot from the formation of a base & the move higher out of the base. This was the base at the time of my buy on APHQF. I EXPECTED THAT IT CAN RUN TO PRIOR HIGHS ( that would be $20) OVER TIME.
APHQF DAILY – COPY PASTE FROM A PRIOR REPORT
APHQF – Notice the MINI FLAG at the 50sma. That is what I look for with the lagging bunch. A flag at the 50sma can be low risk entry, but you’ll need patience. When & if it will break higher takes time.
APHQF – Now look at that mini flag at the 50sma. This is now racing out of the BASE, and it is heading toward $20 so far, with pauses along the way.
TGODF AUGUST 29 – I was pointing this out also sitting on the 50sma and 10sma. It looks sloppy and choppy.
TGODF – THE RUN HIGHER AND THE BASE. I posted this yesterday at 9:53 a.m. , the VOLUME started to swell, and I added to my position as I posted this as one that could be taking off. Notice the flag at the 50sma. Huge volume for 20 minutes of trading.
TGODF – That is a 24% move out of the base as of the close.
ACBFF – The run up and the base. Notice the little bull flag at $5 and then the POP with expanding volume.
ACBFF SEPT 4 – It has now flagged above the 50sma in the $7 area. I think it is a low risk add at the 10sma, I posted this in a report last week. It MIGHT drop to the 50sma, but so far the 8 ema or 10 sma supports the MJ stocks. You might want to just watch list this, and if it starts moving higher, you can jump in.
ACBFF – It ‘started’ to move yesterday, we’ll see if it has the follow through. It has a $10 or $11 target if it continues to act correctly.
MYMMF – Same set up on the 50sma and 10sma. ( Watch list?).
NXTTF – This also was mentioned in past reports. It moved to the 8 ema and then Popped 20 % higher yesterday. This did do an a-b = c-d type move, so it may or may not extend higher from here. If it bull flags to the 8 ema, it will be a buy again.
NXTTF – It has a very long base, and these can actually just run at times, so I did not sell anything on yesterdays 20% pop. Look what it did last December.
NXTTF –
IMLFF – IMLFF has not begun to move higher yet, but the set up is the same. It is flagging along the 50sma.
THCBF – This set up is the same. It finally pushed above the 50sma and is flagging sideways so far, but it did ramp up higher i n December and it is a long base. 
