Wednesday Jan 2, 2019
I imagine that with this opening theme picture, you may think that I am going to start by discussing the burning Hemp Legalization topic or something? Well, actually, this report is going to focus on just one thing, and that is The Precious Metals Sector.
I feel that for Wednesday – Friday of this week, we will need a refresher of something that I have touched on WITH THE PRECIOUS METALS in the past.
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As you all know, We have been looking at what has to be viewed as a serious mixed picture when it comes to the charts over the past few weeks. Things are slowly improving though.
1. You have seen it mentioned in the reports that Silver was obviously lagging Gold in a big way, since it was still hanging at the lows, right? It is breaking higher this week.
2. Gold was strong and bullish, but many Miners lagged for 2 daily cycles ( which is basically 2+ months). On the other hand, as time goes on, some Miners began to act very correctly from a Bullish view ( I have pointed those out as KL, AU, AEM, ABX, ) & Others have now joined in over time too ( BTG, GPL, SA, etc).
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The Dilemma Burning In My Brain: I have been following Cycle Counts too, which, under normal conditions, are very helpful in determining when the next low is due. In Miners, you can see the start of a dip anytime in the 20+day count, and look for a dcl from day 30+. Often by day 34 you have your low (DCL). Anticipating that the ‘next low’ is due can allow us to lock in some gains at higher price and buy back at a lower low risk entry. That is the beauty of knowing when a dip is due. *WELL, WE ARE NOW ON GDX DAY 31, WHICH IS USUALLY VERY DUE FOR A DIP TO A DCL. The problem is that ‘under normal conditions these work like clockwork, but maybe with the recent extreme market crash and Oils extended crash ( with a daily cycle over 70 days long??) , along with a long BASE BUILDING PERIOD in Miners, should we consider conditions to be exactly be normal in Miners or not?
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LET ME POINT SOMETHING OUT AS TO WHY I AM SAYING THIS.
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GDX#1 – I NEVER counted GDX as 2 daily cycles like this, and I can’t now either. Why? That second daily cycle would peak on day 9, and become L.T., thus the 3rd daily cycle would be viewed as weaker (yet we are at new highs). So…
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GDX#2 – I have counted it as 1 long daily cycle all along, but NOTICE THAT GDX HAD 45 DAYS IN THE FIRST DAILY CYCLE. THAT IS AN EXTENDED DAILY CYCLE. At that time, GDX Peaked on day 30 of the first daily cycle. Day 36 looked like a dcl, but it gave way to an even lower low on day 45. THAT DCL was a buy. Notice that GDX then lost the 10sma again on day 9 and that looked weak too at the end of November. NOTE: IN my head, I was thinking that with a LONG 45 day first daily cycle, then the next is often short to compensate, however, IT HAS NOT BEEN SHORT. We are on day 31 with a day 28 peak (so far). I WOULD THINK WE ARE DUE FOR A DROP TO THE DCL, but I need to post this report so we can all stay current with how I see things.
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So I’ve been recently watching things this way…
“I still see several Miners setting up bullishly, and others joining in. Now this week SILVER broke out too. Could this also become an extended 45 day daily cycle too?” GDXJ was also hanging at the lows, and now THAT is also pushing higher. Normally I would not EXPECT 2 long daily cycles in a row, but we just saw an unexpected 70+ day daily cycle in Oil, right? The Markets have also been a bit extreme in all sectors these past 3 months, correct? The Equity Markets sold off extremely deep. NATGAS blew off higher and crashed. Oil & Energy crashed for an extended amount of time. IS THIS THE RESULT OF BIG MONEY RE-POSITIONING, AND CAUSING STRETCHED CYCLES? So lets just toy with the idea that Miners may extend a bit further too.
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Let’s just ‘ADJUST OUR SHORT TERM OUTLOOK’ to “What if this was a GDX 45 day daily cycle too?”. How might that play out? I will explain shortly exactly why I am doing this too…
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GDX#3 – I do still tend to expect a drop to a DCL sooner than later, but look at GDX. It is currently crawling above the 200 sma & especially the 10 sma rather well. So now I want to examine a push higher off of this support as a possibility too, and I will explain why shortly. This chart shows a day 31 reversal on the 10sma. Bull flag looking too. What if it just breaks out and runs to say day 35, then drops to the 200sma as a dcl? That is possible…
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THIS IS A REFRESHER ON WHAT I HAVE MENTIONED IN THE PAST BIG PICTURE IDEAS.
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All along I have been saying that the big picture was very important. If we could recover this shake out, it should be a very bullish set up for 2019. SO LET’s DISCUSS THIS VERY IMPORTANT SITUATION.
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GDX WEEKLY – We are on day 31, HOWEVER , we only have 3 days left in this week, and THIS LOOKS LIKE IT IS RECOVERING ON A WEEKLY BASIS.
– Recovering the 50 week ma
– Recovering the 200 week ma
– Recovering from a weekly and monthly shake out. If this closes here or higher by Friday, the weekly chart is a shake out & recovery.
On DECEMBER 8th, I drew this , expecting a tag of resistance and a drop to the Dcl. The chart above already looks more bullish than this 3 weeks later.
GDX#4 – So I couldn’t normally recommend buying or adding positions this late in a daily cycle, but with an adjusted view of where we might be, this becomes a Big Picture “Low risk set up”. Why? If it breaks out higher, you can place a stop right under support, and DCL could back test. Look at the next 2 charts. GDX is on the 200sma, the 10sma,
ALSO in that Big Picture, it could be a weekly recovery of the shake out, depending on Fridays close. In this case, using technical analysis, Support that was broken & turned to Resistance, then becomes Support again, and it could draw in a frenzy of buyers. 2019 Looks Really good for Miners at this point if this closes higher.
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GDXJ – We now have watched GDXJ try to play catch up too, and it is in the same situation. If this breaks out higher, I can’t imagine that Buyers wont start entering GDXJ. I will also show you another chart later that will be the exclamation mark on this thought.
You can see that if this break above resistance for the GDX and holds into Friday, it is not an really an adjustment in our view of things, it is actually an adjustment in the nature of things. It shows us that the slow buying strength of this move out of the ICL has actually brought our Big Picture Idea into play. The first 2 daily cycles of Gold were weak looking and had miners bouncing along the bottom. The 3rd daily cycle of Gold has been more of a push higher.
This is a chart from a recent report on NOVEMBER 26, just 1 month ago. It looked choppy and difficult. So far, we ran up & tagged that 200sma as expected, but we did not back off into a dcl, it climbed above the 200sma. Back in November this was so choppy, it was very very hard to buy & Hold, but now it has run up and held up actually above that 200sma. The recent strength could cause a break above support, and that changes this from weak & Choppy, to Bullish.
As a review: While using Technical analysis, a possible low risk buy entry is developing for the longer term BUY & HOLD. That is exciting! Using Cycle counts, we are due for a dip NOW, because we are on day 32 as of Wednesday. The first daily cycle did extend to 45 days, will this one too? This is what has been burning in my brain over the past few weeks, while watching stocks like AU , KL, AEM, ABX holding up over time. Now we see others setting up. I also want to point this out about the choppiness…
ABX – I want you to notice something , just in case there is that feeling that the move is running away. We bought SEPT Lows as an ICL. This was then called a BUY again on the 200sma. It was near $12-$12.50 on Nov 15. This actually hasnt gone anywhere since I called it a buy here. Lets take a look.
ABX – Dec 3, almost 3 weeks later, it was still only $12.99 due to weeks of choppiness.
ABX Monday Dec 31- ABX dropped to almost $12.50 just this Monday & put in a strong reversal. If you bought back in November, it has been so choppy that you made $1 so far. That FED DAY drop was scary, and Mondays drop / reversal would have been scary. My point: This & a few others can still be bought here in the area that they have been advertised as a buy. Also…
It may even still drop to the 200sma again, if we do get that dcl drop sooner than later.
BTG – I mentioned this several times in November & December. Here it was $2.64 and you could buy the break out at say $2.70
BTG – Choppy, but climbing, it is now at $2.92. So really, only a 20 cent gain in a month. My point? You haven’t missed a blast off and run higher (yet), but one might be coming from these long sideways consolidations and bases that many Miners are forming. IF GDX breaks above resistance and that becomes support, it should be GAME ON IN 2019!
SA – I posted this Monday as Miner that broke the 50sma last week. It dropped for 2 days Thursday & Friday and Flipped higher Monday. SO BASICALLY, THIS IS A BUY HERE WITH A STOP AT THE 50sma. IS this my first time mentioning SA?
SA – It was a BUY here at $11.50 to $12.21 as it broke the down trend. You would have had an early entry as it bounced along the 200sma bullishly. I SEE OTHERS LIKE THIS NOW, so these may all be getting ready to launch higher , if or when GDX breaks above resistance.
I myself Bought this break out and just sold it Monday as it tagged the downtrend line near 70 cents Monday. I actually now am thinking that this may continue higher. It was bought ‘just as a quick bullish trade set up’, since I was expecting the dcl, but with Silver breaking out, it is possible that these Silver stocks will start acting correctly by themselves too.
This was DEFINITELY bothering me Friday , with SILVER Breaking out, but now…
CDE – A reversal. Can it push above the 10sma again? If so, you may consider it a buy. SILVER may do its own thing from here.
AUY- Look at AUY , GORO, NG, MUX, and several others if you feel that you missed some good bases. These are still making their bases or just starting to show signs of strength. I will be searching for & putting these in future reports.
GORO– Goro ran strongly in October, and then crashed down to build a base. It is AT THE LOWS. I’m not saying to just buy this reversal, but watch how the move unfolds, especially if GDX breaks above support.
Yes, this is an adjustment from the normal way of approaching the ‘high Cycle count set up’ that we have before us. I would NEVER talk about owning Miners on day 31, but this set up has added bullishness. Yes, The Miners can still drop and be frustrating if they sell off to the dcl and do not break out above resistance, but this report is being presented as more of the ‘Don’t lose sight of the Big Picture that I have been presenting too”. We are discussing
1. What is currently right in front of us as of this week, and
2. An adjusted way of looking at it.
GDX WKLY – Watch the Wed-Fri trading, but this is Bullish at this point.
GDXJ – The close on Friday is important here too, this is also bullish. I will show you why shortly…
CONCLUSION: ALL OF THE ABOVE CONSIDERED, I FEEL THAT THIS GRADUAL CHANGE NEEDED TO BE VIEWED WITH AN ADJUSTED IDEA OF HOW TO APPROACH THINGS. I HAVE RECOMMENDED HOLDING A FEW MINERS HERE & THERE, SINCE SOME ARE SET UP PROPERLY, BUT EVEN I HAVE HAD A HARD TIME DOING THAT IN THIS CHOPPY ENVIRONMENT. I HAVE BEEN BUYING & SELLING, AND NOT HOLDING ON- SO THAT IS WHERE THE CHANGE IN VIEW MAY COME ALONG. I CAN SEE STARTING POSITIONS AT LOW RISK BUY POINTS, MAYBE START SMALL AS I HAVE MENTIONED IN THE PAST, AND SIMPLY ADDING ON ANY DIPS THAT MAY COME. Let me put it this way too…
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I usually see Oil with daily cycles that are 40- 50 ish days long. The sell off recently was emotional, panicky, extreme, and lasted over 70 days! I remember just waiting & waiting for this thing to bottom. It would not break over that 8 ema. I would hate for Miners to Break out of this big shake out type base, and finally start a surprise MELT UP that will not break below the 8 ema. That could leave anyone ‘flat footed’ so to speak- waiting and waiting for a pull back or dcl on let’s say day 38, and day 42, and then day 45, then day 50 as Miners stretch out the way Oil dropped.
I repeat: I would hate for Miners to Break out of this big shake out type base, and finally start a surprise MELT UP and leave anyone ‘flat footed’ so to speak. This report is to get you back the Big Picture view as this week is about to end. – So yes, we are due timing-wise for a normal dcl. Are these Normal times, or will the extremes that we have seen in other sectors flood over into a GDX GDXJ Break out? Now is the time to consider both sides of that coin. If Big Money was flushing out of OIL & The GENERAL MARKETS, are they now going to begin entering the Miners at a steadier rate- pushing cycles a bit? Time will tell, especially by this Friday. There are plenty of set ups in Miners to buy, if we do start a ramp higher. When you see the charts at the end of the report, it may hit you the way it hit me. WOW!
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Please, if you have time, read this report twice to Stay Current & Stay Frosty!
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Enjoy your First day of trading in 2019!
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~ALEX
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I WANT TO LEAVE YOU WITH THESE 2 CHARTS. The WOW Charts!
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Again, All along I have been saying that the big picture was very important. If we could recover this shake out, it should be a very bullish set up for 2019.
THE MONTH OF DECEMBER HAS NOW CLOSED, AND THERE IS NOTHING BEARISH ABOUT THIS MONTHLY CHART. THIS IS A VERY BULLISH LOOKING CHART! THIS LOOKS VERY BULLISH FOR 2019!
GDXJ MONTHLY – December has ended and this is the first Positive Month since MAY! I pointed out that down trend line last weekend, and it has been broken! Again, I see NOTHING BEARISH about this chart. 2019 Could be a very profitable year !
