Tuesday – Heading Into The F.O.M.C. Meeting
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This is a Fed Week, and the Markets tend to hate two things that the F.O.M.C Meetings can bring to the table. 1. Surprises and 2. Unexpected changes. I really don’t think that we are due for either of those, so let’s just review the markets as they stand, heading into FED WEDNESDAY .
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SPX – SPX broke to and closed at new all time highs. It did start to pull back, so I chose a weekly chart to show that our expectations here have not changed. We are coming due for a daily cycle low and we could get a Fed Triggered pull back in the General Markets. Stops below the 13 sma have kept one in the trade.
WTIC – Oil dropped Sharply Friday and bounced Monday. If this selling continues like this, it may be a choppy drop to the support levels of the 50 & 200sma. The pull backs in Oil have all been fairly mild, but this looks like a dcl will be sought out.
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GOLD – Gold closed above the 10sma Friday with a swing low from day 32, but it dropped Monday to that 10sma. A stop would be placed below that swing low, in case the selling picks up again. GOLD never tagged the 200 sma like one would expect, but we also had a Weekly reversal with this 3 day run at the end of the week, making this a buy from a weekly view too. This drop was concerning to many…
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EDIT: So this is a live shot of GOLD as I proof read the report Tuesday Morning ( US Time) . It is higher above that 10sma.
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MINERS ARE DIFFERENT THAN GOLD
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GDX – GDX did not get above the 10sma yet (GDXJ did), so GDX never confirmed that swing low, while Gold seems to have. So far the drop Monday did not take out the lows. Though this does look quite bearish suddenly, I want to point something out…
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GDX MONTHLY – The Monthly chart is putting in a back test of the 10 monthly moving average. So far the Monthly chart remains bullish. Today is the last day of the month, so if GDX moves higher, this will be a reversal on the 10 month ma.
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GDX – GDX & GDXJ sold down Monday, giving up Fridays gains, but so far the lows have not been taken out. It would seem normal for GDX to tag that 200 ma, but so far it has not. I did get letters of concern, and I understand that, but this is what happens when we buy near a low. For example…
GDX – Look at these circled lows. These are lows that DID run higher after dropping toward that initial low, but price dropped back to the lows before it took off. I can’t control that, you can’t control that- all we can do if we buy near an expected low is use a stop and hope that this reverses higher again. OR, you can wait until after the FOMC Mtg to try to enter this trade.
CAN THOSE LOWS BE TAKEN OUT? YES it can, because as I mentioned – this is a FED WEEK, and at times Miners get whip sawed on Fed Wednesday. So Miners could drop further, but so far the set up is a swing low, and a stop goes under the swing low…
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GDXJ – Unfortunately, GDXJ lost the 200sma & 10sma, and that might shake some Bulls off that bought simply because it recovered Friday. I held my position and will see what happens from here. I am not “All in” and I am diversified with some MJ stocks and a few other stocks, so I can allow these wiggles to play out and see if we get a recovery or a drop. GOLD still looks fine.
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** There is a small problem with setting stops:
I used to ALWAYS set my stops based on GOLD, and if Gold put in a swing low, I didn’t care if the Miners slightly undercut their swing low, I stayed in as long as Golds swing low held up. What is the problem? You may recall that GOLD put in an ICL in August, and Miners broke down and put in an ICL later in September. In Dec 2015, Gold put in an ICL that December, while Miners broke to a new lows in January 2016and then recovered. THAT makes it hard to just buy miners & use a stop based on Gold. Add to that the fact that The FOMC Meeting could whip saw Miners too, so basically one needs to play this the way that they are comfortable. That means that with Mondays drop, you may want to consider your Position size, your stop placement, and the fact that individual Miners can and have been acting on their own merits lately too. That is a good point, so let’s look at a few individual Miners for example:
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KL – Gold & Miners sold off for around 10 days in a row heading into last weeks lows. KL did not sell off further, it put in a consolidation instead. So this may hold up even if the FED drops Miners briefly to a new low, KL may hold up.
LODE MARCH 26 – I mentioned that I really like this base and own LODE and that this was one of my core holdings. It was holding up under the recent selling too, so lets see what it did with the selling over the last 2 weeks and again on Monday.
LODE – I posted this chart of LODE in the first 1/2 hr of trading Monday , because it looked bullish with the Miners selling down. As Gold & Miners sold off, LODE actually looked ready to break out…
LODE – And it did, closing up 11+%. So not all Miners are ‘selling off’ lately.
TRX – TRX broke below the 10sma & was red in the morning when I checked it. When I looked during the last hour of trading, it had pushed higher to green and closed up 5%. This lacks volume, but it is still much better than dropping all day.
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So it is a Fed Week, and this is always the hardest time to own Miners. The weekend report did show reversals in the GDX GDXJ Charts, and I decided to buy on Friday. The whipsaw that comes from the FOMC Meeting alone can be sharp, with false moves, so I can picture various scenarios. It almost does no good to speculate, but it does do good to just mentally be prepared for anything. I will be able to discuss this better in the Wednesday morning report after seeing another day of trading on Tuesday. Will Gold break the 10sma & even its lows Tuesday? What if Gold doesn’t break down, but Miners do? What will individual stronger Miners do going into the Fed – (KL, MAG, LODE, TRX, ETC?) Let’s see what Tuesday brings our way, and you can personally decide if you want to buy, sell, or hold as we go into the FOMC Mtg Wednesday.
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Let me discuss something else related to Miners- Emotions…
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GDX – Look at this chart and think back in time. Honestly – Do you remember all the negative comments and hatred for miners after the Sept ICL was in place? During the following 2 months there was anger, fear, & heartache at each drop. And then suddenly in December & especially January Miners ran straight up day after day, and everyone was thinking, ” I wish I bought everything during that choppy low. I really Love Miners, I should be in JNUG , it looks so awesome! That is where the money is!!” Well, now we are back to possibly a choppy low, and on what could be day 4, it feels like …
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” Miners fooled me again. I hate Miners. They run up for 3 days and drop like that? This is a waste of time. “
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That does not change the Big Picture, it just affects how GDX & GDXJ bottom before that expected strong run. Leverage will affect your account, so be careful with position size.
When the time comes for the miners to run up higher, that negative feeling & concerns will change overnight. That said, I want to show you a similar GDX move to what we have going on right now. I remember these things based on the high emotions that they cause.
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GDX LOWS 2017: We saw …
1. The swing low & a 3 day move above the 10sma
2. It lost the 10sma on day 4
3. Then a Break out above the 50 & 200 sma took place by day 13, often considered a strong buy!
4. GDX then LOST THE AVERAGES on day 20, 21, 22? “I HATE MINERS!!! I’m out!!”
5. Bye Bye! It took off higher.
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It’s a FED WEEK, which usually causes additional volatility in precious metals. We have a bullish set up that formed Friday,especially on the weekly charts. It can be bought near the lows with a stop if you are trying to catch the lows, but on a fed week, it may get tricky and some may be stopped out. Time will tell. For now, let’s see what the Tuesday before the FOMC Meeting brings our way. And please see the trade ideas below this report…
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~ALEX
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THIS IS AN IMPORTANT REMINDER, AND I WILL TELL YOU WHY SHORTLY…
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HEXO – Look at this buy set up from April 17…
– HEXO had dropped to the 50 sma and reversed with Big Volume,
– I bought it and called it a buy in the live area, and posted it in the next report as a buy too
– NOTICE HOW THIS BROKE THAT DOWN TREND LINE WITH VOLUME. I like that…
HEXO – Volume continued to blast in and we are still riding this one. The Important thing is- Do you see how it had the high volume burst off of the 50sma , breaking the down trend? THAT WAS WHAT CAUGHT MY EYE, AND…
OGRMF – 10 minutes after the open – This caught my eye for the very same reason (same sector too). I was looking at my current ‘watch list’ of set ups and in just 10 minutes of trading, OGRMF had as much volume as it had in many recent entire days. I always personally buy that. It broke the down trend line.
OGRMF – It closed up 11% at the highs and has very big volume. THIS LOOKS LIKE HEXO ALL OVER AGAIN. If you bought this with me, it is worth holding on. I think that it is still a buy, though it could do a day or two drop and then run higher. Again, look at HEXO as an example of what we could see here.
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You may recall: Someone posted a bearish article in our chat area and said that MJ stocks ( CGC) would struggle due to things like “Less than expected buying after legalization in the MJ area was put in place”.
LOL. Really? That is reason to be bearish? I ignore articles like that, they go against sound reasoning and are bearish at the lows. They are emotional. Let’s get this straight, I drew up this 2 year chart to point out that CGC formed a bull run even BEFORE the entire country of Canada Legalized recreational MJ, and before the USD made many legal changes recently too. So this guy is saying that MJ Stocks like CGC will now fail with all of that future opportunity? So I posted this on the same day in the next report…
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CGC APRIL 11 – Someone writes a bearish article on CGC when it looks to me like it is at the channel lows, oversold and a normal pull back in a channel. He warned to stay away from MJ stocks, they would now struggle. I was looking to buy HEXO then, ACB, and CGC. This was actually very bullish looking when an uptrending stock drops to the 200sma and reverses. I mentioned that someone could buy a reversal if we get one, and…
CGC APRIL 17 – After reversing right at the 200sma, THE DAY AFTER THE BEARISH ARTICLE, CGC was due to gap open over the 50sma. Volume had already been popping as price moved off of the 200sma…
CGC – CGC today. If you bought that, do not sell, this is just breaking out too.
ACB – When I bought HEXO, I also posted ACB . It has done a shake out at the 34 sma. If this starts moving higher, I am probably going to jump in, ESPECIALLY if I see volume swelling. I will post that in the live trading chat below the report if I do so. I am also watching CVSI as it slowly dips to the 50sma ( look for a reversal higher). And…
TGODF – This is also looking like a buy right here. It did temporarily dip below the 50sma, and now looks to be recovering, and volume started to come in Monday (Bullish). I am watching this one and could buy as soon as today if it continues to act correctly. Is a 100% move from here unreasonable? No it is not, I would expect that over time, barring any bad news. These are bullish set ups.
There are several more good looking MJ set ups, so the Sector may be heating up again after a normal pull back in a bull market.
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SHIPPERS SET SAIL AGAIN
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SBLK – Ended the day with almost a million in volume and has a price target of $9.75 or better (And it will probably be over $10+). I think that this could easily run to $10+.
SB – Here I was pointing it out midday up 12%, after I mentioned the volume pouring in earlier in the morning. It was only up 4% when I saw it earlier. This actually closed up 16%. THAT is how these shippers can move (in both directions).
DCIX – So I looked for some Shippers that may be ‘Just getting going” that could POP and run later this week. DCIX popped up, breaking out through the 200sma. It closed right here at $1.19 and I bought it . It is a buy here, since it closed above the 200sma, and is in a hot sector.
TNK – This is also acting bullishly by riding above the 50 & 200sma in a bull flag type consolidation. You could buy with a stop right there
LJPC – This is one that we have traded and it started basing out further after tagging that 50sma. I posted this in the morning, because it started moving higher with a little bit better volume than recent days…
LJPC -It closed up roughly 7% and volume was decent. If this breaks from the base, it could run quickly, so it is a buy, or good for the watch list. There is not a lot of resistance from $8 to $14.
TGB – Interesting reversal at the 200 sma, a buy with a stop under the 50sma(?) or 200sma.
