Aug 13th – A Choppy Start
Pick any Sector and it looked a bit Choppy Monday, and even though Gold & Silver are looking like they are forming Bull Flags, Miners dropped. Let’s take a closer look and see what Monday brought our way…
SPX – To be honest, the General Markets look weak. This isn’t what a normal run and drop to a higher low usually look like, this looks more like the bounce in May. It COULD put in a higher low, but their are signs that say this is weak right now. See the chart.
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WTIC – Oil moved higher with follow through from last Friday, but …
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XOP – XOP, XLE, & OIH did not. That is a little concerning, and I have a trade on right now with XOP ( I didn’t close it or get stopped out). Why were these down with Oil higher? We’ll see.
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USD – The USD has been rejected at the 10 sma so far. If it drops from here, that could help Gold to break from the Bull Flag and reach that $1550 area.
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GOLD – This was Gold near the US Opening Bell. It looked like a Bull Flag and should it break higher, it can run to that $1550 area, so I posted this in our Chat / Trading area.
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GOLD Breaking out? – So as I collect charts, This is Gold at 8 P.M. Monday night Eastern US time. It does look to be breaking out, but Miners popped & Sold Off on Monday. That is not Bullish for the Miners, but it could change – no panic or worry yet.
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GLD – So GLD closed almost 1% higher, but Miners dropped? When Miners do not lead the way higher, it is a weakening situation.
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GLD – CYCLES ARE QUESTIONABLE – Do we have this? If so, we’d be on Day 29 with a new high, and due for a drop to a dcl. See the chart. Or do we have…
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GLD – CYCLES IN QUESTION – Do we have this? Here we are only on day 7 of a new daily cycle, maybe dropping to a 1/2 cycle low or continuing higher from here? Unfortunately, it is a vague set up with the sideways chop in July, but either could produce a bounce higher after a drop.
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SILVER – Silver also looks like a Bull Flag. (EDIT: Overnight, SILVER has reached new highs since grabbing this chart).
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GDX REMINDER FROM AUG 8 – GDX can POP & DROP, or chop & drop. It can ride up the upper channel line too.
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GDX REMINDER – In 2016, we also saw a lot of choppy trading in GDX & GDXJ. Are you wondering why Miners were down Monday? Look at this chart, it was Up, then down, then up, then down. We could be in a choppy period.
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GDX – I pointed out the RSI & MACD divergence last week. GDX is rising with weakness short term. It CAN still go higher, but will eventually top & drop into a dcl, due to this divergence. Monday it dropped with GOLD breaking higher. That is not encouraging.
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GDX – If GOLD breaks out from that Bull Flag, We could expect this ( see the chart). So watch GOLD, and if it breaks higher and we do not see Miners run higher? It probably means that Miners are leading the way down, and so Gold will probably drop after $1550 too.
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We saw choppy action on Monday, so now we’ll just have to wait and see what Tuesday brings. I am especially interested in seeing if GOLD & SILVER can break higher form their bull flags, and how Miners will respond from there. THAT will tell us a lot.
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I will discuss a bit more below, enjoy your Tuesday trading!
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~ALEX
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EDIT: As I finish up this report, SILVER is breaking out to new highs, and Gold is also. Now we’ll see how GOLD & SILVER look on Tuesday when the US Markets open, and see if the Miners can catch a bid, unlike Monday when they sold off into the close.
I HAVE BEEN ASKED, “WHAT DO YOU THINK WILL HAPPEN ON SEPTEMBER FED DAY IF WE SEE A 1/4 % CUT, OR EVEN A 50% CUT?“
MY ANSWER, ” I HAVE NO IDEA 🙂 – THAT IS 1 MONTH AWAY. MORE THAN ONE IDEA POPS INTO MY MIND” Let’s discuss it … 🙂
I WANT TO DISCUSS THE POSSIBILITIES. THIS IS JUST A LITTLE GUESS WORK. IT IS WHAT I THINK WE COULD SEE, SIMPLY BASED ON PAST EXPERIENCE. AGAIN, IT IS JUST A GUESS BASICALLY.
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GDXJ – This is GDXJ as of last Friday when I was asked about the FED MTG. That Mtg is on SEPT 18 (Magenta line) . Will we run higher into the Fed? Or drop Lower? I see weakness, but we still CANNOT know for sure, but I can show you what that may look like…
GDXJ – We could drop from here & tag the 38.2% Fib number. That would be the ‘Buy The News’ scenario.
GDXJ – We could drop, chop, and eventually gain ground with Gold breaking the Bull Flag Higher. This may have us ‘PEAK’ on a Fed Cut ( sell the news). ICL into OCT.
GDXJ – This would be as the Gold Bull Flag breaks out, and if Miners do follow, a ‘peak’, and then they bottom on Fed Day.
THE ABOVE IDEAS ARE ALL VALID, POSSIBLE SCENARIOS. THIS IS WHY WHEN I AM ASKED, “WHAT DO YOU THINK WILL HAPPEN ON FED DAY?” – I can’t just say a simple answer. That Fed Day is over 1 month away. A lot can happen between now & then and we could ‘Peak’ at that time, or we could be finding a ‘low’ or dcl.
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GDXJ – This is my version of where we could be as we near the next timing period for an ICL. I copied & pasted just the ICL from MAY 2016, and played it as a peak around September Fed & a drop to OCT. Then the next rally takes off. Look at the 2016 ICL in May. It was deep in real time, but we still made a series of higher highs later. Encouraging. Can you even imagine GDXJ 60?
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GDX / GLD RATIO 2016 – I was looking at the GDX vs GLD ratio in 2016. I saw it double top with divergence in the RSI & MACD , just before it dropped to the May ICL. 
GDX / GLD RATIO – I do see that now, so this could be the end of Miners leading Gold & Gold could do a final push higher, Miners may “Follow’, and then we drop.
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MAG – I posted this chart of MAG as forming a cup & handle back at the end of JULY. They released their earnings and …
They released their earnings and stepping back you can see that a large inverse H&S has also formed. It is breaking out ( though it sold off into the close), I like the set up in the bigger picture.
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METALS like COPPER & STEEL have struggled recently, but some set ups are forming again.
AKS – AKS reversed on the 50sma, so it can be bought with a tight stop, but I’m just not sure that the ‘Metals’ will do well if the General market rolls over. The last time the General Market rolled over , set ups in AKS, X, CLF, etc also fell apart. I owned & was stopped out of HBM back then.
COPPER – Copper is at a critical point right now, sitting on a support. If that breaks down, Copper could become a H&S break down, so I will be watching the ‘Metals’ sectors too. If the USD drops, they may benefit though.
