Wednesday November 6th
What happened in the Precious Metals Sector yesterday was unexpected and yet it was also expected. Why do I say that? We have discussed that the ICL didn’t ‘Feel ‘ like a deep enough drop, and also that other expectations for an ICL were not met, so the recent action was what I called, “Buy the DCL, Use stops, and see if we can make new highs.” That said, I honestly DID start to feel that things changed to very bullish, and I had good reason to. Didn’t you?
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1. We had individual Miners at the recent highs, some breaking away. Wasn’t that bullish action?
2. A triangles trend line was broken upside. That is a break of the down trend & is Bullish, right?
3. Miners began breaking above their 10 & even 50 sma, Bullish or not?
4. Could I just ignore that? No. But we definitely need to discuss what happened with Tuesdays drop and try to adjust to WHERE WE ARE NOW. First, a market review…
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SPX – The SPX has a day 22 high and remains above the 10sma. I started by saying that I would buy with a stop under the dcl (lows). Then stops were raised to the 50 sma. I then raised them to the 20sma. At day 23, I might even start thinking that the 10sma is a good stop. It has been tagged 3 times & has been reliable. This could peak short term at any time.
NASDAQ – I dont think that the coming pull back will be very deep, maybe just a back test of the break out, but I’d like to sell at the 10sma, and re-buy at the break out if possible, rather than ride it down.
WTIC – Oil is on day 23 and does look like it wants to break the 200 sma.
XOP -Some Oil & Energy stocks popped & dropped Tuesday, but they still look bullish. We discussed WTI, WLL, LPI, OAS, CPE, PDS, etc – and now maybe they can be bought at support if they drop & reverse as shown on this chart ( Get a watch list, I’ll try to discuss them in future reports).
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AND NOW FOR THE PRECIOUS METALS, and as a review of recent action:
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1. We had individual Miners at the recent highs, some breaking away. Bullish.
2. Triangle upper trend lines were broken upside. That is a break of the down trend & is also viewed as Bullish.
3. Miners began breaking above their 10 & even 50 sma, quite Bullish.
4. Gold dropped like a rock from $1515 to $1480? That is $35!
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GOLD – Gold dropped from the $1515 area to $1480, a $35 drop, and notice that similar drops did not stop there, Is this drop going to continue? We have to wait and see. Let’s take a step back…
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GOLD – Gold plunged down through that upper trend line and broke back inside? Really? Two break outs that failed? THIS JUST IS NOT A COMMON SITUATION, with Miners near the highs…
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GOLD – I’m drawing the bottom line as a support line here and we’ll see if it holds, bu this is a bit unpredictable. I am also pointing out several false break outs that we have seen along the way. This makes it VERY HARD to read what is real & what is false. That SUMMER triangles false breaks did NOT phase us at all, because it was clear that we were in the middle of that bull run. I had called a ‘Continuation gap ‘ higher in Miners as VERY Bullish and recommended NOT selling. Time was on our side. Right now- it is a bit different, with us at the end (?) or start (?) of a run. Did we get a vague ICL in place or is that ICL still to come? THAT IS THE QUESTION, and it seems that Only time will tell, however…
GOLD – This just doesn’t look Bullish with GOLD down $27 for the day. In 1 day, the RSI dropped, Price & volume crashed, and the MACD wavered. This LOOKS like it wants to crash down into a sudden ICL drop. I sold my leverage…
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GOLD – Notice that the last DCL seems to be Oct 1. That puts us on day 25, so if this sells off, a low can come within a week or so. Again, I sold my leverage to be safe, it moves very fast. Now lets look at Silver.
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SILVER – Silver dropped & lost the 10 & 50 sma too. It has the same OCT 1 low, so the count would be day 25 here too. An ICL here could back test that trend line break & the 200 sma as an obvious place to drop to. Now to the Miners, and the set up is slightly different…
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GDX – Miners do NOT have that Oct 1 low. Their dcl looks to be 2 weeks earlier near Sept 15…
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GDX – So if that was a dcl, we had a day 7 peak, and rejection at the 50sma (which is really what I expected originally). The cycle count would be getting very late though for Miners. This count just is not clear, and I have mentioned that I find triangles mess up cycle counts. You see it here. We have some individual Miners breaking down, and others still at the highs? I would say that this could break down to the 200sma as a normal drop ( forget cycle counts). I will now point out the difference in Individual miners…
I will now point that out with charts…
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CDE – CDE gapped down big, and then rallied to the highs. That looks quite bullish near the highs.
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NEM – NEM lost the 50sma and sold off hard with higher volume. Not so bullish looking.
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HL – HL reversed right off of the 10sma within the first hr, as seen on this chart at 10:30. I decided to sell mine and lock in good gains until this whole picture clears up, but this looks very bullish.
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RGLD – The once very strong RGLD is still slowly drifting down to the 200 sma.
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IAG – IAG reversed at the 10sma & closed up 1 penny, with GOLD down $27? How does that happen?
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KGC – Gold was down, And so was KGC, but then it rallied & broke even by the end of the day? It has lost the 10 & 50sma, but being ‘even’ on a day when Gold dropped $27 is impressive.
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Do you see the confusion in the charts though? After breaking above a triangle , Gold drops $27+ out of nowhere and loses the 10 & 50sma & the upper trend line. Silver also crashed down and loses the 10 & 50sma. GDX drops below the 10 after being rejected at the 50sma and closes low. Add to that that many Miners dropped, reversed, and closed near the highs of the day? Some are even near the recent highs?
I really need to just watch as this plays out further to give it a little more time expressing itself. If you are invested, just have stops in place. Miner do look stronger than the metals, but it seems that time is the only thing that will tell us what the current action means. Enjoy (?) Your Wednesday trading? Wednesday is also Oils inventory report release.
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~ALEX
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I want to share with you a trade that I just executed. Wait, It felt more like the trade may have executed me. It’s important to share the good , the bad, and the ugly…
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SHIP – You know the story, I loved this base. I bought at 54 & 55 cents & added on a break out. These can really run when they get going, so I drew a move higher on my Oct 10 chart below….
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SHIP – I posted this Nov 4th chart as the trade continued to work out. Think about this: SHIP hit 90 cents , almost up 100%, but earnings were due to be released Tuesday. I wrote about that in the live area and I said something like , ” You may want to decide to lock in some gains , sell 1/2 , or ride it out?” …
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I decided to ride it out, because it was a battle of the Greed vs fear. I wasn’t afraid of a big drop since I got in near 55 cents. I was more concerned that I would sell it and it would gap open over $1 & just run away without me.
I wanted my 100% gains and more!! Plus with GOLD doing so good, I had gains in Miners too. So let me show how how that trade worked out after the earnings report…
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Well this is just how it felt, the chart is next…
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SHIP gapped down and sold off all day long. I got out near the 10 sma, just above 70 cents, but this is how that greed & fear works. I could have sold it at 90 cents up near 70% Monday .
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SHIP So will this keep dropping? Maybe, maybe not. It may be a knee jerk earnings overreaction and do a shake out at the 50sma & recover. I’ll still keep an eye on it , because I still like the base if it can recover ( and maybe I’m a sucker for another good gut punch?). Speaking of that…
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I am also still in GLBS , I still like the base and would like to see how this plays out. The real question is…
How do I really feel after that kind of experience with SHIP, especially on a day when my JNUG also dropped? It was a rough morning, but…
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How do I really feel after that kind of experience, on a day when SHIP & my JNUG dropped?
I’ll be ready for the next trade. There is ALWAYS another trade ready to develop right in front of us. It may mean being patient for a proper set up, but I want to be focused and mentally ready to pounce on the next proper set up. I’ve done this before, it’s how I feed my family. Just ask this guy how he survives when a good one gets away? He looks focused and ready try again. 😉
