Tuesday March 17th – Baby Steps
The weekend report was called Courage, because I was discussing that despite the recent ‘all sector sell off’, we could see the Precious Metals bottom first in time, and begin to show strength. This would be a buying opportunity , but it may take courage at that time. This could be at the next ICL in Miners. In this report, we may be seeing an early sign of how that leadership in Miners may starting to take place. I’m going to discuss Baby Steps and start this report with a hand drawn chart to show what I am discussing…
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SPX & GDX – In the past when the Markets were rolling over and taking everything down with it, we would eventually see strength start to show up in the MINERS and they would bottom first. It happened after the markets topped in 2000, and it also happened in Oct 2008. In 2008, Miners bottomed first and the general Markets continued lower, not bottoming until 2009. So here I am just drawing a market sell off with normal bounces in Red. GDX sells off too, but eventually begins to put in a bottom and even starts to move higher. Please read the chart.
SPX – The SPX sold off sharply again Monday, and the DOW lost 3000 points. We have had ’40 day daily cycles’, but with this extreme selling, it may be possible that it bottoms a bit early. So far though, it CANNOT get above the 8 ema. Guess what? Even with this selling, Miners were up big Monday.
WTIC – Oil dropped again and down another 10%, but it did not break the lows. Guess what? Oil stocks pushed higher. Oil may be trying to bottom, so if it bottoms in this $26 area, it could forms a bull wedge? or…
WTIC – It may bull flag and drop 1 more time, since Oils daily cycle does usually last longer too. It is early for a DCL cycle-wise, so caution is recommended, but this $26-$27 price area has been supportive in the past…
WTIC – Magenta arrows show support, so we’ll see if oil bounces around with a bottoming process here or breaks down.
XOP – The XOP also looks to be bouncing at the lows, with lighter volume selling. It could be firming up, because many Oil Stocks have been popping, as mentioned in last Wednesdays report. Let’s take a quick look.
WLL – I used this chart when I mentioned some of these Energy stocks a week ago . A break of the downtrend line could be bullish…
WLL – It popped Friday …
WLL – And even had follow through Monday. This is actually a 140% move, so taking a SMALL position in some of these has been good ‘trading’ for the short term trader. LONGER TERM? It depends on Oil going forward.
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LPI – With Oil selling down, LPI POPPED last week twice with big volume too, and these little pops were actually 100% price moves. Notice that it returned back to the lows both times, so they are short term trades for now, but it could be a bottoming process.
OAS- OAS popped 168% on Friday with good volume. This can be short covering & buying, but I’m simply pointing out the action that I am seeing in energy stocks as Oil possibly bottoms out. Traders can trade the section, Investors would want to be careful, because bottoms can be VERY choppy (especially with current market conditions).
CVI Energy popped on Friday too . It dipped Monday and gave 1/2 back.
DO – Diamond Oil popped 164% Friday too, from under $1.50 to $4. It dropped back down on Monday, but climbed all day long back above $3. These are big moves.
MRO – This was a $14 stock in January and dropped all the way to the $3 area. It could be bottoming. Even a nice bounce in the form of a gap fill is a large %-Gainer.
So I am watching and trading Oil / Energy stocks, but I will remind everyone to KEEP POSITIONS SMALL. REVENGE trading is emotional and can be a trap.
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PRECIOUS METALS: THIS IS INTERESTING. We know that Gold was holding up well while Miners were dropping for a while. Well, GOLD dropped $30 and may be playing catch up with the sell off in Miners, Silver crashed and the General Markets crashed Monday, but Miners were actually up a lot. Let’s take a look at that…
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GOLD – Gold gapped open and then dropped all day with the General Markets. I Used a weekly chart to show the 50 week MA.
GOLD – So far the drop doesn’t change the big picture, but you can see that it can have more downside.
Silver got crushed Monday, down 11%. That is just Ugly. Could the Miners really be higher with the SPX, NASDAQ, DJIA GOLD, and SILVER all down so big? And the DOW even dropping 3000 points?
GDX – Miners flipped higher and GDX was up almost 20%. THAT is a BIG move when Gold & Silver got smacked down, so at the very least, this shows what can happen when this puts in the next ICL. Question is, IS THIS the ICL? That may be a possibility, we need more time to be safe…
GDX as of 11 a.m. yesterday – I wanted to point out 2 things on this chart.
1. If it is NOT the ICL, we may just bounce & roll over as shown, just doing a small stop run as it breaks these lows.
2. I used the Magenta arrow as the dcl, and if it is, we’d be too early for a dcl. What if the RED ARROWS are dcls, then that ‘a’ of the ‘a-b-c’ could be a 1/2 cycle low, and this would be on time for a dcl (Maybe even an ICL ). Read the chart.
3. DID OTHER MINERS pop when GOLD & SILVER crashed and the DOW Crashed 3000 points??
The reversals seem yesterday are often bought by technical traders as Bullish Engulfings. You must place a stop under the reversal, and usually raise it as time goes forward.
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MAG – That looks like a big bullish engulfing with high volume. That move was a gap down with Silver, and then a rally from $4 to $6. It could get choppy, but I have mentioned in past reports that a candle like that can be bought with a stop and then raise the stop as price rises.
IAG – I decided to try to look at other miners with a view toward individual cycle counts. IAG would be within the timing for a dcl, though recent ones are 32ish days- these drops were extreme.
SAND – Even Sand landed on day 28 and also gapped down, reversed, and did a bullish engulfing with Gold & Silver getting hit. These may be durable lows. Let me show you something to compare these pops to,,,
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Let me show you something to compare these pops to. This is a cautionary note for those that may buy the bullish engulfing with a stop. They CAN drop & Chop without breaking the lows, but the moves can be BIG percentage-wise. Notice LPI again…
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LPI popped like the Miners, and dropped back down, then POPPED again. If Miners do this POP & DROP with a day 28 low, they can test that low and put in a dcl on day 31 too.
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So at this point we are seeing things take place that makes the markets less predictable, like a 1 point interest rate cut on a Sunday for example. My weekend report showed how we could be entering a bear market drop in the general markets now. We have to be heading into a recession, with EVERYTHING closing down for a quarter or maybe more. Sales will be slashed for many companies. I don’t see how company profits in some companies will do anything but plummet, but I mentioned that in the past I have seen the Precious Metals bottom first and resist selling.
We actually caught a glimpse of that Monday, with Miners gapping down and strongly reversing higher, while the down had its biggest point loss ever, and Gold & Silver slammed down too. It could be a sign of things to come, and it could be a bottoming process beginning with Miners ( and Oil/Energy stocks). Only time will tell and Tuesday can tell us with Miners are going to have any follow through higher, or is it just an occasional pop and drop?
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~ALEX
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HUI – We have seen very choppy consolidations in the past, yet the bull run continued higher when the choppiness ended.
HUI From the weekend report: The HUI Crashed down and broke many past ICL Levels, but once it bottomed, it started trending higher in a bull run that ran from $150 to $650. We will look for signs of bottoming, and we may be seeing some signs of that starting now.
