Volatility
I don’t know if you were watching the futures or not last night, but it was as volatile as it gets with the US Elections. I saw the SPX Futures shoot straight up about 3% and actually looked as though they tripped the breakers & shut them down? I saw Gold & Silver crash and shoot back up, then crash again and try to recover and I thought to myself, “Whatever I write tonight might be invalid by the morning release of this report.” So I grabbed this chart of Gold to show you what I was seeing, just in case you missed it.
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Here we are looking at GOLD on a 2 hr chart. It was climbing rather strongly and suddenly the floor dropped out & it crashed. Then it tried to recover ( The long wick on the bottom) and it crashed again (2nd long wick). It then recovered again, so I just though to myself- “This is choppy! I’ll need to see where this is in the morning.”
So this is Gold this morning on a different time frame, the 5 minute chart. The drop last night was from $1916 to $1880. It then bounced to $1906 and dropped again to $1882. It recovered only to $1904 and then began trying to stabilize . I needed to show you this so you understand that if you woke up and saw Gold down $10 or so, it wasn’t just a mild sell off , it was volatile and that MIGHT return. Basically Gold rallied up after hrs and then crashed $36 points . So with this we should expect…
If Gold rallied up after hrs and then crashed $36 points . So with this we should expect a chance of VOLATILITY today with the US ELections and also the FOMC Mtg ahead.
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SPX – I had already grabbed this chart and it looks normal, it looks bullish. In after hrs trading with the elections it was extremely volatile here too. I saw the futures shoot up & drop and up and drop again and again too. E-Mini S&P Futures ran from $3340 – $3420+ and I think I saw that shut it down. Then later it dropped to $3325 (That is a $100 point drop) and then it bounced right back to even. If these moves happened during trading hours, it would be one big day of VOLATILITY, so I am just warning that we may continue to see choppiness Wednesday.
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This also could simply be a case of light volume trading after hrs making it easy to push around, but I just wanted to report that to you.
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WTIC – Oil stalled briefly at the 50sma
XOP – The XOP dropped but we do see solid bullish divergence at the double bottom lows, so I think we may be seeing a bottoming process in the OIL / Energy sector. It is not possible to know if it will only be temporary or will these take off higher. It could remain choppy, but buying a dip with a stop is an option if you want to diversify and own something in this sector. I do like LPI, APA, MRO, VLO, etc as possible companies.
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So now back to GOLD. After the break out and back test, Gold is rising steadily. Yesterday I pointed out how GOLD bottomed in Dec 2015 and Miners broke to new lows in JAN 2016. I am leaning toward that possibility here, but until we pass the FOMC Mtg ( Thursday), there is the strong possibility of Volatility and we did see that last night. So at this point, I am still a bit cautious, but the set up is big picture Bullish.
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So with the FOMC tomorrow, I am still a bit cautious, but the set up is big picture Bullish. Can GOLD drop sharply and swiftly to the 200sma after the FOMC MTG? It could, but at this point it may be that too many people are waiting to buy there & the contrarian side of me thinks that we may already have a mild ICL in place. This break out & back test is a bullish reaction. The MACD is Bullishly divergent.
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THIS IS GOLD AT 6a.m. GOLD is dropping and is down about $16 at 6 am, but as mentioned at the start of this report—there was a choppy, sloppy tricky overnight drop, it was not just a slow sell off.
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6 am Gold and we are down, but this is not a huge drop so it also could recover and take off higher, just shaking people off. We already have the break out & back test that does show up with ICLs. Very tricky.
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SILVER – also chopped and dropped overnight, and this is SILVER at 6 a.m. giving up the 10sma that it gained yesterday, but it is now trying to bounce back.
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GDX had a nice 4 day run. It is approaching that 50sma, so we’ll see what happens if it can get there. Let me show you NEM.
NEM – Newmont released earnings last week and really did not have a big bullish reaction, but you can see that it is starting to run away. It could be that the Big Boys are accumulating it. I like the action here and a downtrend was broken too. If NEM pulls back and you wanted a big Miner that may be under accumulation, you can buy the dips.
AAGFF – This is a smaller Silver company that I have mentioned that I own in a seperate account ( Not my trading account). IT has only had a sideways consolidation, but it did drop last week to new lows and recovered. Now it is pushing against the 50sma, so I wanted to point it out. With the FOMC this week, we may see final lows. Also with GOLD & SILVER down this morning, this may drop 1 more time into the FOMC MTG to last weeks lows and offer an entry. MANY MINERS MAY OFFER ONE LAST BUY THIS WEEK NEAR FOMC.
AG– I decided to buy AG as it broke the 50sma & I posted this chart in the live area 1 hr into trading yesterday. I thought it would drop at the 50sma & downtrend, but it got through it, so I did a starting position and I can add on dips or along the way. We’ll see how it handles the drop this morning. It may be a false break out, but I wont sell, I’ll add , since we must be close with the FOMC tomorrow.
This actually may be the AG chart that I posted, I found that I captured 2 charts as it broke out.
MRDDF – Outcrop Gold Corp reversed right at the 200sma. That is what happens in bull markets , but what about the possibility that Miners have an ICL ahead?
1. I did mentioned that some could resist the breaking to new lows at that time (MRDDF is at new lows , but this is a bullish reversal)..
2. IF WE GET A GOLD SLAM DOWN at the FOMC, and a drop to a new low ICL, I think we would only see a quick drop & recovery like a shake out with some too.
3. With the bull market set ups these, the 50sma & 200sma do act as support areas & can also perfectly hold as support.
So far that is what we are seeing with several Miners. You can buy at the 200sma reversals, as long as you understand that we may see volatility this week. Any drops from here should be followed by a move higher, so I wouldn’t use a tight stop .
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I have pointed out bullish set ups in Miner recently and mentioned that you can start a small position if you feel you are looking at a Miner that bottomed. Lets use NEM or MDRRF as examples. Even if the GDX & GDXJ drop to a new ICL low after the Fed Mtg, MDRRF may just tag that 200sma again. If you already bought that reversal you would add again as it reversed. IF it broke that 200sma, it would likely be a shake out & recovery, so you could buy the recovery.
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I will just say that in real time, when I saw GOLD & SILVER slam down , bounce, drop again, etc, last night: I thought to myself, “Here comes that volatility! This is going to get rough!”. Now on Wednesday morning it seems rather calm, Gold & Silver look like they want to recover, but seeing that last night simply reminded me that anything can happen and it is just better to be ready for anything and have a plan. Lets see what the next couple of days bring our way. Again, if you want to buy this dip this morning or see if it dips into tomorrow too, you can just start with a small starter and add on dips, or add on rips later. We are either at the mild ICL lows, or will be shortly. The weekend report leans toward ‘more room to drop’ ( I know you recall that Silver $20 area). Yesterdays report hints at the Gold bottom in Dec 2015 with Miners breaking to new lows later as a possibility. Why? Gold broke a downtrend & back tested it. It looks like a bullish low. Time will tell!
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We are almost there. Enjoy your volatile Wednesday!
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~ALEX
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LAC – I bought LAC as it regained the 50sma and also began to break a downtrend line. I am viewing it as a swing trade ( Hold for a week or 2 and see how it goes), but obviously if it breaks down I am out.
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