November 6th – Explosive Moves

We have recently been seeing a lot of uncertainty and choppiness in the markets.  We knew that last week & this week would be choppy and full of uncertainty, but we also knew that that was also going to be coming to an end this week too.  We needed further confirmation as to which way the markets would run first, and Yesterday with the Elections in the US winding down and the FOMC Meeting pretty much a guarantee that interest rates would be held down, we got explosive moves in MANY Areas. Our choppy precious metals sector seems to have picked a side too, so lets get right to the charts…

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SPX  – Do you see this move that has surged higher day after day after day? I want you to imagine this: “What if GDX  or Miners do that now?” DO I wait for a pull back or just enter?”  I will discuss that when we get to Miners, but the answer is that this can be a ‘runaway move’, and they can just keep running before we get any meaningful pull back.  Yesterday was the time to add to current smaller positions and I’ll discuss that.

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So the General Markets remained bullish and at one point yesterday I ran through every chart that I had in recent  reports (ETSY, SOHU, SQ, MSFT , LAC, SOLO, MARA, RIOT, OGI, IGC, AMD, MU, etc. etc). and they were green.  The General Markets look Bullish. The MJ Sector was absolutely on Fire.

I have had in recent reports that I am seeing signs of a bottom in the MJ Sector. I have pointed out stocks like OGI, IGC, HEXO, TLRY, CGC, VFF, CRON, etc.  They can be hard to ride with their wild swings, but when they run higher they can  (like Miners)  Double and triple rather quickly. In the US, Biden Campaign stated when he was running that they would legalize medical and recreational marijuana if elected. Sometimes Perception is reality in times of uncertainty.

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The MJ Sector was absolutely on Fire yesterday. The ETF was up 10%, but some of these Companies were up 20-50% too!

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IMPORTANT TO WHERE WE ARE NOW:  With GOLD recently I said that I was leaning more toward the idea that we are seeing what we saw in 2016.  The FOMC was still ahead so I wanted to be cautious, but we discussed what happened in 2016.

In 2016 we saw Gold bottom first  ( Dec 3, 2015 ICL) and then Miners dropped to new lows in January, but recovered and that was it,  the ICL was in place.  With that idea I did again mention that even though we have choppiness and uncertainty, I thought Gold could have a milder ICL in September and that I was seeing many miners looking Bullish too (some near there highs, others double bottoming etc).  It might be wise to start a few small positions and be ready to add on a dip or a rip, in case the lows were in place.  WE GOT THE RIP.

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GOLD PreMarket- Yesterday I posted this before the open and said that this is just plain Bullish. It was that break out of the downtrend line & a perfect back test. Gold began to rise above the 10sma, and that is simply Bullish.  See the chart.

 

GOLD : This is why I felt that we had a mild ICL in place. Gold broke the trend line & back tested it.  Yesterday it continued higher as the day went forward.

 

GOLD by the close: We have another type of trend line break (Bullish) and Gold was pushing above the 50sm (Bullish). The RSI finally pushed above 50% (Bullish) and the MACD has crossed higher.

As recently as yesterday this could have easily been a final daily cycle that rolls over & drops to the 200sma as an ICL, but breaking above that 50sma & downtrend is confirming strong bullish action. I have to conclude that the lows are in.

 To be honest, I was expecting a drop to $20 as an ICL on Fed Week and pointed that out in the Big Picture.  That would be a good drop into an ICL and a back test of a recent break out.  We dropped to $22, but AS OF YESTERDAY that looks like all we’ll get.

 

SILVER did the same thing that GOLD did. Silver broke the downtrend line & closed well above the 50 sma and that makes this now more of a Bullish confirmation and a Buy.  A drop to the 200 sma was $20, so you can see how compelling that idea was and that makes me think something important here...

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A drop to the 200 sma was $20, so you can see how compelling that idea was and that makes me think something important here…

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I feel that we could see a truly explosive move higher now, but why?  Possible Short cover.  IF you were thinking of shorting Silver, where would you load up your short position? Right at the resistance shown on this chart.  You’d be thinking that we’ll drop to the 200sma (red line). These shorts will now have to cover and that is as good as constant buying.  Yesterday we saw Silver Miners absolutely explode too. Many up 12-22%!  That could be short cover & Buying too. 

 

GDX gave a buy signal too, as it broke above the 50sma with strong volume.  That would make GDX DAY 5, since it broke to new lows similar to what we saw in 2016.

HUI ICL 2008  – Looking at the double bottom low in 2008 you can see ‘dips along the way’ that offered buying opportunities,  but you really need to see something very different from the 2008 lows. You need to see the 2016 lows, since we just said that this time looks similar to that time. This is an older chart from an old report, ignore the writing on this chart.

 

GDX in 2016 broke to new lows and then it was like a sling shot out of those lows. LOOK AT THIS EXPLOSIVE RALLY. As GDX broke to new lows, I think it was heavily shorted as a failure and then when it recovered, it had short covering and buying. I told my subscribers at that time not to wait for a pull back, we could see a runaway move.

GDX 2016 – So here it is again. We bought the reversal dip & I recommended not selling anything because we were in a short covering rally / runaway move.  WE COULD BE ABOUT TO SEE THE SAME THING. Yesterday was a confirmation buy and several Silver stocks like EXK (up 22%) CDE( up 15%) AG (up 12%) etc may be experiencing strong buying and even some short cover of their own..

GDX 2016 – So for those that are going to ask, “Should I just wait for a pull back?”,  my answer is “You need to at least own some Miners by now.”  We have another tricky low here and it could have drawn in the ‘shorts’.  Gold bottomed in September and Miners broke down last week and that can draw in shorts. They may now be trapped and need to cover positions.

If this does what GDX did in 2016 under the same circumstances?

1. GDX broke down , reversed, and then ran out of the lows to that 50sma.

2. It actually ‘paused’ for 3 days on top of the 50sma, but then…

3.  GDX ran higher and eventually Gapped away higher (see the chart),  and that Gap never closed.  That run left a lot of people behind.  You had to at least have some positions at that 50sma and it paused for 3 days there.

 

GDX is currently above the 50sma as a buy.

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I’ll post more chart set ups below,  and let me just mentioned that now is not the time to be nervous about holding your Miners over the weekend.  I got an email from one reader that started the Miners positions last week as recommended, but instead of adding, wanted to sell before the weekend and lock in the gains. He was thinking that a Sunday night sell off would take the gains back.   I understand that feeling very much, but what about a possibility of ‘short cover’.  I am looking at this as Bullish confirmation and possible runaway short cover move next—even if we pause first.   If this goes into short covering, you risk being left behind for the real meat of the move, a multiweek rally.  I believe that we had strong confirmation that the lows are in place now and we are on day 5 for GDX.  Can we dip? Yes, but most likely GDX will hold the 50sma now. In fact, These Miners could gap open Monday and not offer another good entry.

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As many of you already know, when an ICL is in place you can get many weeks, even 3 or more months of upside, so we have some great trading gains ahead.  You can buy & hold a core and I will also be finding the low risk set ups that are ready to go and making good gains along the way too. These past 2 weeks were choppy and rough, but now it seems that we have those blue skies ahead!

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I’ll cover more below and in the weekend report.  Enjoy your Friday trading!

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~ALEX

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CDE popped 16% yesterday and I added to my current smaller position even before the Fed, because I saw Gold & Silver breaking higher over their 50sma & downtrend lines. CDE was doing the same, as seen here.  SO lets discuss CDE…

 

 

So lets discuss CDE.  Can this drop to the 50sma as shown as a good place to add?  Yes, it might. If you own it and didn’t add, should you wait for a dip to the 50sma or a back test?  Well, you risk missing a runaway move, so I’d still add something anywhere above the 50sma.  Lets discuss THAT possibilityof a runaway move…

 

 

CDE BIGGER PICTURE – You can see that once this ICL was in place, we were expecting a run that could double this stock. Adding now and then seeing it drop to the 50sma hurts temporarily, but if the ICL is in place, the meat of this move is ahead, and…

 

CDE VERY BIG PICTURE – Some of these Silver Miners were up 12-22% in one day. If the sector gets running hot and finds a lot of buying, we have a long way to go. Waiting for a drop to the 50sma and missing this move would be sad. My advice remains the same as last week:  I would at least start a position & add on a dip, add on a rip.

 

AXU  just started to break out, so it is a buy too. The problem is that it was up 12% and that makes it hard to buy, since we worry about a pull back. Again, start small, add on dips.  If you already owned it at a lower price, you can add . It sat on support and yes, it looked like it would drop to the 200sma, but now it is bullishly breaking out. So…

 

 

AXU BIG PICTURE- When I look at the Bigger Picture I see great potential here too.  AXU just broke from a massive 7 year base and it can slowly run back toward prior highs.

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I posted this live yesterday :

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EXK SHORT COVER? EXK gapped up and as it started to cross that 50sma it just kept extending until it eventually made it up 22%! This may be the kind of short cover that I have discussed. I have pointed out where shorts may have entered short, added short and then may have added short again. If so, they need to close the shorts positions by buying EXK.

 

Silver stocks exploded higher by 12-22%, but many Gold Miners took a more gradual gain with 5-10% gains. They could offer low risk / high reward entries. For example:

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AU  sits on support at the 200sma. Several Gold stocks did land on their 200sma and in a bull market the 50 & 200sma often do act as support. AU dropped from $37.50 to $22.50 & is a buy.

 

AUY -Yamana was up 7% and is just starting to break out too, with increasing  volume.

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I posted this chart of GPL in the live area yesterday. It is pushing on the 50sma at 90 cents. You can see that these looked like they would drop to the 200sma, but …

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GPL actually broke out above the 34 sma and bounced off of the 120 sma. I like the volume and I think that GPL will run nicely.  ALSO they reported earnings yesterday and this was the reaction.

 

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2 days ago I mentioned that  I owned AAGFF and that it was bullishly pushing on the 50sma. That would be a buy if it gained it…

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AAGFF broke the 50sma and pushed up almost 20% higher. This is more proof of the overall bullishness  too.

 

IAG sits on support too. They released earnings and were up 10%, but this is a low risk, high reward buy in an ICL time period.   IAG is under $4 and it could easily run 100% or more.

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IAG is actually a break out & back test as it sits at the 200sma. Can this run to $8 (100%)? Or  $12 (200%)? Yes, it can in a bull market.

I pointed out that SPAZF was pushing on the 50sma yesterday and had strong volume in just the first hour.  It closed right above the 50sma and this is a buy. Former August highs would give you a 100% move.  Breaking those highs and running higher is a strong possibility too.

 

TDRRF had a great run from may to August, but was a bit of a lagger yesterday. Its a low risk buy if you wanted to by a smaller one

 

NIO ELEC VEHICLES ( EV)   – I pointed out the RAMP higher in NIO, a Chinese  Elec Vehicle company that is like the Tesla of the US.  Well…

XPEV – XPeng, Inc. designs, develops, manufactures, and markets smart electric vehicle. I almost recommended this one and almost bought it, but I chose SOLO instead. This is exploding higher, so how did SOLO do?

 

SOLO  was also up almost 30% yesterday. These have been running strong so you can layer out on the way higher or try and ride it out and see if it does hi the July highs (very possible).

 

LAC  – I own LAC and mentioned it as a break out earlier this week. It is a Lithium play in the battery sector. You can see that it ran from under $8 to $17 in days in September, so we’ll see what it can do now.

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MJ SECTORON FIRE:

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TLRY  Popped 30%

 

ACB popped 41 % out of the lows.  These could be seeing short covering or just a burst of strong buying, but volumes are also huge here.

 

IGC was recommended since it consolidated sideways while many MJ Stocks sold off sharply.  IGC looks like it hardly moved, but it was actually up 13% here and should have a lot more upside as it pushes above the consolidation.

 

OGI  was recommended because it has a nice steady consolidation along the 50 sma. It also popped 13% yesterday  and these can all begin trending higher.

 

This MJ SECTOR will probably become a BUY THE DIP sector, since it may recover and start coming back to life with sales increasing and Medical uses becoming more widely accepted & legalization becoming more and more likely.