PART 2 Fuel To The Fire

Mid day Nov 18

As we watch the day unfold, I am still seeing some Bears add to their shorts here in public blogs.  It’s tough to watch if you think that we have more upside, and I’m not happy about it, just pointing out what that might mean .  They want to add here trying to  make their money back if prices drop. Some are still saying that   “KIng Dollar will crush the Metals” and  “It was a Break Down of Triple Support, now support is broken , so its going to crash.”    As I have outlined here…It had the makings of  a “Shake out” &  Now looks to be a “LOCK OUT”.     When these shorts finally throw in the towel, prices should even climb higher leaving them with bigger losses and then for them, prices are too high to jump into ,  without feeling like they are chasing.  I want to share with you another development…MINERS.

As explained in an earlier report- A  “SHAKE OUT” is when price breaks below support and causes “Shorts” to take or add to existing positions. Prior support SHOULD become resistance, but IF support is recovered – it is viewed as a “shake out”. I pointed that out in GOLD.  Today we see MINERS acting in the same manner. Notice…

GDXJ – I was watching for a recovery here too and drew this chart at noon. Since then,  It has now recovered its support level. Price as I write is Currently $29.22 . A close Above $28.82  is Bullish.

What about GDX? …

GDX has not recovered yet , but I am thinking it may by the close of the day . The price for you to watch , if you are interested, is $20.18

If you look at Miners…they reflect the picture that I chose for the report. Shorts were being added as price rises. Then when it gets to be that losses are becoming too burdensome, shorts close their positions and prices surge upward. You cant tell when it will exhaust, but MAY 2014 was a GREAT example of short covering rally.  Often they wont stop to let you buy if you’re not already in.  Also NATGAS / UNG was a similar short covering  & Buying rally.  Its too hard to watch it go up day after day sitting on the sidelines, but also its too scary to buy, because the pullback is feared. You have to just sit back & watch and buy either a stock that underperformed ( and may play catch up)…or buy the next pullback.  UNG eventually had one and Miners will too.

Notice the current move off of lows in these stocks for example. They were buys yesterday, along with EXK that I mentioned here.  What I am trying to show is a combo of short covering & buying leads to small pullbacks & sideways moves  in the past, so selling out of or trading positions may not be the best way to play this current move  (If you believe we are at an ICL). I hope you bought last week or at least yesterday.

ASM  some just go straight up , tagging the 10sma on slight pullbacks

  This above example was for “Miners” to show that often they dont offer good entry…and BUY & HOLD for a week or two may be better than just trading in & out.   On the other hand, COAL stocks are consolidating after each few days up, so maybe we get something similar in Miners this time?  Notice

ANR

WLT – ran up day after day, but went sideways to allow buy opportunity too. You can look for similar sideways moves or dips to certain moving averages  in the future to add to positions.

Summary:   Some still dont believe that we are seeing anything more than a Bull Trap.  Others are starting to close their short positions and it has formed a RECOVERY in the GDXJ  (So far) and GDX may be next.  I just wanted to write to say that we may be seeing some short covering rallies here and some underperforming stocks may begin to play catch up.  I pointed out EXK the other day at lows and mentioned that That was a buy candidate.

I want to post this now, because as I write…GDX is closing in on its RECOVERY number, and GDXJ is leaving its # behind. Likely more shorts are throwing in the towel.  Watch those numbers into the close…Its just another sign that we have witnessed a SHAKE OUT & Possible LOCK OUT in real time.

Best Wishes

~ALEX