Friday September 28th – Are we There Yet?

We made it through a week where, due to cycle timing, we just knew that we’ have a pullback in the general markets as well as the precious metals sector. We are now coming due for a dcl / ICL in Gold and the Fed had a speech last night after the markets close. That can move markets so let’s take a look at the charts.

Before we do, this is a snapshot of Gold and Silver at 6 a.m. ET. So far we see both rising up overnight after that Fed Speech.

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SPX -I decided to go back and look at our most recent daily cycles and see what their cycle count was. Before the March ICL we had a couple of stretched out daily cycles at 50 days each, but recently I am seeing 37 days, 35 days, 38 days and now we are on day 26, so this DOES indicate that we could have roughly 10 more days of trading before an ICL forms. So…

 

QQQ – We had a reversal forming yesterday and I wanted to point out that we have seen that on the way down in the first drop lower. We can get a bounce in the next 10 days and then a deeper drop can still follow ( maybe to the 200sma).

QQQ – So we could even get a decent 4-5 day drop and then a drop into the final low. If we rise to the 50 or 34 sma & then start to reverse lower, That bounce may be one that can be shorted ( SQQQ, SOXS, SPXS) by those that wish to try it.

WTIC – Recall that OIL burst higher on Wednesday and now we see that it reversed and dropped on day 25. I still think that Oil can rise higher, since it is capable of having 45 or more days in a daily cycle. It has been a little choppy lately on the run higher.

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YESTERDAY I SAID OF THE DOLLAR:

The USD surged again, but it has reached the upper trend line, so it may begin to chop up here and then pull back to a dcl.

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AND I SHOWED THIS …

The USD (6 a.m.) is down a bit on Thursday morning and may be in a resistance zone. It may finally be ready to chop and drop into a dcl.

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The USD tagged that upper trend line and then it reversed lower after the jobless claims report was released on Thursday. This is a reversal candle at the top and shows up as a bearish engulfing on stockcharts, so we may see the usd finally chop & top & drop into a dcl. CAN THIS DROP TO THE 50 & 200sma? It could.

USD – It is not out of the question that the USD has 2 daily cycles higher and then rolls over with 2 daily cycles lower. We just have to wait and see, but a move like this would likely send Gold higher to the all-time highs.

GOLD dropped again on day 28, but we have expected that as Gold drops into a dcl.  I wrote on this chart that Gold is not due for a dcl quite yet. I want to change that thought to a bit more clear, so please hear this:  “MOST DCLs run about 32 days long, and Gold is not there yet, but it can and has bottomed earlier on day 28 at times in the past. ”  That being said, this is still considered early. Let me show you something else…

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GOLD LIVE AT 6 AM:  With a day 28 low that formed a reversal candle, and now Gold pushing higher, we COULD Have the lows in place. A day 28 ICL is early, but not impossible if the waterfall drop was enough to exhaust selling, so that does make this tricky.

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GOLD could put in a small bounce Friday and Monday and then continue to drop next week, as shown here, with a bottom closer to day 32 (give or take a couple of days). OR…

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GOLD may put in a swing low that is the ICL, and move higher as seen here. Everybody loves to try to catch the bottom, but for safety let me just mention ‘The Rule for proper cycle trading’. To try to play it safe and not get caught up in 1 more final drop, buyers wait for a swing low and then an additional push higher above the 10sma. The choice is really yours and…

The choice is really yours when it comes to trying to buy at the lows, and one other option that I have done for myself is to start a couple of small position in stronger Miners and see if I can add later ( Either on a final dip or after the real ICL is confirmed).

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SILVER LIVE AT 7 a.m. ET – Silver has actually been putting in higher lows, but I am ignoring that for now. We use Gold for the cycle counts, but here we see that Silver has been moving sideways in a large consolidation. It is up nicely as of 7 am this morning.

Gold was down sharply yesterday, but The GDX and many miners put in a reversal ahead of Gold. I’ll just repeat that this is normally early for a dcl in Gold, so we may see a bounce and a final drop.  It is not possible to know for a certainty at this point.

AAU continued to stay green despite Golds waterfall sell down.

EXK , HL, FSM, etc reversed and closed green yesterday too. I am seeing bullish descending wedges form in a couple of the Silver stocks.

Did anyone else notice that GATO has been bullishly holding above the pinched 34, 50, and 200sma? That is impressive. It actually bottomed in June near $3.50 and put in higher lows, even reaching $6 2 weeks ago (almost 100% move already??). Like I said, that is impressive.

HL has a small tight looking wedge here too and closed green yesterday. It is showing divergence in the RSI & MACD too. Silver stocks have been dropping to new lows, but I am now starting to like what I see here.

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 It is Friday, the last trading day of the week. To buy or not to buy? That is a good question, because to be honest, nothing has confirmed that a low is in place yet. The general markets are on the early side by maybe 10 trading days (2 weeks), I expect more downside with the general markets.  Gold is also a bit early by a few days.

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 The safest bet is to wait another day or 2 and I mentioned that above. Gold is considered to be on the early side of where a dcl would form, so we could bounce & drop 1 more time to a lower low. Really the choice is yours whether or not to start buying early.  I am still away and will not be in front of the computer today, but I may start a couple of starter positions simply knowing that the downside is close enough for me to endure. We do have a little more data to be released at 8:30 today and we’ll see what that does to the futures (if anything). Next Monday could be a rally or a slam down in precious metals, there is no way to tell for a certainty, to if you decide to buy anything earlier than the normal rules dictate, please keep that in mind.  Enjoy your Friday trading and your weekend!

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~ALEX

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EXK – I pointed out bullish wedges in a few stocks and they do represent a possibly buying opportunity when they break out, but I did just want to remind everyone that a breakout can also back test. That back test could happen if the real DCL is next week, so we still could see a double bottom low or even a slightly lower low with divergence next week.

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GRPN – I know that I keep showing Groupon, but it remains bullishly aligned after releasing a favorable earnings report, even during the market sell down. It has more than tripled out of the lows from the May earnings release.