November 1st – Fed Expectations
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Well, it’s a Fed Day, and those can be very volatile and choppy, even just on an intraday basis. I have captured charts of those intraday moves and posted them in reports many times just to show that pretty much EVERY Fed Decision gives us a strong move in one direction that quickly surges in the other direction—and this repeats over and over until he is done with his speech and Q&A follow up. So please remember that from 2 p.m. to the close, the action can be tricky.
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The SPX is giving us a bounce. It could be a bear flag if this is only day 20, so let me review the 2 ideas on the table right now, due to a lack of cycle count clarity. This would be an early dcl on day 30 and now we’d be on day 20 of a final failed daily cycle that should continue to drop into the ICL. A 5th daily cycle.
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This cycle count would be saying that a day 30 dcl was too early, so THE SPX would now have a day 38 dcl & ICL. Day 38 – 45 is a normal daily cycle count. We would now be on day 2 and the Fed should send this higher.
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WTIC – Oil is actually trading as expected and at day 48, it should be close to putting in the next low.
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USD – The Fed Decision should really push the USD one way or the other. I am expecting it to roll over eventually, and drop down into a lower low, but it could pop and try to test that red trendline first. That means that this can go either way in the short term.
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THIS IS GOLD AT 6:30 a.m. Today: Gold is on day 18 and it has finally started to dip lower. The Fed Decision will affect Gold and I do hate the fact that it has plenty of room to drop and still not take out the ICL. To be honest, this could rally after the Fed Decision or it could drop. Let me show you the drop version, since we all know what a rally would look like...
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Gold has been very strong and is still up near the highs, but it honestly could drop lower and chop around with this as a ‘peak’ and a dcl ahead. Deep down inside (a guess), I really would expect Gold to take off higher, because the initial run was very strong!. That said, this is also possible on a Fed day and it wouldn’t ruin the overall bullishness, so I have to put it out here in the report.
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SILVER is chopping along under its’ 200sma, but we should be looking at an an ICL. I see a possible ‘a-b-c drop into an ICL’ in place when Gold put in its’ ICL. It is also a shakeout, so I wouldn’t expect it to be revisited but Silver has been much weaker than Gold and it may drop to the lows if we don’t rally soon.
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GDX was above the 50sma and looking good…until yesterday. This isn’t bearish , but it is discouraging the day before a Fed Mtg. I grabbed this at 2:30 p.m. to show the initial dip, but it is not broken by any means. A 50% or 61.8% Fib drop is actually considered normal and remains bullish.
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GDX bounced slightly heading into the close, so we are at the 50% fib level. I didn’t like the increase in volume with this selling and it is concerning that GDX dropped 2.6% when Gold just started to dip down only slightly off of the highs. So…
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GDX can rally from here with a Fed Decision and we can see an inverse H&S , but we also need to discuss the weaker side…
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GDX – In E.W., price can drop back to the lows of an ICL in wave 1-2 of a 1-2-3-4-5 wave move higher. We also know that Miners can do their own thing completely, even though Gold remains strong, so Tuesdays pre-Fed Drop is a bit concerning short term. Longer term Golds ICL looks very clear and Miners should run with Gold again. They did rally strongly in October with Gold. You can see that the Miners did run with Gold out of the ICL (I’ve also discussed HMY, GFI, AU, EGO,NGD, etc were solid), so when Gold runs again, I expect Miners to take off too.
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I keep putting Miners in the reports, because we have a mix of some stronger ones and some weaker. I have recommended the stronger ones from the start and they are still ok (except for Silver stocks, which are weaker). Let’s look at a couple more Miners…
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The rally for EGO in October was a solid rally. This is now $8.25 to almost $11.25 (about 35% in a month). They then released earnings and it bounced off of the 50sma and rallied again. This did pull back into the close yesterday, so if it drops after the Fed, I think that you want this on your check list to buy when the next run unfolds.
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HMY: To be honest, I really wanted to see HMY, GFI, etc drop to the 50sma and fill a couple of gaps so I could lode up. Now it is dropping and the psychology of trading is that we now worry that it is becoming weak. Is something wrong, we ask? 🙂 I still think that these will make a good buy WHEN things turn higher.
We are waiting and watching the Fed and things can honestly go either way for any sector on a day when they release a rate decision and then he gives a speech . We could see a strong rally unfold in the Precious Metals after he speaks and answers questions. It is assumed that they will leave rates alone today and raise in December, so THAT may trigger Gold higher. We’ll have to wait and see. For now, The Uranium Sector seems like a good place to buy and hold right now. I had it in yesterdays report and I will include a follow up below. Enjoy your Fed Trading Wednesday (be careful, expect a lot of false moves and chop later in the day).
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~ALEX
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YESTERDAY I CALLED ATTENTION TO THE SET UP IN URANIUM STOCKS : I said…
URA – Uranium stocks are doing what they do best–chopping sideways in a consolidation. They do have great runs higher once they decide to break out and go, but for now they are a little frustrating if you did a buy and hold at the 50sma. These do remain bullish set ups though. They are actually a buy again at the 50sma.
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CCJ – released earnings and popped 8%. All of the Uranium stocks looked very good yesterday as a buy.
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UUUU – All Uranium stocks are looking like this. They are acting correctly around the 50sma, and all pushed higher yesterday. So you want to look at and even buy any of them. See DNN, UROY, UUUU, UEC, URG, CCJ, NXE, etc.
