Friday November 17th
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SPX – The General Markets have ‘Paused’ on day 13 & 14 after gapping up this week. This can either pause and run higher or…
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SPX – This could also pause as though it ran out of steam and dip lower to fill that gap near the 10sma. We saw that on the left-hand side of the chart in July. Either way, the set up remains bullish.
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WTIC FROM YESTERDAYS REPORT – We’ve been discussing a bounce and a drop into an ICL over time. Yesterday I mentioned that this bounce was very small and I said…
“I now see an even steeper downtrend (See my Magenta line) so we’ll see if Oil can get above that or not. That is where the 10sma is and this really should only be day 5 unless those lows are taken out.“
Oil never closed above that 10sma and after losing that 200sma on the bounce, Oil actually plunged yesterday. I’ll visit this further in the weekend long term report, but obviously Oil is struggling with the ICL ahead, not behind us.
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REMINDERS: Nov 15
With the USD, I have discussed the sharp drop and bounces that followed, but the USD should be rolling over. I said yesterday:
We have been seeing a strong ‘1 day drop and then a slow multiday bounce’, so this looks like a Drop, Bounce, Drop, Bounce, Drop pattern so far. If this bounces Gold could pull back and offer a buying opportunity, but to be honest, I think that at some point Gold is just going to run and leave people behind too.
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Fast forward a couple of day:
USD: The USD failed and I had mentioned that it should roll over and drop, with small bounces along the way.
1. We have actually seen a 3 day bounce now, but..
2. Even with a bounce in the USD, that is not hindering Gold, Silver, and The miners this week. They have moved higher, so that is noteworthy.
3. That could be a bear flag forming, it might tag the 10sma. When the USD drops again, I would expect Precious Metals to push higher with even more force again.
Take a look at GOLD with the USD bouncing. This is only day 3 after the reversal at support and it looks great so far.
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SILVER actually pushed to new daily cycle highs and new intermediate cycle highs. This easily confirms the ICL for Silver, and Silver stocks are finally pushing higher. On the first leg up , silver stocks only gains 1-2% a day and were very choppy, but that has now changed. Yesterday I was pointing out the bullishness in several Silver stocks.
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At the open, we saw The GDX pop, stall, and then POP!. I grabbed the intraday chart.
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GDX slowly drifted lower and tagged a support moving average and then POPPED & RAN again. This looked great, however, possibly because of the USD bounce, Miners drifted from here and started to give some back. Notice that the highs here were $29.07.
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GDX did not close at $29.07, it did a bit of a Pop & Drop.
That isn’t bearish, but it may signal the lack of trust in the move and a little profit taking from traders, but this can still run higher swiftly (or maybe fill that gap below?). We’ll see but this is a bullish set up and I encourage at least a small basket of miners for any surprises to the upside. When we get a surprise gap higher, I get emails or comments asking, “Should I chase this?” and ‘How are you buying this – do I wait for a gap fill?” etc. Having a small basket eliminates those concerns. You ride your positions and add when comfortable doing so on the dips.
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Let’s look at various Miners and see how they are playing out (We do have a variety of set ups and reactions).
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RGLD – This is a royalty company that used to do Very Well, but it has been somewhat lame lately with Gold well off of the Oct 2022 lows. Well, I noticed that it is suddenly acting like a royalty company again as Gold gains traction, and it broke out from the downtrend yesterday. This doesn’t have HUGE moves, even yesterdays move was only 2-3%, but it used to move slow and steady, so this is a buy for those looking for something like that to ‘buy and hold’. This is not great for ‘traders’.
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Recently I discussed that Silver Miners are bullish bases and just coming out of the lows now (After dropping on earnings). Imagine that! A Basket of Silver stocks may actually be profitable again. 🙂
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Yesterday I pointed out HL as a buy. HL dropped on earnings, but those losses were quickly erased. HL looks ready to break above a downtrend line and it is already above the 50sma.
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Yes, HL did a pop and drop, but it still closed up 5.54%. That means that it was up around 7% at one point. I still like this chart.
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CDE popped and dropped, but also still closed up 5.53%. Silver stocks could be showing us that they are ready to join in the rally and get off of these lows.
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I recently pointed out that FSM had bullish earnings and did NOT drop after the earnings release.
I said that I think that FSM is a leader in silver miners and that is proving to be true. It was ‘only’ up 4.14% on Thursday, but it has moved nicely out of the lows, and with excellent volume. It might be a little hard to buy it up here now, since it could be a bit extended, but a pullback might offer a nice entry.
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Speaking of hard to buy now, or possibly being extended:
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HMY is the king of Gaps to the upside. To be honest, if you didn’t buy the ICL in early October or try to buy the dip towards that 50sma, it is almost impossible to get into HMY at this point. $3.50 to $5.50 is the move so far, but it can run to $10 or more if the real bull run develops.
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MUX started to break out above the 200sma yesterday. MUX also released earnings and shot higher, not lower, even surging 13% on Tuesday. Well, this chart is from the first hour of trading and unfortunately it dipped back below that 200sma, but that still makes it a buy to me. Let’s take a look at the close…
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MUX started to breakout but lost that 200sma. Will it dip back to the 50sma? Maybe. Will it just try to break out again Friday? Maybe. It is not possible to know, but it is worth watching, mainly because it reacted bullishly after the earnings release last Thursday and then again on this Tuesday.
I wanted to also show how AG sold off and recovered after earnings, and I forgot to put this in yesterdays report. This chart is from Nov 15 and it is a $5 stock recovering from that sell off and approaching the 50sma at $5.20. So…
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AG gapped over that 50sma, but it also did the Pop & Drop yesterday. It still closed above the 50sma and it still closed up 3%, but that was disappointing. Am I giving up on it? No, because…
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The big picture for AG (First Majestic Silver) shows me that it is trying to break from a major downtrend. The upside potential could become very profitable and think about this: If the price of Silver soars, shouldn’t these Silver Miners that tripped up for a couple of days on earnings, but then quickly recovered? In my mind, THAT was like a final shake out for silver stocks, and people are likely afraid to buy and hold these, but they could really start to run if we get the major bull run here.
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BARRICK (& NEM) are heavily tied to the GDX ETF, so this pop and drop could have affected The GDX. It isn’t bearish, it just seems to be a downtrend resistance. I’ll be looking for a break out soon, this is also a large inverse H&S pattern.
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And don’t forget my recent post pertaining to Uranium Stock consolidations. They are very choppy, but all do seem to move together and they are all making progress too.
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DNN is very choppy, but it has been pushing higher over the past couple of weeks. It has reached the recent highs again and looks ready to break out soon.
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UUUU is a lagger but it looks ready to go now too, right? Back to the highs and then break out to new highs. CCJ and UEC are leading in that way…
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UEC ( & CCJ) are leaders, since they already are breaking to new highs and I expect the others to do this too. So…
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See NXE, DNN, CCJ, UEC, URG, UUUU, UROY, etc. URA is the ETF for those that prefer that.
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We have bullish set ups in the General Markets and as seen in the above charts, we still have bullish set ups in the Precious Metals & Miners. I hate the POP & DROP too. It can be discouraging when you own a basket of Miners and they’re all up 8-10% in the morning, but then close up 4-5%, but even with yesterdays Pop & Drop, The set ups remain bullish so it is hard to explain. It may just be traders and nervous profit takers that have been burned before, selling stocks that are up 8%. Time will tell if it is problematic or not, but for now I have to just ignore it. Why? Because it was only day 3 for Gold & Silver out of the 2nd daily cycle. There is plenty of time to see how these play out.
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Remember back in October when I said that this could be a wave 3 as Gold attempts to break to new all time highs? I drew this when GDX was at $30 area and…
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So far it is playing out exactly as I had hoped. It’s choppy and frustrating at times with the Pop & Drop days, but I just want to give this sector a fighting chance and ignore the wiggles this early in the game.
THIS COULD BE THE START OF WAVE 3.
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Just a sidenote before I sign off: Next week is a shortened holiday trading week in the U.S., and they adjusted the release of the Fed Minutes to be on Tuesday of next week instead of Wednesday. Gold could really have a good week next week 🙂 Enjoy your Friday trading and enjoy your weekend!
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~ALEX
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