Thursday March 7th
DATA – We have often seen the markets rally after the jobless Claims report. Will that happen again? If so, we would get another new ‘all-time high’, at a time when we are also very much due for a dcl. Wow! Let’s take a look…
YESTERDAY I SAID:
NASDAQ – We are now on day 40 and the drop down into the dcl has likely started.
.
SPX – Well, we got a bounce and the data being released on Thursday (Jobless Claims) has been bullish for the markets lately, so this may even run to a new high again on day 41, and then roll over later for a dip into the dcl. I thought that day 38 was the peak, but here we go. These markets are very bullish and surprises have been to the upside, so we’ll just have to wait and see.
.
WTIC – Oil is still chopping along and struggling at resistance (shown on the weekly chart this weekend )
THE USD actually lost the 50sma Wednesday, but was supported by the 200 sma.
I just want to say that this is now 48 days out of the lows. Obviously, there must be a dcl in that count, but it is very hard to know exactly where it is, since there was no real identifiable dcl. I would guess that it was near the end of Feb, when price was at the 200sma. If so, this tells us that the 1st daily cycle was strong, the 2nd has been weaker. The 3rd should bounce and be even weaker, and Gold will benefit from that.
.
THE FED TESTIFIED TO CONGRESS ON WEDNESDAY, AND HE DOES IT AGAIN ON THURSDAY.
.
We had The Fed testifying before Congress on Wednesday and at that time Gold slammed down and recovered very quickly, so I caught that candle here on a 4 hr chart. After the Fed entered the Q&A part of his testimony, GOLD shot back up and the Miners began to make some gains. Gold went on to hit new all-time highs.
.
YESTERDAY I DISCUSSED PRIOR RUNS FROM THE ICL. THEY PEAKED AT DAY 15, AND WE WERE AT DAY 15 YESTERDAY: So I drew 2 possibilities. A break to new highs, or it rolls over into a dcl.
.
GOLD ended ‘day 15’ up another $16 and at all-time new highs. So now we have a breakout and close at all-time highs. We still cannot tell if this will be a ‘peak’ on day 15 or 16, and dip down into a short daily cycle(?), or will this be a stronger rally, since we are breaking out to new highs? Let’s discuss that a little more…
.
GOLD #1 – If we only have a rally that is as strong as one of our prior rallies out of a recent ICLs, we could actually still go higher in the first daily cycle. I placed the measured move here, but noteworthy is the fact that the first one made it that high in 15 days. How? This one got off to a much slower start.
.
What I wanted to do next was OVERLAY the first 2 daily cycles from recent rallies out of the ICL, to possibly gauge where we are now.
.
GOLD #2 – So this is Gold with the last 3 runs out of their own ICLs. I will take the first Yellow one and the last Pink one and overlay those 2 daily cycles on to where we are now.
GOLD #3 – Look at the yellow box #1 on the left first. Notice that it rallied up, dipped (dcl) and rallied again, in a 2 wave run up.
1. I copied that from the low and set it beside the ICL that we have now (green arrow).
2. You can see that we did pull back at this point when compared to then, but then it ran even higher than it did on the first leg up.
.
GOLD #4 – On this one I will copy the pink #3 box and overlay from the bottom of where we had our ICL.
1. In this example, it ran a little higher than where we are now, and then dipped down into a dcl.
2. I’m sure that we all remember that Gold then ‘spiked’ and topped 2 weeks after the dcl. That is still much higher than where we are now.
.
Conclusion for Gold: So even though we cannot yet tell whether this will just rally strongly onward and upward, or will we continue to do shorter bull daily cycles, we do know that Gold will go higher over time. This is the first daily cycle and the second one should be strong too.
.
SILVER paused on Tuesday and then was able to push higher on Wednesday. Gold already broke out above the ‘spike high’, so Silver is lagging (it dipped down deeper during the 4th daily cycle). Let’s see if it can make a run to the highs in the next couple of days. Silver stocks have been joining in on the journey high now.
.
GDX – I can’t say that I’m happy with the candle on GDX. Several other stocks closed at the highs, so they didn’t have a candle like this, but it is a sign of weakness, the inability to hold the highs with Gold doing so well. That said, if Gold continues higher, GDX should follow.
.
AS A REMINDER: A strong ‘Bull Run’ could just….run!
.
Using the 2016 bull rally for Precious Metals, you can see that the dips were VERY SHALLOW for a long time. If you didn’t own Miners near the lows (even by the day 12 mark, which is about where we are now), it never pulled back below that price. Buyers just kept jumping in and possibly we saw short covering taking place, and Miners ran away from those without any position. So for this reason, I do think that a dip should be bought so that you at least own ‘something’ if this runs away.
.
SBSW– An hour into trading I pointed out this company that was still at the lows. That slam down that became an ‘abandoned baby ‘was the result of earnings, so it must not have been very good, but the recovery was starting quickly and could involve short covering. Abandoned baby lows are usually not retested. Price can just run higher from that low. SBSW ended the day up over 13%.
BTG could be considered to be a bit of a lagger. It sold off a bit after earnings, but Gold was not running higher then. It recently Popped out of the lows and has started to run. If it ‘stalls’ and ‘crawls’ or dips at the 50sma, one could use that as a buy (or watch it and wait for the dcl).
.
AG – Many Silver stocks like AG, HL, EXK, CDE, PAAS, MAG, GATO, etc are coming out of the lows now and we saw that Silver may be heading up to its spike high in December, so these were a buy and still can be considered a buy candidate. Since they are still somewhat near the lows one could buy a small starter position and add if it dips, or add at the next dcl, wherever that may be.
.
So the set ups remain bullish, but the timing for the General Markets is late and Gold MIGHT BE getting a bit extended here. We’ll see what the Jobless Claims report and ‘Fed Testimony day 2’ does to the progress of each individual sector. Enjoy your Thursday trading!
.
~ALEX
.
Todays report was written on Wednesday night, so this is a live shot of Gold Pre-Market at 7 a.m. I used it to show that on day 16, we made another new ‘peak’. Yesterday when the Fed answered questions from congress about inflation and rate cuts, Gold extended the morning gains, but this is getting quite extended so it may stall at any time in the near future too. That said…
.
This chart in the report showed that an equal measure of the first run out of that ICL from October 2023 could possibly extend Gold further, if ‘time’ allows it to.
