November 5th – Election & F.O.M.C. Countdown
I’m trying to encourage a little less trading this week, due to the volatility that I expect going forward on a week that has the U.S. Elections, a Fed Rate Cut Decision & Speach, and our regular ‘Data’ on Thursday & Friday. It could become very choppy and whipsaw, but I also want to point out when I think the next bullish trade in Bitcoin will be arriving.
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THE SPX broke down from the rising bear wedge that I had been drawing and so far it is chopping along the 50sma. We could see a bounce after the elections or Fed mtg, but I am expecting selling in the longer term though, since the SOXX broke below the dcl.
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THE SOXX : Let’s discuss why I see what I see
1. I do not think that the General Markets had a dcl on day 23 of the first daily cycle, it usually has 35 to 40 days, so…
2. If that wasn’t a dcl, I did see a dip at day 40 (normal timing) and counted that as the dcl.
3. That dcl was broken on day 22 of this daily cycle, so that should give us a failed daily cycle and a sign of real weakness this early in the cycle. This is why I expect a sell off and this week could be the catalyst. We’ll see.
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WTIC – I want to mention that this COULD BE a dcl in Oil at day 35, even though I am not buying it at this point. Usually these daily cycles run 40 -50 days or so, so we may have further to go, but I do think that the MACD looks pretty good and may want to cross higher as Oil actually closed above the 50sma again. Oil may NOT have a dcl and may just be putting in a choppy bottom though, so I am not buying it. I looked at MRO, VLO, APA, NOG, WTI, etc and they have been quite choppy too.
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After a very strong rally out of an ICL unfolded, I have been watching for THE USD to start a drop down into a dcl, and that dip looks to have begun. We might even have a day 24 reversal at the 20 ema acting as that dcl. The USD has not really affected Golds movement, so this is less interesting at this point.
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What I am interested in seeing is for Gold to put in an ICL when the USD ‘peaks’, possibly during its 2nd daily cycle. THEN the USD should weaken and drop down into an ICL over time as Gold runs higher again. For now, however, we were happy to see that the strong rally in the USD did not hinder Golds run to new all-time highs.
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GOLD peaked on day 14 and has begun to drop into a dcl. I expect it to be choppy and drop lower over time. What excuse may we read about for the dip? The Fed may do a .25 cut, and we’ll read that Gold needed a .5 cut, or something like that. Note: Gold arrows show that we bounced and double topped in the past in this area.
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Did SILVER have a day 20 dcl out of the ICL? I counted it that way and if I did not count it that way, we would have had a day 42 first daily cycle, but I do not think that that is the case. So I have a day 20dcl and then a day 22 dcl putting us on the 3rd daily cycle at day 19. The stochastics isn’t quite oversold, so we may need more time.
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Many Silver stocks look like they are dropping into dcls too, and CDE is an example. These Miners have been brutally choppy and buying into positions late has not worked out. Buying ICLs or the first couple of dcls have been profitable.
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I have been showing that upward sloping channel for a while and The GDX is still within it, but it is dropping down into a dcl. One interesting thing that I noticed was…
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GDX – One interesting thing that I noticed was that the slope seemed to be starting to increase, and that might mean that after we get our next ICL, Miners may run at a steeper rate rather than being as sideways and choppy as they have been lately. That also MIGHT mean that we get a steeper parabolic blow off top in Gold on the next intermediate cycle. We’ll have to wait and see, but I’ll be keeping an eye on that.
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This week will be volatile and trying to guess the direction that things will go in at certain times is not an exact science, so I just recommend that we expect it to be tough. If you bought and held at an ICL, you may be able to ride it out, but if you sold and rebought at a 3rd dcl, etc, those gains can go away in this environment, plus a drop into an ICL is always tough, so last week I mentioned that we all have to decide how we want to ride out the stormy weather here. After the dust settles and we see how things play out post Fed, we may see a new bottom and a place to go long, but until then, I expect volatility. I am watching Bitcoin for a low too, so I’ll discuss that below. Enjoy your Tuesday trading (or just rest up). 🙂
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~ALEX
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BITCOIN – In yesterdays report at the bottom commenting section, I noted that often we I see a reversal low in Bitcoin, it does a little fake out. It sells off and gives us a double bottom. S0 I wrote what I wrote here as a note or warning that Bitcoin may bounce and drop one more time. Please read the chart…
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So now I am seeing BITCOIN with a reversal but take a look at the stochastics. We are not oversold, but maybe one of those double bottom lows would help? So I took a count …
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BITCOIN – I took a count simply using the 30 day cycle method, and noticed that
1. After that slam down Capitulation low, we had a 32 day low,
2. That was followed by a 34 day low,
3. Which is now being followed by a day 25 day low? No, I think that we have a low ahead for Bitcoin and that stochastics may reach oversold and the 50sma or the lower channel may get tagged.
4. Bitcoin may bottom after the time of the Fed Mtg, in my opinion. Friday is day 29 using this count.
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BITCOIN – Stepping back, I just wanted to point out what I mentioned about a month ago. I was watching for that 50sma to cross above the 200sma, and now we see that the 50sma has crossed above the 200sma. Take a look at what happened the last time we saw that.
