February 1st – Weekend Report
After this weeks Fed Meeting and the Thursday Friday Market reaction, I think we’ll really put most of the focus on the Precious Metals area. I’m receiving just a few emails asking, “Should we buy this dip on Monday?’ ‘Is it different this time’, ‘Is Silver going to $300 and Gold up to $10,000?’. At this point, I have around 22 charts to show you in that sector alone, just to try to give us all a good thorough picture of things, so let’s get right to it!…
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SPX DAILY – The General Markets are chopping higher. They remain bullishly aligned coming out of the ICL, and it appears that we had a dcl on day 38.
1. It IS possible that we get a dcl at day 50 or so with another dip, but basically this is just a lot of chop for now.
2. This also could be a day 38 dcl and the markets rip higher next week. We’ll see.
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NASDAQ WEEKLY (Triangle) – The Triangle should be bullish, and we could break out next week. Yes, I know I said that last week 🙂 , but we did break out and dropped back after the Fed. Let’s try it again next week. Look at the MACD, Does the dropping MACD bother me?
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No. When we had GOLD’s WEEKLY TRIANGLE, the MACD was dropping there too, but it corrected with a breakout, and we certainly do know how things went for Gold once it broke out at $3400 last summer. Let’s hope that the NASDAQ does something similar, upside.
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THE SOX never really gave us a visible dcl, so we COULD see that next week if this keeps dropping, right? This is one reason that I started to wonder if we could get a day 50dcl with the SPX. To align the SPX, NASDAQ, SOX, and IWM, a dip next week could give them all a dcl. This would be another great buying opportunity.
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WTIC WEEKLY – Oil was up almost 8% this week and it broke out above the 50 and the 200sma on the daily charts, and the 30 week ma. That is bullish price action, but we have seen false breakouts in the past. That said, you follow price action and at this point in time, it is a bullish breakout. Oil stocks have been responding bullishly too.
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I thought that it was kind of important for us to step back and point out just one thing about the USD, using this 16 year chart. I wanted to show you a price channel.
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THE USD WEEKLY: The ‘shakeout’ at the lower trendline in 2011 was when Gold and Silver ‘peaked’ in 2011. The USD didn’t blast off higher, but it chopped higher and sideways and Gold also chopped around topping out. We are at that lower trend line again, and we don’t want to dismiss the fact that the USD may strengthen, and Gold and Silver may have just peaked with a blow off top. I’m NOT saying that the Gold Bull will die, but at times, lengthy ‘consolidations’ are important in Bull Markets and this may indicate that we are about to start one now or soon.
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Let’s talk about Gold, Silver, and the Miners. The most important take aways will be with Gold and Silver, because the Miners would most likely follow what they do going forward. So with that in mind, I will have many charts of Gold and Silver, and then briefly cover Miners.
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ON FRIDAY I SAID:
On this chart I am simply showing the last 2 ‘peaks’ in Gold. They also have sharp drops in price, but then the selling slowed up and they formed a swing low / dcl. Gold and Silver are coming due for a dcl, so will this kind of price action repeat? We’ll see as soon as next week.
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GOLD – With the above in mind, one thing to look for going forward is… in the past Gold dropped sharply one day and then small chop into the dcl. In a parabolic blow off top, we sometimes get 2 or 3 Big Drops. Monday is day 21, so we have ‘time’ to let this play out.
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GOLD – Please take a look at the mark up on this charts MACD and Stochastics. Overbought to oversold happens at DCLs and ICLs. Also, each sharp drop was followed by a few additional days of selling and we are only on day 20 as of Friday. “Should I buy this dip on Monday?’ I personally think that it is best to be patient and wait.
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GOLD – Friday was only day 20, so even if we are green on Monday and Tuesday, we still may not have the dcl in place. That means that we could still get another big sell ff day, and that is why I think that we should have time to wait and see. I don’t think that day 20 is going to be the dcl / low. We also could have another whole daily cycle to get to an ICL, take a look at the Stochastics and you’ll see why.
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If GOLD Is a parabolic blow off top, it can drop into a dcl now (a), bounce out for a few days in that new daily cycle (b), but then start to sell down to new lows again (c). THAT would be a 4th daily cycle… lower. Please study the chart for details, because it gives us an a-b-c ICL. If you see this, we are likely starting a longer consolidation. So…
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GOLD has had very long consolidations in the recent past, like the long April to September consolidation. It also had a shorter one recently. I took the shorter one, copied it, and added it to current price, just to see what that may look like.
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GOLD – This is the longer April to September consolidation, added on to current price. I just want to prepare us for consolidations as a possibility. There is also another possibility, and that is an outright crash. Why would I say that?…
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GOLD – Many strong rallies pull back 50% in their consolidations. Look at the rally from 2000 to 2011 and you’ll see that it pulled back 50% over time. Currently we have a massive parabolic rise and a 50% retrace over time would be very big and would take time to unfold. This is very steep and should be unsustainable. And right now I also see a warning flag…
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What is a SHOOTING STAR?
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It is very often a strong reversal that is a top. Why? Because the trend was up and buying was plentiful, but what happens when profit takers arrive and buyers dry up? We run out of buyers, the sellers show up, and once the selling starts it really can pick up steam. Price starts to trend lower and the old childhood screams of “Last one in is a rotten egg’ comes to mind, and everyone heads for the exits. Even those ‘buying the dips’ get stopped out as sellers.
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By the way, THIS is GOLDs Weekly chart. THAT is a shooting star, and we need to prepare for a possible reversal in trend. We had one in April too. In April we just consolidated sideways, so that option is also on the table, but we could also just crash after a parabolic blow off top shooting star candle. WHAT CAN WE LOOK FOR, AS CLUES ALONG THE WAY?
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So we can start by taking notice of the blue 50 week MA. For at least 2 years recent pull backs did NOT violate that line, did they? Price did reach that line though, so this tells us that we might see Gold drop down further to the $4250ish area on this next ICL drop. Or…it did chop sideways at times and reach that 50 week ma over time. Both scenarios may call for patience. So “Do I buy this dip on Monday’? My answer is that it is probably best to wait, this can drop. And yet there is more…
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As mentioned: GOLD can actually drop this week and give us a dcl. It could then bounce and give us a L.T. Daily Cycle that then drops again into that ICL. That would be an A-B-C down into an ICL. That being said, this could actually go pretty deep…
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And we need to keep in the back of our minds that
1. The USD is at the lower trend line of that channel ready to bounce. That was where Gold peaked in 2011.
2. This could be Golds ‘Peak’ as a blow off top with that shooting star candle right now.
3. Gold would then sell off into a much bigger consolidation. I will show you again why this could be a blow off top…
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WOW! This just isn’t a sustainable uptrend, so it is just a matter of time before this sell down more than it has been. Friday it lost $500. The weekly chart is a ‘Shooting Star’. This is parabolic. This should start a consolidation or crash phase sooner than later. The USD is at the bottom of that channel. These are just the things that I think you should know before you decide to buy on Monday (or anytime next week).
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To repeat:
Gold could drop into a dcl this week, and then chop around into an ICL in a 4thdaily cycle, followed by a long consolidation sideways like this.
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A-B-C down into an ICL: A 4th, weaker daily cycle that rolls over.
.What about a bullish scenario of a final strong 4th daily cycle that still forms as L.T. after making new highs? Could we possibly get 1 more rally as a L.T. Daily cycle that blows off? I cannot rule it out, but when you see Silver, you see parabola.
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SILVER CRASHED from $121 to $77: That is a $44 drop. You have to look at this chart and make your own decisions, but would try to be patient and see how this plays out next week. I am not personally recommending buying this dip, unless it is for a short-term bounce of a new daily cycle. Why? Well…
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SILVER just dropped $30 in one day, so what makes me think that it wouldn’t do that again 1 day next week? January was straight up for Silver from $75 to $120, and almost all of January was wiped out in 1 day. Another day like that could erase Silvers December gains too. When I look at the stochastics, I see that this can continue lower.
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Silver can bounce too and then put in a dcl.
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SILVER – And even if Silver bounces for 2 days Sunday night into Tuesday, that still may not be the dcl at day 20. Bouncing on Monday and Tuesday could make people feel like they need to be in Silver because its running to $200 next, but then it could drop into the real dcl at day 23 or 25. Yes, that MIGHT be an exhaustion low on day 20, but the risk / reward seems to lean toward risk. AND…
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SILVER IS VERY PARABOLIC NOW – Please read the chart. In last weekend’s report I mentioned that the daily cycle ‘timing’ allowed more upside, but then we could peak. I think we did. Price is actually at $85, but this chart didn’t show that candle accurately.
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GDX and most of the Miners dropped 10% or more, some even losing 20%. The selling Volume was extremely heavy for the ETF. I think that we have more downside since Gold and Silver are only on day 20. We’ll see.
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GDX – I looked back to the 2011 peak for clues, but it was very different from what we see now. This did not blow off top; it was choppy and formed more of a dome top. This would have been horrible for the ‘Buy the dip’ crowd, and I know because I bought the dips for a short period of time. What about Gold in 2011?
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GOLD IN 2011 – Do you see Golds large candle drop with my red arrow? The next week was also a large drop and then a reversal. It then ran higher and dropped and started that choppy consolidation. What about Silver? We all remember Silver!
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SILVER 2011 – Silver rallied sharply for months, similar to now. This is a daily chart and please notice that the large candle drop off of the top was followed by 4 more large candles down. The rally from Mid-March to May was erased in 4 days. Each of those red down days also ran higher and then sold off (they have wicks). Buying those bounces would hurt.
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SILVER 2011 – So we saw the a-b-c drop into the ICL and then we got a difficult frustrating choppy consolidation. It looked bullish for 5 months, but…
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SILVER 2011 – Silver chopped sideways for 5 months and then crashed into the next ICL too. A downtrend was born and Silver continued much lower than that ICL too.
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The General Markets are still bullishly set up, but they are a little choppy. I’m hoping that we see that Nasdaq triangle breakout higher and we get a nice bull continuation in the general markets.
Oil continues to show strength too, breaking above the 50sma and the 200sma. Oil stocks are playing along and can be bought on the dips or near support.
The Precious Metals sold off very harshly Post Fed. I personally think that there is more downside to come. That may be followed by a longer consolidation, but it will take time to see how it plays out.
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I see a blow off top formation, weekly shooting stars and other warnings signs, so I just wanted to put these charts together to tell a story of possibilities. Some people feel that ‘it is different this time’, and they have shared the reasons why with me. I understand, I may even agree, but I also was told that it was different with Bitcoin now that the Trump administration was pushing crypto. I was told last year that Trump loves crypto, The U.S. is buying, and the whole world would follow. ‘It is different and you wont see weakness in crypto this time’. Well, I didn’t change my reports. I called for weakness in the 4th year, possibly starting in Oct, November 2025. Now I see weakness in crypto. I’m not saying that the Bull is dead in crypto or in Gold and Silver, but after extremely strong runs, we usually see a consolidation.
All I know is that from a chartist’s viewpoint, this chart of Silver is just not sustainable without a long consolidation or crash, even if it is different this time. If you want to ‘buy’ based on other reasons, that is perfectly fine, but my analysis has to be one of patience and caution right now. We could have a 4th daily cycle lower and that next drop could be sizeable too. Unless you are a long term ‘Buy and Hold’ for many years, use stops to avoid giving a big chunk of your 2025 gains back, just in case we continue to sell off. This chart is absolutely amazing, it has surpassed my expectations, but it can turn lower very quickly too.
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Thanks for being here, and of course I will be covering all of this in the daily reports too. Enjoy your Sunday day off!
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~ALEX
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BITCOIN – Bitcoins last bounce was ‘weak’, but we were prepared for that weakness as we enter the 4th year of a 4-year cycle. I am expecting another bounce with this new daily cycle, but the weakness is really weighing things down. That being said: We are going to get a great buy opportunity in Bitcoin later this year, when the 4th year bottoms and that bullish period of trading or ‘buy and hold’ will last for 3 years!
