We’ll Take Another look
Sometimes We See Different things
AUDIO Link http://www.screencast.com/t/VB1zwW7IPrs right click the link / click ‘download’ / click OPEN and return here to follow charts when it starts playing
I got emails and comments yesterday when Miners reversed lower saying “Miners are getting ugly, what do you think?” I guess I need to do another review and then touch on a bigger picture view.
GDX UGLY yesterday? I like the chart.
It’s closer to recent highs than lows. In fact, it tagged recent highs just yesterday.
CAN it still drop? Yes, I have said in every report that if we are still in the first daily cycle, we can still dip to a daily Cycle Low. We can drop similar to the red arrow & be fine.
I understand that some are more nervous because they’ve been burned before , but may I present another possibility. It often has to do with Position size. I AM NOT SAYING THIS IS ANYONE HERE SPECIFICALLY , but I have seen in the past that some who have lost a lot of money in the markets try to go extremely heavy to try to make it all back. A drop of any size can affect perspectives. If this is the case, one might want to examine their risk tolerance and lighten up, or stop out again when GDX dipped below the 50sma.
Quick Reminder: At lows, like DEC of last year, one day reversals and even 2 or 3 days of selling will happen.
Reminder: I keep trying to help remind all that when an ICL is in place, bottoming is a process. This 6 day sell off into a Daily Cycle Low was quickly erased in 3 days.
GDX – I said that it is a safer buy to wait for a close above the 50sma. (Apparently It is messing with us) Safer because if it drops back below, one can stop out & just watch the action if they are concerned . We maybe dropping to that first Daily Cycle low.
THIS IS GOLD as I write this a.m., it has dropped down to support so far. $1205 puts it below support & likely a drop to that first Daily cycle too.
And lastly – doesnt GOLD look almost like a twin of Last Dec 2013 lows? Nothing noteworthy has changed In My Opinion.
We could “Test” that trend line break , which looks like around $1200
I was asked yesterday (DEC 10) about reviewing the general markets. I briefly did that in the report the day before (Dec 9) . I have also done this from time to time, showing the QQQ, SPX, IWM, $IWC, RUT, $USD , $VIX , etc but likely wont cover it everyday. I Know of some reports that only come out 2x a week covering the MKTS, and most of the time the big picture of the general mkts dont change all that much day to day.
As I speak , the Futures are up nicely, but we had a reversal higher the other day too. It sucked in longs, and then scared them out again yesterday. Will that happen again ? No one knows, I do believe we will see NEW highs again after this dip . For now I thought the pullback would be a little deeper, here is how I viewed it,
SPY WEEKLY 10 WMA & Channel ( 201 and 196 ish )
SPX Daily ( Almost there? Test break out or 50sma at 1998 area) 1978 for deeper correction
QQQ has been very strong , may not drop to the targets shown (I just showed this 2 days ago, to show why I expected markets to drop)
I also showed this 2 days ago also… indicating that I expect a drop
Yes, we have been dropping. Plausible targets, but dips have been bought quickly since Oct lows.
The EURO & The YEN
$XEU – the EURO has been acting inversely to the $USD. The dollar has been strong, and the markets have been strong , as the EURO drops. IF the EURO breaks out, will the dollar continue to break down? I think so and the EURO is looking like it is setting up for higher prices, so basically this could affect the general markets, the $USD, $GOLD/$SILVER / Miners going forward. The story is the same with the YEN. It too looks like it wants to go higher.
The YEN & $SPX have been acting inversely . The YEN looks to be setting up to run higher. Good for Gold, markets and the Dollar could drop.
SO Gold looks fine, I am not overly concerned about the reversal in Miners from the resistance area at recent highs. We could be dropping into that 1st daily cycle low (As I mentioned in yesterdays report…CYcles seem a little cloudy, the technical analysis looks good for metals / miners / and now EURO & YEN. Please dont misunderstand- I do not mean That The EURO & YEN have to go up today. I do not mean that GOLD / MINERS have to go up every day. I do not mean the dollar has to drop straight down today. I am showing some Big picture and short term together to show that (AS I SEE IT) Things are still lined up.
So I want to stay focused on the bigger picture too , and try not to fear the wiggles in between. How do you see things? Did you see everything at first? I’m sure you did.
I just listened to my own recording. yes, I lost a day there somewhere, sorry : ) Today is THURSDAY DEC 11 and I posted MKT analysis on DEC 9 (Tuesday) .
~ALEX
Alex,
day 28 will be next wednesday with the FED meeting, it looks like we may not be able to get free before then to end the first DC for pm. 1 scenario is to drop into the FED meeting and then rise sell the expectation and buy the news? the other scenario is to rise now and then revisit this point on a slam down, that would be a small wave 1 and 2 and then be ready for a ramp up after the FED meeting into year end for the goldies.
I thought about the timing & the Fed mtg too. I hate going into a Fed Mtg holding positions , because even though they are rather non-events at this point, the markets still “react” to them – It does seem that (especially Miners) are just sluggishly rising & falling here, so I can picture a drop into the Fed Mtg
. I think I could see either one of your scenarios play out too. I’m still looking at the Euro and that possible gap fill and the Dollar possibly doing a double top of sorts. Thanks for the input
Hi Alex, Big picture – gold and silver holding up well, especially considering strength in stocks and USD. Small picture (you told me to watch the 5 min chart to see what is really going on!) – there seems to be a change in tone in the gold market since todays low at approx. 1000. The multiple red candles are on low vol and the rallies are on high vol, almost as though the bulls are standing by and letting the bears get the price down before placing their buy orders. Do you see this as being of any special significance?
Well thats a good observation. I do use the 5 minute ( or 15 & 30 minute etc ) charts to see whats happening “today” , but also aware that tomorrow can be a change.
I was also thinking that tomorrow is Friday & it seems that almost every Friday has had a mini sell off & then buyers stepped in after that too ( those shake outs we’ve seen) . So my mind says- same thing? ” Sell down pre-market Friday and then scoop it up into the weekend? Or change it up , because we may have a daily cycle low ahead of us. What if they sell down and we drift lower into the fed mtg Wed.
SO I guess what I’m saying is what you mentioned is a good observation of how it is acting today. I’m unsure how this will play out short term in the next few days,however. I’m still Bullish, but it’ll be so much easier when we can finally see where the First Cycle out of Nov 7 lows bottoms and the 2nd cycle begins. I expect that 2nd Daily Cycle to go higher than the first one did. Thanks for sharing your observations!
Also I just looked and do also see what you are saying, the buying seems stronger than the drift back, but the MINERS seem to be leading us down into a daily cycle low
Hi Alex, thanks for your comments. As I have said before, I think gold and silver are the key markets to watch. And, they are doing very well today considering the strength of USD. I sent you a chart of $Gold:$USD in an email recently and I would post it again if I knew how. Anyway, I have just looked at this chart and it is still in an uptrend – up about 7% since Nov 5 low.
I have become increasingly convinced that the miners are under the influence of year end selling. I routinely use 14 day RSI, 12,26 MACD and OBV to assist in analysing stock prices. On both GDX and GDXJ there is a marked divergence between price and all three of these indicators. That tells me that price is currently being affected by something other than normal buying and selling pressure. Since the prices are lower than they should be, there is an abnormal selling pressure. Year end selling is an abnormal pressure since there is an artificial constraint of time on these transactions. This might lead sellers to accept prices lower than they would otherwise. If they are doing this to save tax on other winning trades they will also feel that they are gaining even though taking a bigger loss than they would have accepted without the tax gain.
If my theory is correct the miners should take off when this artificial selling pressure passes (as long as gold and silver has not turned down – which I am persuaded is unlikely given how the metals have been performing in the past month).
Bull ‘Hope’
If pog can continue it’s ic relative strength, the GDX miners might pounce to $23-25, next dch, inciting catchup passion. Add decreasing costs of energy to mine (margins) this last few months and I get more confident with that minimum $23 at a relatively modest $1280 pog ICH?
I have looked at pog/gdx relative strength with the divergence idea and am curious your thinking that $1240 to $1260 pog seems hot to the GDX miners. I’ve attributed this correlation to costs of production which are since diminishing dramatically.