How Deep is that??
MAY 7 (Intraday thoughts)
Lets not find out the hard way. When Gold / Miners are acting correctly , Trading can be profitable. Have you ever traded them when they get caught up in a sell off though? I mean a REAL SELL OFF? They pick up speed and start defying support levels , Moving avergaes, over sold markers, and so on. We may be starting one of those now, so I wanted to point out a few reasons why I think that that may be.
GDX DAILY – we just lost support of the 10 & 20 sma this morning. That was my line in the sand, especially with the Stochastics overbought and the R.S.I. rejecting 50 again (REMEMBER- THIS WAS JUST AFTER THE DOLLAR WAS GETTING CRUSHED YESTERDAY).
I was holding JNUG, but flipped to JDST this a.m.–I believe we may see Metals / Miners accelerate in their selling – lets discuss why and look at a few POSSIBLE targets along the way.
The reason why is plainly that it was ‘Do or Die’ time for GOLD & Miners when it comes to their cycle counts. Yesterday the Dollar basically crashed down on a daily chart & broke below the support that I had posted about here on its weekly. It may now bounce back inside as a “shake out” type move and bounce nicely… but what does GOLD do when the dollar bounces??
so GOLD / Miners should have Rocketed higher with the dollar crashing, instead they hardly reacted. THAT weakness should have caused me to think “Short”, but GDX held above that 10 & 20 SMA on that daily chart and I thought they could move higher today in a delayed reaction or with further dollar downside. I did use this as a warning however, that the weakness was apparent, and tweeted this out to take note of…
If it hangs in that channel- its weak (Please click charts if they’re too small)
Today- I awoke to a bit of a gap down, and flipped short as a result. It wasnt a crash open , so I tweeted this as a guide… short or long? (Click to enlarge)
The trend-line broke, but It didnt just continue to FLUSH, instead it returned to possibly “TEST” the break down, so I also Tweeted this out.
It was A place to ADD JDST if its just a ‘TAG’ of the break down ( a bear flag) , or if it recovers , you would sell the JDST & could consider adding JNUG if it continued higher and was just a shake out ).
Well, It did just tag that line & it and dropped further. NOW WHAT? I’m looking for a deeper drop. It likely wont drop straight down , but will bounce along the way to shake shorts out, but now you have to look at this as a likely Next target along the way.
As I post RIGHT NOW 3:15 EST time), we are right here. It could bounce from here & shake out shorts, but I still believe we are going lower (As I was writing, this took longer to write than I expected !!) the markets closed with a mini bounce in this chart. I still think we have begun a strong sell off & that was just a bounce into the close)
Yes, I believe we are going to continue down and in fact, the dollar may bounce up retesting its break down putting more pressure on Metals & Miners. The Daily charts for GOLD & MINERS are NO WHERE NEAR oversold. The RSI 50 just rejected Miners & Gold , and they lost their 10 & 20 M.A.’s while the dollar was trashed. It doesnt show the kind of strength that I was anticipating with a weak dollar .
Also for the cycle analysts – The “TIME” left in this move is another week or two!! Yes, there will be bounces along the way and maybe some sideways periods but often, if you are familiar with a REAL ICL (Investor Cycle low), the selling escalates in intensity as people do give up & throw in the towel. I will be looking for signs of capitulation and a strong reversal to go long at that point, but now that seems to be many trading days away. It looks as though the real selling may have just begun
GDXJ could actually end up like this in a Dollar bounce, moving into its ICL.
I will POST an update to a thought that I am having at the end of the week
Best to all and thanks for reading! ~Alex
SIDE NOTE: I am planning a vacation for next week & likely will not post much if any new content here on the weekends or during the week. If I do- I will tweet it out, so if you do follow me on twitter, you wont miss anything. Please retweet if you think your followers would enjoy reading here too! Thx
