We Love Swings!

When most traders were  kids, it’s probably safe to say that if they had one available, they loved playing on the swings. Today I think that it’s safe to say that most traders still love to play on the swings. We’ll discuss one such swing in a minute, but first I just want to show the chart of OIL as of yesterday. ( Excuse the typo)  : )

WTIC

I know some people that are looking at this chart and saying that it has formed a bear flag…

I am still holding my energy stocks and I still like the set ups that I have mentioned in prior reports. As for OIL in the above chart, it is looking more like a bottoming process  (Temporary or permanent remains to be seen, but the energy stocks look like bottoms).  You can see higher lows along the 20sma, so $49 is a likely downside target.  If the other 2 lows are broken, it also could simply be a stop run. Right now, the drop on 1/2 the volume as we have seen lately is encouraging for the bullish side.

For the sake of  time and along with the theme of “SWINGS” , I want to go right to GOLD.  I sent out an alert tht yesterday may have been the daily cycle low that we have been waiting for. It is our 3rd daily cycle since the bottom in November and they  ( In bear market rallies)  are often weaker and in danger of rolling over after only a short period,  lets say 7-10 days. THAT IS ROUGHLY 2 WEEKS OF TRADING, so lets stay alert to that.

My reminder chart of how past daily cycles have worked.

The first 2 boxes are strong, the 3rd & 4th begin to fail a lot. We had our first 2 boxes roughly 30 trading days long  in length in November through Jan. See how the 3rd cycle pops higher and then rolls over.

THIS Occurs in Bear Market Rallies.

IF WE HAVE STARTED A NEW BULL MARKET?  It will run higher, sideways, higher, sideways.   See 2000  $HUI. The steeper sell off came in MARCH and that was just testing a break out really.

Why bring this up? We have a swing in place in GOLD this morning. A break of yesterdays high ( $1213.40) this morning puts a swing in place and the timing is late enough that it should stick. IF you bought that reversal yesterday in GOLD or Miners…you want to watch it with a view that you may see weakness in 7-10 days.

Interestingly,  cycles aside and using technical analysis, GOLD acted correctly so far. In other words, not so bearish yet.

Here you see a reversal at the 61.8% level of the move higher.  50% is ideal, 61.8 indicates to me that we wont break the highs on the first try. That first run higher is a possible double top first ( Cup forms , then a handle ) or less.

ALSO GOLD has done what I have always shown you we expect in technical analysis. It broke out & tested the break out . I LOVE how these things play out in T/A and Cycles and other forms of analysis. Amazing, no?

I posted these reversals in yesterdays alert, taken at 2:45 my time.  With Gold up this morning , they are now swings place.

So again,  if you went long, or plan on going long in this trade, it needs to be watched carefully.  I’d take profits earlier than it looks like you need to, and watch to see how it unfolds.

Reminder :   In bear mkt rallies , the 3rd & 4th can often be shorted, but are we still in a bear market rally?  Scroll back up to the 2000 HUI bottom.  SIDEWAYS will kill your ‘short positions’ and ‘puts’. If we have bottomed, and are building this “Base” further into the next ICL in a constructive way, shorting may not be great.  We really need to watch things going forward.

  WHY AM I HARPING ON THIS AND WRITING IN ALL CAPITALS ? 

I have noticed strength in the MINERS that I would think  shouldn’t really be there heading into a 3rd daily cycle, especially if the 2nd cycle was stretched and so long. There should be selling and weakness by now. Notice what I am seeing and tell me if you see weakness or relative strength? This chart has no name for now. If I showed it to you, would you see bullish or bearish  SO far?

That above chart is NEM  (Newmont Mines) as of yesterday.

GG   ( This is bullish, not weakness so far )

AEM

With those 3 above charts and any set up like them   ( 38% or less pullback) , we should see break outs to new highs.  Is it bullish? I just want to keep all things on the table.  I have seen the double tops that give it up fast too, and a 3rd daily cycle is where that happens. SO I leave this chart as a reminder too. They can look strong into that  double top   (#5 on this chart is the double top spike before the drop). The move looked strong until that point.

SO we have about a 2 week long trade for Gold / Miners. Some individual Miners may do well , and they are all rather low risk entries as of yesterday….we just want to be alert to the fact that the 3rd daily cycle shouldnt prove to be very strong in the long run.  I am still in energy and OIL is down, I am watching  (And you should be too, if you own any) to see if its a buying opportunity or not.  I think support will hold.  Watch support at the 10 & 20sma, in some energy stocks the 50sma if they already went higher.

I dont always do a FRIDAY report, because what I write today may not change at all by tomorrow. I just cover the week in the weekend report, so let me also add that the equity markets have been creeping higher and higher, little by little each day, since breaking out.  It looks like they are possibly getting a little tired with small gains day after day & I wouldn’t be surprised to see a pullback to the break out/ Gap.

That may be a buying opportunity in some other stocks that have run up there too.

Thanks for being here, have a great day . I will be around in the morning to answer some questions in the  comments section from time to time. I may not be around this afternoon. Thank You for being here!

~ALEX

Please excuse typos and such, I wont have time to proof read this , since it is 8:47 . I just want to release it.