THE SQUEEZE PLAY

I think we’re seeing the old squeeze play in action, lets take a look…

GOLD is in a squeeze with spikes along the bottom. This is a bullish set up

Also GOLD is still on that supporting trendine

$SILVER  also has a bullish Squeeze

We have had false breaks higher almost daily , waking up to GOLD being green, only to see it sell off , try again, fail , etc .   Being DEEP in the daily cycle and due for a low, I have just ignored this noise because other things were not looking correct to me and I didn’t really want to encourage people to be  jumping in too early.   NOW, however, I think we are running out of room and I expect these to break upside very soon.

This is fine for short term & experienced traders, but I STILL THINK that we may not get very much of a push higher before rolling over & selling off  into a spring ICL  ( Meaningful Low).  THAT  trade should be great.  When GOLD does break higher, we may also see the stock market begin to sell down , and possibly test the recent break out, as shown here in Mondays chart .

I pointed out yesterday that some miners like GG, NEM, ABX , etc are actually holding up very well.  (The juniors? Not so much ).  This is interesting, still  seeing strength in such a deep sell period timing -wise.   GDX has sold off in a daily cycle possibly 45 days long? Really?  I think anyone trying to just use cycles to time the miners has been very frustrated.   This has been as long as 2 daily cycles.

Again- This is NEM deep in the daily cycle? It looks like it started a new leg up. GG has pulled back 50% , which is a normal bullish re-trace so far. It will be interesting watching things unfold.

 I want to re-post a chart I drew JAN 23 .  It is  what I thought could happen in Miners that leads to that great buying opportunity, likely  in the spring.

Look at GDX weekly now, so far it has almost followed it exactly, without the big bounce for a 3rd daily cycle . SO I dont think MINERS will sell off to new lows, I think they will be a great buying opportunity and patience in that area will be rewarded nicely. We made 40% to over 100% on some of our Miners trades, I expect the same this spring.

I discussed my thoughts on OIL yesterday  ( possible double bottom unless it gets above the 50sma). Nothing has changed, see yesterdays report .  I posted this It could break above the 50sma (Blue line)  or double bottom  (Red dotted line)

  I still own Energy stocks and they are still acting correctly. I am watching them for another leg higher, but if OIL were to double bottom , they would likely delay or drop. The set ups are still correct.

REXX –  this is a proper set up , for example.

I noticed  a few other bullish set ups in STEEL that may interest you as a trader .  These STEEL stocks sold off recently, and are in a recovery stage , so you really want to see follow through upside and not a close below those moving averages if you trade these. 

X-  reversal yesterday & becomes a buy right here with a tight stop

AKS – also a buy with a tight stop  (Some resistance around $5.25)

SO for today I mostly wanted to post about the GOLD/SILVER set up.  GOLD hit $1212 last night and has sold off all morning so far,  however I would say they are now fairly short term bullish , ready to POP higher very soon.   WATCH GOLD AT 8:30 EASTERN TIME.    If you have been watching a Favorite Miner  and see strength in it already  ( Like noted in NEM) , (  or you trade GDX / GDXJ in some form)  you may want to enter a trade IF GOLD breaks out and see if it pops higher with the metals.  This is a riskier trade , since the pop is only expected to be for a week or two.  You have seen the weak prolonged activity in Miners, Please keep that in mind.  Due diligence means check to see if your miner has earnings this week or next also, since that can adversely affect performance.

I am watching the markets melt upward and this was expected after the break out from that consolidation, but I do anticipate a test of that break out at least.   I always take things a step at a time, so then   We’ll have to see how the selling  part plays out when it starts.  That consolidation turned into such a bullish set up that I would have expected the NASDAQ to hit that round number of 5000 before turning lower. If we get a healthy pullback ( to be determined when it unfolds) there may be some nice set ups that take place in the stocks that just ran higher with the markets. I will be watching for that.

Right now it is ‘Patience’ with Energy to see how that plays out. I am still holding some positions. Patience in GOLD/SILVER/ MINERS may have paid off for traders that want to quickly trade this squeeze play when/ if  it breaks higher . Patience on a market pullback and see if trades line up there.  2 steel stocks look like  bullish reversals for a trade. 

~ALEX

P.S.  GDP & NADL report earnings  on FEB 26  –  tomorrow

NADL looks semi – bullish , but also has small signs of weakness in the MACD & RSI.    I think earnings will affect it one way or the other, so proceed with caution based on your risk .  50/50  –  It could be a buy here,  but it could also sell off if earnings are worse than expected.