I dont always feel the need to do a Friday morning report, much of Thursdays action flows into Friday and the weekend report covers that. This week we had some interesting developments , so I want to do a quick review.
SPX – I have been looking at a Wedge pattern , but lets look at things from another angle. This looks like day 8 of a new daily cycle.
NASDAQ – A break to new highs. The reversal after the Fed mtg has follow through. Volume picked up. If I was long Calls or TQQQ or any other long vehicle, I dont think I would sell at the tag of this blue wedge pattern yet. The recent consolidation has built up energy and I would take my chances that we are breaking out a little higher. THAT break out may eventually roll over, I will explain further below. For now bullish factors are:
1. We are early in the daily cycle (bullish)
2. Sentiment got really bearish, adding shorts (Bullish)
3. Break outs in NASDAQ, IWM, RUT, etc to new highs. Watch those for clues.
IWM – You can see that the wedge pattern is still in play, today is important. Breaking to new highs in the RUT and BIB look good, but Breaks to new highs in the past HAVE FAILED. I’ll explain.
IMPORTANT CHART- Notice that prior breaks to new highs have not had follow through, so we keep that in mind. Smart money may be unloading , causing a topping process. The $TRAN is still weak (DOW THEORY). So there are warnings too.
SPX : Notice breaks to new highs were sold off soon after. I would use trailing stops or stops below the prior highs If I was long and strong. I would not be leveraged personally.
There is a pattern that has played out in the past in EEM . It has higher lows and often surges out of the lows for roughly 7 or 8 days, then does an initial dip before moving higher. Buy the dip?
EEM- I think this 3 higher lows in EEM was 1st posted in the comments section by LeChiffre . I like the set up.
WTIC– I cant tell if OIL is having trouble or just trying to bore me to death. Its still consolidating above the 50sma, but I dont want too much time eating up the 2nd daily cycle. We need a move higher to curl that MACD higher. RSI is still good.
NATGAS -broke below the 10sma, may tag that 50sma. The chart is ok, but I expected more strength. The RSI was weak on the recent mini double top. I would sell below the 50sma just to be safe (or now) until I see strength.
XLE– I’m not happy with the XLE and I have sold or been stopped out of more than 1/2 of my energy positions. ( I own SZYM and REN) I had to leave early Wed, so I sold my UWTI & UGAZ due to risk with the fed Release, got stopped out of CLNE . I may not re-enter until I see some action. Also I expect a possible short trade or even better than that, a strong move out of the ICL later this summer in Metals/ Miners. I may try to be patient and wait in cash for that. This is a down trend until it breaks higher.
I do not think the dollar will break to new lows- this could pressure Gold as it bounces.
GOLD, SILVER, and MINERS
I am writing because they looked great, but there is a need to be cautious
GOLD – that was a strong looking pop on day 9, but we need to be careful . It is real looking, and with this consolidation, it looks like it just wants to take off and run, but…
Please note that we have seen this before in the 2nd daily cycle. It didn’t do a lot after the POP in May and the 3rd daily cycle should be even weaker. Even in BULL market runs with Gold, most 1st and 2nd daily cycles are strong, and the 3rd is mediocre. Theoretically this POP could be shorted into a DCL. (GLL) . I personally am not taking that trade yet.
SILVER – Notice: When Gold popped in that 2nd daily cycle in May, Silver popped more (orange arrow) . Yesterday Silver Popped & dropped . It hit resistance at the 50sma and failed. Please take that as a warning, since Silver & Miners usually lead the real moves.
There were many nice moves in Silver Miners. Some Miners are holding up very well. I have been discussing the possibility that smart money is accumulating some miners before the next real run higher begins. Caution still must be priority .
GDX– acted perfectly so far, but a 1.27 % pop ( $0.24 gain) isnt much to get excited about when Gold was up $16+
GDXJ- JUNIORS held up better and do look good with increased volume and the MACD cross. This simply tells me to focus on Juniors once the real ICL is in.
SO I just wanted to post this update and point out what I am seeing. The markets actually look very Bullish, but trailing stops or stops below prior highs should be in place. The wedges are still in play but there is always a chance that they could be negated. A short squeeze could come from those who shorted that boring, tricky sideways consolidations, and there is a chance that it could lead to a strong break out higher.
The TRAN is still weak, BUT….$UTIL is showing a little strength . I’ll have more in the weekend report. Have a great Friday and weekend.
~ALEX
It Looks A Little Mixed 
Cash Is King
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Great points about pm juniors. Again I don’t think they will seenew lows, it is all a matter of buying the coming ICL. Do you think it is going to be more than 3 DCL? Or this is it? It has been difficult to recognize DCL and ICL’s.
Hey Marinho,
That is a tough one, and it is what needs to be watched as we head down in the next drop. I dont think we can know until we see how the 3rd DC sells down. There is also a possibility of a 4th and 5th daily cycle. UGH. In my mind I wonder if we had a 3 daily cycle IC Nov -March, so to balance that off, do we get 5 long , boring sideways ones now? the move since March has mostly been sideways.
To answer your question: That ICL in March was tough to spot, I got a strong buy signal in Miners on Match 10 -using a T/A technique that i developed, but I admit that I was looking for 6 months between ICL to ICL , based on the past few ICL’s. so I thought we’d get a 4th daily cycle into an ICL in April. I didnt take that buy for long thinking it would be risky with the 4th dcycle ahead of us. I had a Bias that ICL to ICL would be 6 months.
I guess that the answer is that I really need to focus when the selling takes place.
Stocks are going to be on week 36. The longest intermediate cycle of this bull market was 37 weeks, trough to trough. This is likely to be the longest intermediate cycle of this bull market and maybe ever. Buying 36 weeks into an intermediate cycle is risky for sure. There are divergences in MACD, the advance decline line and weekly money flows. All signs that often occur as an intermediate cycle tops. Trailing a stop is a prudent plan.
USTs: If Bond prices hold the early gains today that will be 2 v positive weekly candles on TLT
TLT WKLY CHART – looks like it wants a bounce (refresh)
.
I like TLT. I have averaged in on a buy the last two days.
GDX GAP FILL from yesterday
Think this is a 2..pullback. hows jdst look 4 a scalp..also szym. Sorry..at dr on cell.
Thanks Alex,
As always a great report. I remember before you started your paid site you had a model when 2 or 3 indicators had lined up to get you in and out of gdx. You haven’t gone back to it in awhile. Maybe you can incorporate that into your analysis.
Knight
You’re right. I use that model in the 3rd or 4th Daily cycle, It caught the past 6 icls actually….even the stealth one in May of last yr. , and I was using it in March ( it triggered March 10). Since I was expecting a 6 month IC, I also expected a 4th daily cycle , so I wasnt going to go heavy in March or call a buy, because I expected it to rollover after 8-11 days or so.
On the drop in GDX to june lows, it was not really even close to a strong buy signal, it was more of an oversold buy.
I am definitely going to be using it this time in the 3rd ( and 4th , 5th if we get those) 🙂
Alex,
Can you show us the model in the weekend report and how it looks on a current chart? if so, thank you. Shermo
Uranium anyone? UEC
i added at 1.18 & so far looks like a dead money 🙁 urre
Gave up on URRE first thing this morning.
Holy Toledo! Down 30%. I swore off uraniums months back, seemed like I could never make money on them.
Yeah. That’s just not my bag. I’ve got way to much exposure to commodities, mining etc to be chasing crazy uranium penny stocks.
Kite is doing alright, the rest not so much.
Meant to add that this morning. I have a limit buy set of it comes back down to test, but didn’t want to chase at +4% after a huge move by NAZ.
GFI double bottom and bouncing. AUY at lower trend line. EGO green. ABX inverse H&S
any thoughts on REN?
Might be good here, like support on chart, but oil very unimpressive. Check out ERN, up 10% today. REXX has been resurrected. GDP and HERO dead (changing ticker to DUD!).
Man, really surprised how much oil has sold down since storage report, my USO calls are essentially dead at this point. Now, will look to liquidate all energy on any possible strength. If/when crude breaks above 62 I’ll look to get back in, but not feeling like holding now that this consolidation is really starting to extend.
Added final 1/4 to Nat gas as it held 10week and came off of morning lows. Need gas to really firm up next week.
Er, is that what they call a stop hunt on URA?
WOW…thats wild
Heads up, big block traded at the last minute on GOLD (Rangold). Volume spike.
interesting 🙂
Wow, CLNE took a huge dump right at the close. Alex, maybe best you stopped out. I am within pennies of my stop. Would have been better if I had it tighter and just exited, most likely.
I like your weekly of NATGAS yesterday, reversed at 10week today, looked alright into the close. Added at that reversal.
Man, gold held up ok today but Sr. Miners got taken to the woodshed. That and Silver got rocked at 50 day yesterday. Just to share, I’m going to likely start amassing a short gold position early next week (barring anything crazy over the weekend). Btw cycles, miners, dollar, and seasonality July could be just nasty for gold. Many different ways to do it, I’ll likely use GLD puts out through July. Just wanted to share.
2 big swoons today GPL down 45 percent and NAK down 15percent
WOW again!