Searching For Clues

 Wednesdays Fed Meeting went off without a hitch. Sometimes the following day can get a little volatile, so Lets look at some clues within the market moves and see if things look normal or sketchy

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SPX–  bounced off of the 200sma and now has good follow through above the 50sma.  I would expect a possible break above the recent highs

You cant help but notice that the markets have been basically going sideways all year. Will they break out here and just start a nice rally?  Here is an interesting clue…

I think the markets are looking pretty good short term for a couple of reasons ( I’ll explain), but this is odd. 

The VIX often gets to the 12 area and the markets get toppy. The Vix is already at the 12 area?  Something to keep in mind going forward. 

VIX –  notice how the SPX reversed lower when the Vix hit 12 and reversed higher.

VIX  2 YR WKLY – This is just to point out that the 12 area has been fairly solid support.

This is why I surprisingly see short term strength in the markets.  I have been pointing out the break down in the transports.  Suddenly we had a recovery Tuesday, and I pointed that out Wednesday.

Fed Wednesday had further recovery. The blue line is the big test, but the TRAN broke a down trend line and regained the 50sma.  That Blue Line is strong resistance however.

SO as I watch the markets,  I am watching overhead resistance.   Especially with the Vix at lows, I would keep an eye on  the prior highs. We may just get a break to new highs and turn back down.  For now-  LONG IS STRONG. 

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USD-  many think the reversal looked strong.  SO far it is ‘internally’ weak. I will be watching for it to strengthen or roll over soon.

The CRB and Commodities like OIL , GOLD, SILVER, MINERS , etc were Green while the Dollar was Green too.   Is this indicating that the Dollar is going to roll over for a bit?  Possibly.  Time will tell. Lets look at …

WTIC – I think we saw a DCL, and I have been expecting a “test” of the break down or the 50sma.  All are aligned nicely.

GOLD SILVER & MINERS

The precious metals held up well during Fed Wednesday too. I still want to be cautious, because we really dont have a confirmed ICL.  All of the signs are there for an ICL, as mentioned in prior reports,  but no one can rule out a small 4th daily cycle where we just drop fast and put in a final short daily cycle .  I just want to re-post this chart as a reminder that STOPS should be used to preserve funds.

A 4th daily cycle could drop Gold to 1033 easily,  even below $1000 for final lows.  We have seen $50 down days in Gold at crash moments, so we need to just keep alert and expect the unexpected.

GOLD – so far we look to have a day 34 low.  We need a surge higher soon, or we may have started a weak 4th daily cycle that will roll over.  Nov looked like a bear flag & then it surged higher. We want that now. 

 SILVER – breaking out? We need a surge here too (See last March Icl)

GDX – looks very similar to the Miners slow crawl at the ICL in March.  It looked like a possible bear flag in March and then surged higher on day 5.  We are on day 4 as of Thursday.  Again, we need a surge higher soon.

I use 4 or 5  signs of confirmation of a DCL. We only have 2  or 3 so far.  TSI ( not shown) crossed upward, but that gives me false signals too often. Trendline..Blue one or Magenta?

I gathered these charts and wrote most of this report late Wednesday night. Overnight we see that GOLD & SILVER were smacked down a bit. Gold went down $10 and Silver was down about $0.19ish.  They havent broken any lows, but this keeps us on guard for further selling. We really would like to see a surge higher today or tomorrow, before going into the weekend. 

 With the DOLLAR green, Many beaten down commodity stocks started to look good recently.   Steel stocks have broken out strongly with volume   X,AKS, STLD,  and Aluminum stocks are starting to do the same  see CENX, AA, NOR .  Are they leading the way?   Will Metals & Miners follow that course?  

It looks promising when you look at VALE, CLF, BOOM and a few others too.  They seem to be  getting that short covering push higher too.  Will there be follow through?

It is encouraging to see some of the miners looking like they are trying to break higher also.  It is encouraging,  but not enough at this point.  We want to see that burst higher in the GDX & GDXJ to know that things are healthy through out the sector.   We need to see more from the miners soon.  See    TRX, SSRI, AKG, NG . 

So stay alert if you have taken a position and honor your stops. We still need confirmation and more follow through before we can say whether we have an ICL or not.  If we only have a DCL and we are in a 4th daily cycle…it will roll over.  I will repeat that this sell off in Metals & Miners has all of the hallmarks of an ICL,  but we need further proof.  If an ICL is in,  we should get a nice relief rally very soon and the Miners will be a very good trade %-Wise.  It is a low risk set up at this point, if your stops are in place.    Bottoms are NOT easy to buy & hold, and so far we are still forming a bottom. A break of the lows would likely be bearish at this point in time.

~ALEX