Author Archive for: Alex - Chart Freak

So we were expecting that the Miners could possibly drop to do a 'back test' of the 50 sma.  In fact, I mentioned that in almost every report for weeks.  I must admit though, I did not expect it to happen all in one day, but that is pretty much what happened Thursday.  Let's take a look...

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This is my GDX Oct 15th chart, showing that that possibility exists for that back test.  I wanted us to be prepared for a drop like that, but like I said, I expected it to be more of a normal gradual dip lower.

Just 1 hr into trading, the drop in GDX & GDXJ looked like this, and it closed even lower at $19, just above that 50sma.

On top of  THAT,  this was Gold and it hardly dropped?

Can we make sense of this?  Is this still just the back test of the 50sma for GDX & GDXJ?   Did earnings of GG & NEM destroy all hope for Miners? Well, I do  have a few ideas that will give us clues to watch for as this continues to play out.  This will be a longer Friday report than normal, so let's get right into it...

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The selling continued in the stock market, but there is a recent development that I mentioned we should look for.

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DJIA - Yesterday I used this chart and mentioned that we could  look for a possible double bottom low, or 'W'-Bottom with divergence.  You see it at other Lows formed this year.

Tuesday the DOW dropped over 500 points and broke below the 200sma as a possible shake out / reversal.

1. It is safer to buy a swing low confirmed above the 10sma, as you can see, the last swing low 2 weeks ago failed at the 10sma.  However...

2. For higher risk traders  using technical analysis, That low can actually be bought with a stop below yesterdays lows,  but keep in mind...

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Nothing has really changed since the weekend report. The markets have been choppy and difficult to record any gains over the past few days, but I do love the way the Precious Metals sector acted yesterday, so let's  take another  look at what we have.

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SPX - You can see that these types of sell offs into an ICL can lead to a double bottom, and Monday our General markets sold off further.

DJIA -  You may want to look for something like this

HOWEVER....

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I love Rocky Road Ice cream,  but Rocky Road Trading?  Not so much.  My last few reports have mentioned that even though we do have a 'low risk entry' for Buying at a swing low in the General Markets and some other areas, stops are a must. It is not a confirmed swing low, and we have volatility and choppiness, so buying the swing doesn't necessarily mean that it will be an easy ride.

In fact, yesterdays report was entitled :  'It Is Still A Rough Ride.'  Going into the last day of trading  for the week, lets review Thursday and see if this proved true.

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Yes, it proved true - The Dow was down over 399 points and the NASDAQ was down 184  when I captured this in the afternoon...

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SPX - I also mentioned that similar to February and March, things can be choppy around this 50sma, even with a swing low in place.

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The release of the FOMC Minutes really didn't seem to have any meaningful or lasting reaction in the markets.  It may have added a little knee jerk reaction or volatility, but overall there was no big directional change.   Let's take a look at our markets, and again, there really are no major changes from yesterdays report to discuss, but we'll still review what we have...

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SPX - I have been looking for a steep drop and an ICL.  We have that steep drop and a reversal after the 200sma was taken out, so this could be a shake out.  It is a swing low, and yesterday I said that this could be bought ( TQQQ or UPRO, etc) however...

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