Its An Illusion

Friday Sept 25    ( Note: As I write, GOLD just got sold off  $1228 to $1218 )

In the above picture, are these horizontal lines parallel or do they slope?   Its an illusion.

When a magician lifts something up with his right hand and holds it right in front of your face  (While his left hand is grasping something taped to his left pant leg) and claps his hand and everything  changes in a puff of smoke…Its an Illusion

And Thursday,  when I looked back at what has happened to $GOLD & $SILVER lately , and then examined a few other things, I thought…. IS THIS REAL OR IS THIS AN ILLUSION??

Notice  $SILVER– Breaking down to new 4 year lows! Everywhere I read,  ” It’s going off a cliff, $10 to $13 Silver soon!”

 

$SILVER

 

Nobody is yelling,   “Its on sale! Lowest Prices in years!”     People used to buy it all the way down, but now there is an element of Fear. THATS GOOD!

And lets look at $GOLD

 

 

$GOLD has had a steep sell off, and it has had 1 or 2 day reversals recently all the way down, but anyone who buys gets burned. The story gets uglier and uglier on CNBC.

I believe its called a “Useless Relic”  by many interviewed there, and the DEATH CROSS has sealed its fate. THATS GOOD!

 

$GOLD SELL OFF

 

 

  WELL….You and I know the story VERY WELL!  When GOLD & SILVER  drop even a little, the Miners get thrown out with Both hands.  When the GOLD and SILVER  prices start to drop, people start loathing Miners…”Miners lose money with lower Metal Prices!..SELL!”  And then comes the panic flush, right? Have you seen that too?  Ok, then answer this…

If the Magician Market Movers are showing me WEAK GOLD,  and SILVER is at new 4 year lows being pushed down easily with their right hand , who is secretly strengthening some of the Miners with their Left Hands?  To The Chart!!…….

 

GDXJ – Silver broke down, new 4 yr lows! Gold cant catch a bid and Miners?  Is this an illusion?  If the Volume is THAT HUGE, shouldn’t prices be MUCH lower and at new lows? What is holding price up with that massive “Selling” volume?  Buying? Distribution? Magic?

 

gdxj weekly

 

And of course, the tiny Juniors must be bleeding like Mike Tyson went 3 rounds with them in his early days, so lets take a look at the blood bath.

 

EXK – is a  silver Miner.  It must be shredded with new 4 yr lows in Silver, right?  And  with $Silvers “Continuation Triangle break down”  screaming $10 Silver….

Wait…EXK has higher lows and higher highs  for 1.5 yrs?  Is this an illusion?

 

EXK

 

 GPL – a baby tiny Junior Silver miner. Dead and bankrupt, right?

 

GPL

 

RIC –  Does a chart often get any better looking than this? Do you know what the “Magic line” is?  If you read  William O’Neil or Jesse Stine you do,  and  I have pointed it out in past reports often too.  This is one sweet weekly  chart. This weekly reversal trying to re-gain the 10WMA is WHILE METALS are still smoldering.

 

RIC

 

GORO – Another SWEET wkly chart. The 30WMA held it captive since 2012. Reversed off of it this week while CNBC reported that GOLD is not done selling off.

Also, when GORO sold off  in the March to  May selling, it almost got cut in half.  In the recent sell off  from August to now, it only lost a little over $1 and is reversing back up! 

 

GORO

 

 RBY –  Normal 61.8% re-trace, lands and bounces of the 200sma twice. The MACD looks good here.

 

RBY

 

 Heres an Illusion...Gold cant catch a bid this month, is this stock ready to crash or has it been bought up?

 

RBY Sept 25

LSG WKLY – this baby ran up 500% from June 2013 lows. It is orderly and rising in bullish stages (Break out, Back Test- Break out, Back test)  Hint : Buy the back test.

 

LSG WKLY

 

LSG daily –  close up of recent Back Test.  Has this sold off for the last 2 weeks too?

 

LSG DAILY

 

OK, Miners didn’t all do GREAT,  but I see MANY that are holding up very well under the circumstances.  Silver stocks like FSM , MVG, EXK on a 1 yr chart are NOT selling off as SILVER threatens a panic crash.  Others have held up on a 1 yr chart like RGLD, GG, NEM, while may others are in a trading range , testing lows ( or some have broken to new lows too).

 

MVG

 

The point that I am making is that there seems to be an illusion here at this sell off too.  Since when do Metals get trashed and Miners hold up so well for so long?  After all , Miners need to sell that very metal to make money  (Hedging not included) .   Its up to you to decide what is real and what is not.   Is it more likely to you that…

1.   While Metals are being sold off as valueless relics, barley catching a bid , and threatening GOLD to $1000 and $SILVER $13 or lower-   Miners are seen as valuable ( even though they are selling that metal dropping in price)?   Is THAT desirable to big Money?

Or

2.  Perhaps Miners are being accumulated by smart money , while Metals & Miners are still in the process of putting in a bottom. And maybe that ‘conspiracy’ illusion that  Metals are being sold off  harder to scare people out of their positions,  while allowing  big money to accumulate  positions…is real?  It is true that the Big Boys must BUY when others are selling to fill the larger orders without driving prices up.

 

  I haven’t mentioned Miners here for weeks, they werent acting correctly to my eyes. Yesterday  I posted intraday mentioning that I bought .  I didn’t see any other newsletters buying, most articles on 321Gold and so on where telling me “Why Gold is selling off” and “Why the strong Dollar is hurting Gold.”      Just like at the end of MAY 2014-  I got a few of my buy signals this week and took some new positions. You may recall that I was posting here during the month of  MAY about a “Meaningful low” called an  ICL,   meaningful because its a special low that only comes about 2x a yr  (Roughly).  I caught the June 28 2013  lows, The Dec 2013 Lows, and End of May 2014 lows as reported here.  I may be expecting a bounce, but it unfolds much stronger.  In MAY , most waited for a pullback in June that never really came. The short covering rally quickly took Miners straight up.  Is THIS one of those ICL lows?    It could be, but I cant say for sure yet.   If it isn’t this will be a short trade,  because it can roll over for a couple more weeks, likely into that ICL  (meaningful low) on the next drop .   I DO , however, Think that this could be the  ICL (or Very  close to an ICL), since I got those BUY signals that are also fairly rare.

 

  In MAY it seems that everyone was ‘looking at’  Gold breaking down from that small triangle . I was too.  I kept hearing :  “We will be ready to Buy  “SUMMER SEASONALS” for Gold in July!”in all the reports that I read.   They were saying get ready to short a bounce &  Go long in JULY.     I was contrarian, pointing to healthy looking MINERS ( Just like now) during that May sell off in Metals.   I started buying at the end of May…( yes we could have bounced and dropped further then too , but I also said that it could be the ICL that leaves most behind).   It was the ICL.   See my article May 30 as a reminder here    https://www.chartfreak.com/2014/05/31/learning-to-be-patient/

 

In summary,  it doesnt make sense to me that as GOLD is HATED and cant make a reversal stick , Miners are getting some kind of love. Heavy volume and not dropping? HMMM?   I’m not telling you to buy, I am letting you know that I bought and expect a bounce very soon. Some of my signals indicate that we could be at the ICL  (meaningful lows)  or we should bounce and 1 final drop could get us there. One thing not lined up is the current C.O.T. levels. That doesnt bother me. As usual, Time will tell if what I am seeing here is a good trade, but in this business you go by experience and probabilities. I think Miners are telling me something and again, I got a couple of my meaningful BUY signals this week.

 

Follow up on one stock – I was discussing OTIV with one of the readers earlier this week.  I mentioned a possible entry near $2.75. There were reasons that it could drop there and reasons that it “Might” be supported there. Thursday it hit $2.80 & reversed higher. I had drawn this chart that afternoon as it approached $2.75 , then it reversed, and was about to TWEET it out. I got interrupted and never got to. I still think its valid to share.

Again, it can still drop here  (or break down or up ) , but on a day when the markets sold off, this dropped on light volume and reversed, closing green. Interesting.

 

OTIV SEPT 25

 

   Thats it for now.   Again, as I write this  GOLD & SILVER have sold off $10 from when I started.  I am going to be brave, hold my breath and post this anyways.  I think the metals ship may be turning a corner soon, especially if that STRONG DOLLAR decides to give it a rest for a bit. . I got a couple of my Buy Signals for Miners this week , and I took the buy Thursday, as JNUG reversed above $13. Next I will be looking for follow thru.

     I like the set ups on MANY other stocks mentioned in prior reports .  like  JRJC, HPJ, HGSH, etc etc etc   Thanks for reading and best wishes!

 

Click Here – Never miss a FREAK SETUP again, delivered to your inbox, free!.

 

~Alex

 

You may want to  read yesterdays brief report if you didnt yesterday.

35 replies
  1. rob
    rob says:

    Great analysis, Alex. If GDX catches a bid and rallies, it could leave many people behind. Thanks for posting this.

      • thebeek
        thebeek says:

        You’ve listed all the ‘value’ issues above. They’ll be the last to fall. For diferent reasons but sort of like the select few DOW 30 that hardly reflect that entire market which has been distributing for months.
        These miner companies are actually all in the mix for my old broker friend. ‘Old Turkey’ so to speak.IF POG were to move 5-6% we might expect these to be first movers to 15%+. In the next run to $1300 we might expect other ‘more batterred’ miners to jump on the wagon with 20%+ moves on that next leg. Do you have a means of fingering that next group? Maybe relative to the last ICL’s
        tia

      • thebeek
        thebeek says:

        You’ve listed all the ‘value’ issues above. They’ll be the last to fall. For diferent reasons but sort of like the select few DOW 30 that hardly reflect that entire market which has been distributing for months.
        These miner companies are actually all in the mix for my old broker friend. ‘Old Turkey’ so to speak.IF POG were to move 5-6% we might expect these to be first movers to 15%+. In the next run to $1300 we might expect other ‘more batterred’ miners to jump on the wagon with 20%+ moves on that next leg. Do you have a means of fingering that next group? Maybe relative to the last ICL’s
        tia

    • chartfreak1
      chartfreak1 says:

      Liza – I’m watching OTIV closely too. It has such potential when it POPS to the upside, and the wkly charts look really good too. The 50sma is a bit closer to $2.60 , so I’m keeping that in mind too. It is rising tho, so it still may be supportive near the 200sma. Best wishes to you

    • chartfreak1
      chartfreak1 says:

      Liza – I’m watching OTIV closely too. It has such potential when it POPS to the upside, and the wkly charts look really good too. The 50sma is a bit closer to $2.60 , so I’m keeping that in mind too. It is rising tho, so it still may be supportive near the 200sma. Best wishes to you

  2. Ric
    Ric says:

    Thanks for all your hard work. Take a look at SAND for your gold watchlist. They are a gold streaming company, sort of a proxy for gold, with excellent management. Had them off my radar for a while with gold on the decline. Your update reminded me of it, now its on mine, unfortunately a day late. It popped almost 9% yesterday. Someone’s buying !!! Thanks

    • chartfreak1
      chartfreak1 says:

      Hey Ric- Yes, I know SAND very well, and yeah , they should be set up to really take off if GOLD/SILVER decides to rally again. It had the capitulation type volume lows the other day and those lows “Could” get tested or broken on lighter volume…THAT could be a nice buy. Or above the 10SMA. Notice how it doesnt close above it for more that a day yet. That would be a good sign I.M.O.

      I looked at about 25-30 charts yesterday, but it took me long enough to draw up the ones that I posted, so I had to leave some out.

  3. Ric
    Ric says:

    Thanks for all your hard work. Take a look at SAND for your gold watchlist. They are a gold streaming company, sort of a proxy for gold, with excellent management. Had them off my radar for a while with gold on the decline. Your update reminded me of it, now its on mine, unfortunately a day late. It popped almost 9% yesterday. Someone’s buying !!! Thanks

    • chartfreak1
      chartfreak1 says:

      Hey Ric- Yes, I know SAND very well, and yeah , they should be set up to really take off if GOLD/SILVER decides to rally again. It had the capitulation type volume lows the other day and those lows “Could” get tested or broken on lighter volume…THAT could be a nice buy. Or above the 10SMA. Notice how it doesnt close above it for more that a day yet. That would be a good sign I.M.O.

      I looked at about 25-30 charts yesterday, but it took me long enough to draw up the ones that I posted, so I had to leave some out.

    • chartfreak1
      chartfreak1 says:

      Thanks UAE- The link is for subs, but I imagine they downgraded and said , Burn your Coal holdings? : ) The bottom MUST be close if thats the case. WLT looks so scary , and big capitulation days lately, ubt then you think about the bounce alone if it did a dead cat bounce. %-Wise could be quite good. I’ll keep an eye out, thx

    • chartfreak1
      chartfreak1 says:

      Thanks UAE- The link is for subs, but I imagine they downgraded and said , Burn your Coal holdings? : ) The bottom MUST be close if thats the case. WLT looks so scary , and big capitulation days lately, ubt then you think about the bounce alone if it did a dead cat bounce. %-Wise could be quite good. I’ll keep an eye out, thx

  4. fubsy_cooter
    fubsy_cooter says:

    Alex: Really enjoy your reports. You have an excellent eye, and I appreciate the way you allow what you see to speak to you regardless of majority biases. I believe that is a trait of the very best traders. Fubs

    • chartfreak1
      chartfreak1 says:

      FUBS!! Good to see you , Your posting between the first 9 and the back 9 holes, aye? : ) Thanks for the compliment , and seriously…its one thing to see it against the majority , then riskier to take the trade, then harder to POST about it. I was joking with someone saying that my next post will be entitled…”Egg on my face” – lol

      Thanks for stopping by and again for the kind words. Now back to the fairways !

  5. fubsy_cooter
    fubsy_cooter says:

    Alex: Really enjoy your reports. You have an excellent eye, and I appreciate the way you allow what you see to speak to you regardless of majority biases. I believe that is a trait of the very best traders. Fubs

    • chartfreak1
      chartfreak1 says:

      FUBS!! Good to see you , Your posting between the front 9 and the back 9 holes, aye? : ) Thanks for the compliment , and seriously…its one thing to see it against the majority , then riskier to take the trade, then harder to POST about it. I was joking with someone saying that my next post will be entitled…”Egg on my face” – lol

      Thanks for stopping by and again for the kind words. Now back to the fairways !

  6. Cason
    Cason says:

    Alex, thanks for sharing. I was calling Sunday overnight/Monday AM a washout on silver. Only time will tell though. I found it interesting that miners held longer – basically following the metals, which is reverse of normal. The final abnormality was one of your central points – if volume was that high to the downside, why did support hold? Still, the $$ index is going to have to take a breather if this move is going to be for real.
    -Cason

    • chartfreak1
      chartfreak1 says:

      Cason- I agree with all of the above. The only thing that concerns me is “Are we going to bounce” and then do 1 final dip to wash out Gold/Miners? It would seem likely that going into yr end, SPX NAsdaq , etc remain strong while Metals weak, but nothing is ever etched in stone in these mkts. Have a good wkend & Thx for your thoughts!

  7. Cason
    Cason says:

    Alex, thanks for sharing. I was calling Sunday overnight/Monday AM a washout on silver. Only time will tell though. I found it interesting that miners held longer – basically following the metals, which is reverse of normal. The final abnormality was one of your central points – if volume was that high to the downside, why did support hold? Still, the $$ index is going to have to take a breather if this move is going to be for real.
    -Cason

    • chartfreak1
      chartfreak1 says:

      Cason- I agree with all of the above. The only thing that concerns me is “Are we going to bounce” and then do 1 final dip to wash out Gold/Miners? It would seem likely that going into yr end, SPX NAsdaq , etc remain strong while Metals weak, but nothing is ever etched in stone in these mkts. Have a good wkend & Thx for your thoughts!

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