PART 2 Fuel To The Fire

Mid day Nov 18

As we watch the day unfold, I am still seeing some Bears add to their shorts here in public blogs.  It’s tough to watch if you think that we have more upside, and I’m not happy about it, just pointing out what that might mean .  They want to add here trying to  make their money back if prices drop. Some are still saying that   “KIng Dollar will crush the Metals” and  “It was a Break Down of Triple Support, now support is broken , so its going to crash.”    As I have outlined here…It had the makings of  a “Shake out” &  Now looks to be a “LOCK OUT”.     When these shorts finally throw in the towel, prices should even climb higher leaving them with bigger losses and then for them, prices are too high to jump into ,  without feeling like they are chasing.  I want to share with you another development…MINERS.

As explained in an earlier report- A  “SHAKE OUT” is when price breaks below support and causes “Shorts” to take or add to existing positions. Prior support SHOULD become resistance, but IF support is recovered – it is viewed as a “shake out”. I pointed that out in GOLD.  Today we see MINERS acting in the same manner. Notice…

 

GDXJ – I was watching for a recovery here too and drew this chart at noon. Since then,  It has now recovered its support level. Price as I write is Currently $29.22 . A close Above $28.82  is Bullish.

 

GDXJ Recovery

 

What about GDX? …

 

GDX has not recovered yet , but I am thinking it may by the close of the day . The price for you to watch , if you are interested, is $20.18

 

GDX recovery

 

If you look at Miners…they reflect the picture that I chose for the report. Shorts were being added as price rises. Then when it gets to be that losses are becoming too burdensome, shorts close their positions and prices surge upward. You cant tell when it will exhaust, but MAY 2014 was a GREAT example of short covering rally.  Often they wont stop to let you buy if you’re not already in.  Also NATGAS / UNG was a similar short covering  & Buying rally.  Its too hard to watch it go up day after day sitting on the sidelines, but also its too scary to buy, because the pullback is feared. You have to just sit back & watch and buy either a stock that underperformed ( and may play catch up)…or buy the next pullback.  UNG eventually had one and Miners will too.

 

Notice the current move off of lows in these stocks for example. They were buys yesterday, along with EXK that I mentioned here.  What I am trying to show is a combo of short covering & buying leads to small pullbacks & sideways moves  in the past, so selling out of or trading positions may not be the best way to play this current move  (If you believe we are at an ICL). I hope you bought last week or at least yesterday.

 

 

MUX

 

ASM  some just go straight up , tagging the 10sma on slight pullbacks

ASM

 

  This above example was for “Miners” to show that often they dont offer good entry…and BUY & HOLD for a week or two may be better than just trading in & out.   On the other hand, COAL stocks are consolidating after each few days up, so maybe we get something similar in Miners this time?  Notice

 

ANR

ANR

 

 

WLT – ran up day after day, but went sideways to allow buy opportunity too. You can look for similar sideways moves or dips to certain moving averages  in the future to add to positions.

 

WLT

 

Summary:   Some still dont believe that we are seeing anything more than a Bull Trap.  Others are starting to close their short positions and it has formed a RECOVERY in the GDXJ  (So far) and GDX may be next.  I just wanted to write to say that we may be seeing some short covering rallies here and some underperforming stocks may begin to play catch up.  I pointed out EXK the other day at lows and mentioned that That was a buy candidate.

I want to post this now, because as I write…GDX is closing in on its RECOVERY number, and GDXJ is leaving its # behind. Likely more shorts are throwing in the towel.  Watch those numbers into the close…Its just another sign that we have witnessed a SHAKE OUT & Possible LOCK OUT in real time.

Best Wishes

~ALEX

 

 

38 replies
  1. chartfreak1
    chartfreak1 says:

    Your welcome everyone- The hard part now is deciding “Do I want to trade this, or ride out any pullbacks?” The last ICL’s were best just buy & hold for a bit, but if you know cycles…then you know a daily cycle low will be coming & its hard to give back any gains. ESPECIALLY if one got in later.

  2. chartfreak1
    chartfreak1 says:

    Your welcome everyone- The hard part now is deciding “Do I want to trade this, or ride out any pullbacks?” The last ICL’s were best just buy & hold for a bit, but if you know cycles…then you know a daily cycle low will be coming & its hard to give back any gains. ESPECIALLY if one got in later.

  3. Matthew Goldman Kimher Lim
    Matthew Goldman Kimher Lim says:

    Alex, I am ‘LOCK IN’………the interval of these sagas are shortening towards month end so I would expect more such repeats, ya?

    • chartfreak1
      chartfreak1 says:

      We are at lows and there WILL likely be a pullback soon, when shorts are done covering, but its a tough call. I dont think it will be a HUGE pullback, but if you look back at the JUNE 2013 lows…that pullback was a semi -steep quick drop and then higher.
      I get a feeling it wont be all this easy to stay on

  4. Matthew Goldman Kimher Lim
    Matthew Goldman Kimher Lim says:

    Alex, I am ‘LOCK IN’………the interval of these sagas are shortening towards month end so I would expect more such repeats, ya?

    • chartfreak1
      chartfreak1 says:

      We are at lows and there WILL likely be a pullback soon, when shorts are done covering, but its a tough call. I dont think it will be a HUGE pullback, but if you look back at the JUNE 2013 lows…that pullback was a semi -steep quick drop and then higher.
      I get a feeling it wont be all this easy to stay on

    • chartfreak1
      chartfreak1 says:

      Well H50- you may get stopped out for break even and heres why. GDX is approaching the 50sma. IF (it may but if…) It pauses there and dips down to the 20sma for a 1/2 cycle low…thats below your price.

      If you look at the MAY lows, and the rally (short covering ) out of those lows …the 50sma was broken easily…then price went sideways on it for the 1/2 cycle low. That also could happen now. Its tough to kow.

      I look at many miners though, and some have blown right through their 50sma …so its a tough call , and will need to see how it approaches the 50sma area I.M.O. I hope that helps you to see what I am seeing?

    • chartfreak1
      chartfreak1 says:

      Well H50- you may get stopped out for break even and heres why. GDX is approaching the 50sma. IF (it may but if…) It pauses there and dips down to the 20sma for a 1/2 cycle low…thats below your price.

      If you look at the MAY lows, and the rally (short covering ) out of those lows …the 50sma was broken easily…then price went sideways on it for the 1/2 cycle low. That also could happen now. Its tough to kow.

      I look at many miners though, and some have blown right through their 50sma …so its a tough call , and will need to see how it approaches the 50sma area I.M.O. I hope that helps you to see what I am seeing?

  5. Cason
    Cason says:

    Bears have been indiscriminate and unrelating in their shorts so I wouldn’t mind seeing some of them get smoked. Feel for the noobs that jumped in 3x ETF on herd mentality (I’ve been there before). Grabbed long calls yesterday to make sure I was in. I see pullbacks as opportunity to add at least fkr next 2 weeks. As always great analysis – thanks for sharing!

  6. Cason
    Cason says:

    Bears have been indiscriminate and unrelating in their shorts so I wouldn’t mind seeing some of them get smoked. Feel for the noobs that jumped in 3x ETF on herd mentality (I’ve been there before). Grabbed long calls yesterday to make sure I was in. I see pullbacks as opportunity to add at least fkr next 2 weeks. As always great analysis – thanks for sharing!

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