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Here’s What to Key on With Gold on the Brink of Failure

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Last week was bad, no doubt about it. But it wasn’t a catastrophe yet. This report tells you the key benchmarks to watch to let us know whether this will turn out ok, or not, for gold and the miners.

See table and charts (subscriber version).

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Second, Even Bigger, Explosion of Sell Signals in Swing Trade Screens

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This Friday’s screens had  26 buys and 136 sells. 9 of the buys were inverse ETFs, meaning that only 17 of the signals were bullish and 145 were bearish. This is a big number that indicates downside thrust, but it can also mean that it’s time for a minor bounce first.

This week’s numbers compare with 19  buys and 53 sells which was a pretty good indication that last week would be bearish. 11/22/21 51 sells is still a big enough number on the sell side to make me sit up and pay attention. I was overconfident on the long side, and overstayed several of the longs on the pick list without trailing stops. I’ve instituted them, and a few outright sells this week.

Only 1246 stocks, about 100 less than usual, met the initial screening criteria in the current screen thanks to the semi holiday shortened session. But a whopping 13% of them rendered signals on Friday, which is more than triple the norm. Last week there were 4% sell signals. 11/22/21 That’s a more than a typical percentage of new signals on a given day. So it’s time to look for a possible rollover and more shorts to add to the list.

Last week, I added 6 shorts to the list and put stops or sells on most of the longs. 8 of them were closed out as a result. I have added a sell condition to one pick and have stops on 3 others.

On this week’s list of sell signals, most had dropped to or near support. As a general rule I would not short a chart where price was at or near support. This might be the rare time that they crash through, but I must go with percentages. Despite the 145 bearish signals I only found 4 charts that were weak enough but far enough above support to add to the list as shorts this week. They’re shown on the table below.

In total, this will bring the list to 13 open picks, of which 2 will be longs, and 11 will be shorts. That’s up from 6 shorts last week. I don’t remember ever having as many shorts since starting this swing trade chart picks a couple years ago.

As of Friday, the average gain of open picks and those closed last week was +2.2% with an average holding period of 20 days. That’s not bad considering the S&P tanked last week. As long as we have a  plus sign when the broad market is down, it has the smell of victory.

However, it compares with an average gain of + 3.6% with an average holding period of 27 calendar days. And that was a drop from an average gain of 8.5% on an average holding period of 25 calendar days 3 weeks ago. I previously allowed the list to age too much without installing trailing stops. Then last week, while I was Jack be nimble, I was not quite nimble enough.

The table and charts of open picks are below. I have stops in place on aged picks, but I’m leaving fate to the wind on the picks from last week, and this week’s new picks. Have to give them time to breathe. I will add stops as they age.

The table and charts of open picks are below (subscriber version only).

Table (subscriber version only)

Charts (subscriber version only)

Technical Trader subscribers click here to download the complete report.

The strategy and tactics opinions expressed in this report illustrate one particular approach to trading. No representation is made that it is the best approach, or even suitable for any particular investor.

These picks are illustrative and theoretical. Nothing in this report is meant as individual investment advice and you should not construe it as such. Trade at your own risk. 

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When the Fed Balance Sheet Will Hit the Fan

This report examines and illustrates the most important line items on the Fed’s weekly balance sheet. It tells you what to look for to recognize when the markets will crash.  Because that’s coming.

The markets are in a state of suspended animation while the Treasury is still paying down T-bills, and the Fed’s RRP institutional money market slush fund remains huge.

But the Fed seems determined to cut QE, with the byproduct showing up as slower growth in its balance sheet.

That will run head on into a surge of Treasury issuance. The debt ceiling will be lifted, and the Treasury will flood the market with T-bills.  The RRP slush fund will act as a shock absorber for awhile, but it will plateau when some holders of RRPs decide to leave their cash parked there for good.

That’s when the real trouble will start for the Treasury market, with stocks to follow.  I track the trends of those key Fed weekly balance sheet line items for you.

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Market Variant Not As Bad As It Looks

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Cycles There’s no evidence yet of downturns in the 6 month and 10-12 month cycles. They’re still in up phases, but currently without projections.

The 13 week cycle has obviously turned down, ideally due to last xxxxxxx xxxxx (subscriber version) . What can’t be known yet is the shape that the down phase will take.  If the xxxx area breaks down, the target would then be around xxxx . But if the xxxx  area holds, they could bump back up to the xxxx  area by year end.

On the third rail chart the SPX fell into a No Man’s Land on Friday. Support is xxxxxxx xxxxx (subscriber version). It rises to xxxx at the end of the week.  If it breaks, the targets would be xxxx, then xxxx. If the xxxx area holds, then the market should quickly rebound to the xxxx area.

 

xxxx (subscriber version).

On the weekly chart, updated long term cycle projections as of October 10, 2021 show targets ranging from xxxxx to xxxxx for cycles of up to 7 years.

As long as the market is above xxxx (subscriber version) at year end, it would still be in a long term uptrend and the projections would still be doable.

Long term momentum indicators suggest higher for longer. They normally form negative divergences long before price peaks.

On the monthly chart, the market uptrend channel lower bound is at 4300 in November. They’d need to break that to show any sign of possibly ending the bull market. Clearing the long term trendline around xxxxx would set a course toward xxxxx in November and possibly xxxxx (subscriber version)  in December or January. The monthly long term cycle momentum indicator remains bullish.

Cycle screening measures broke down, a week after I was skeptical about the negative indications. Now we know. 6 month cycle measures are now neutral. Another down week would turn them negative. The cumulative line is on the cusp. Market weakness this week would trigger a  xxxxx xxxxx (subscriber version)

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These reports are not investment advice. They are for informational purposes, intended for an audience of investment and trading professionals, and other experienced investors and traders. Chart pick performance changes week to week and past performance may not indicate future results, as you know. Trading involves risk, and these reports assume that you understand those risks and manage them according to your tolerance. 

Reason to Stay Optimistic on Gold

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The 13 week cycle up phase aborted early and the pullback has negated the base breakout. When that happens there’s usually a recovery before a second high that confirms the top. I want to remain optimistic that this will only result in a mild correction/consolidation. As long as the 10-12 month cycle indicators continue to signal an up phase, that’s where I’ll give the benefit of the doubt.

Here’s what the current up to the minute charts say about that (subscriber version).

The HUI mining stock index 6 month cycle is probably topping out. But with the 10-12 month cycle due to stay in an up phase for at least 12 more weeks, I’ll give the benefit of the doubt to the 6 month cycle down phase playing as a consolidation, rather than deep decline. The parameters to watch on that are here. (subscriber version).

Today, there are 2 buys and 13 sells from the swing trade screens of 52 gold mining stocks. This followed 2 buys and 6 sells last week, on the heels of a flood of buy signals the week before. That suggested the possible onset of a new upleg.  Now we’re in a correction.

Could it be something worse? Maybe, so I’m putting stops on all picks, but with a little wiggle room to allow for a little more dipping and then hopefully recovery. I’ll see on the recovery if it’s too weak, and close out picks where the charts call for it. But for now, I want to give them time to allow for recovery.

Current open picks got crushed with the sector as a whole, ending the week with an average gain of just 14.1% on an average holding period of 41 calendar days. That was down from an average gain of  21% with an average holding period of 34 calendar days.

I didn’t see any charts I wanted to add this week. I will stick with existing picks, with stops added as shown on the table.

See table and charts (subscriber version).

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An Explosion of Sell Signals in Swing Trade Screens

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This Friday’s screens had 19  buys and 53 sells. 2 of those were inverse bond funds so we can ignore that. 51 sells is still a big enough number on the sell side to make me sit up and pay attention. I was overconfident on the long side, and overstayed several of the longs on the pick list without trailing stops. I’ve instituted them, and a few outright sells this week. I also didn’t trust the short picks and bailed on two of them too early last week.

1340 stocks met the initial screening criteria in the current screen. 5.4% of them rendered signals on Friday, including nearly 4% that were sell signals. That’s a more than a typical percentage of new signals on a given day. So it’s time to look for a possible rollover and more shorts to add to the list.

On reviewing the charts, I found 6 setups I liked well enough as shorts to add to the list. They’re on the table below. I will remove 4 longs as of Monday’s opening price. I have added stops to 5 others.

In total, this will bring the list to 15 open picks, of which 9 will be longs, and 6 will be shorts. This is the most shorts we’ve had in many moons. “Many moons” is a way of saying how long its been when you don’t know the actual number of months. Let’s just say it’s been awhile.

As of Friday, the average gain of open picks and those closed last week was 3.6% with an average holding period of 27 calendar days. That was a drop from an average gain of 8.5% on an average holding period of 25 calendar days two weeks ago. I allowed the list to age too much without installing trailing stops. Will compensate going forward, but the market will undoubtedly make that look bad too.

The table and charts of open picks are below. I’m back to using trailing stops, and have instituted a couple of new picks with initial protective “just-in-case” stops.

The table and charts of open picks are below (subscriber version only).

Table (subscriber version only)

Charts (subscriber version only)

Technical Trader subscribers click here to download the complete report.

The strategy and tactics opinions expressed in this report illustrate one particular approach to trading. No representation is made that it is the best approach, or even suitable for any particular investor.

These picks are illustrative and theoretical. Nothing in this report is meant as individual investment advice and you should not construe it as such. Trade at your own risk. 

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Underweighting the Negative Signs

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Cycles The 13 week cycle up phase is maturing. The projection range is now xxxx-xxxx (subscriber version).  Around xxxx is trend support. Above there, the up phase stays in progress. A breakdown through that level would signal a down phase.

Short term cycles are moving sideways in flat down phases, due to strengthen within a week or so. That could carry the averages a little higher while the 13 week cycle is due to top out.

On the third rail chart Support is at xxxx (subscriber version). on Monday and rises to around xxxx at the end of the week. The market faces a cluster of resistance trendlines at xxxx on Monday, rising to xxxx at the end of the week. Clearing that would signal acceleration with a likely target of 4800. If they don’t clear, it would set up the possibility of a downside reversal, but the market would also need to break support around 4650 to signal more downside.

On the weekly chart, updated long term cycle projections as of October 10, 2021 show targets ranging from xxxxx to xxxxx for cycles of up to 7 years. The SPX is above the 18 month cycle channel extension, suggesting that the long term trend is accelerating toward a possible target of xxxxx (subscriber version) at the end of November.

Long term momentum indicators suggest higher for longer. They normally form negative divergences long before price peaks.

On the monthly chart, the market uptrend channel lower bound is at 4300 in November. They’d need to break that to show any sign of possibly ending the bull market. Clearing the long term trendline around xxxxx would set a course toward xxxxx in November and possibly xxxxx (subscriber version)  in December or January. The monthly long term cycle momentum indicator remains bullish.

Cycle screening measures sent quite a few indications that the market should be making a short term top here. But for the past year or more, the market averages have often trended higher on the basis of a few big stocks pushing the averages while perhaps the majority languished. So I will continue to underweight these indications.

Swing trade chart picks will be posted later Monday morning.

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These reports are not investment advice. They are for informational purposes, intended for an audience of investment and trading professionals, and other experienced investors and traders. Chart pick performance changes week to week and past performance may not indicate future results, as you know. Trading involves risk, and these reports assume that you understand those risks and manage them according to your tolerance. 

Beware- Debt Ceiling Uncertainty Darkens the Outlook

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We approach another debt ceiling drop dead date. The next month is thus fraught with unknowns. It makes projecting our QE and PONTs charts beyond the next two weeks all but impossible. We’ll just have to wait and see along with everybody else. Of course we view the world a little differently than everyone else.

Here’s the view through that prism.

Word is that Yellen says the new drop dead date (DDD Day) when the Treasury runs out of money will be December 18. You’ll get no argument from me on that score. The extrapolations of Treasury cash spending and revenue seem to support a mid December deadline. At that point, all new debt issuance will stop, and Treasury spending will be severely curtailed. The Federal government will be unable to pay somewhere around 40% of its bills on average.

Everybody else thinks that a debt default would be a catastrophe. I’m not so sure. No doubt it will throw the Treasury market into chaos, but there will still be vultures buying any dips, knowing that a technical default will be cured sooner or later. A stoppage of issuance will mean that new supply will be zero. How much supply will come from panicked sellers, and whether that will overwhelm demand from dealers flush with QE cash, and hedge funds that are short Treasuries, remains to be seen.

The consensus seems to be that a default will trigger a really bad something something something, in the stock market and economy. The economy? Make me laugh. Irrelevant for our purposes.

But the stock market? A complete halt in government debt issuance could be very bullish…

Get the rest of the story and ideas on how to handle what’s to come all spelled out and illustrated in the subscriber version.

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Gold Breaks Out, Sets New Targets, Miners Move

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Gold has broken out of a 5 month base, with a measuring implication of xxxx-xxxx (subscriber version). There’s resistance at xxxx but cycle projections now point to the xxxx-xxx range.

The HUI mining stock index has broken out of a reverse head and shoulders bottom. The upsloping neckline results in a measured move target of xxxx (subscriber version). There’s not enough data for a 10-12 month cycle projection yet, but if these gains stick, the implied projection would be at least xxxx-xxx .

Today, there are 2 buys and 6 sells from the swing trade screens of 52 gold mining stocks. This followed a flood of buy signals the week before. That suggested the possible onset of a new upleg.  Now we’re in the momentum follow-through stage after the initial surge of buy signals.

Current open picks and one that was sold last week, had an average gain of +21% with an average holding period of 34 calendar days. That compared with +16.3% and an average holding period of 37 calendar days the week before.

I didn’t see any charts I wanted to add this week. I will stick with the ones that “brung us,” with no stops. I’ll close them out of the list when their charts turn less favorable. For now, I give the benefit of the doubt to the upside.

See table and charts (subscriber version).

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Buys and Sells in Balance in Swing Trade Screens

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This Friday’s screens had 29 buys and 30 sells.  It compares with 68 buys and 22 sells the Friday before. That indicated a new, moderate buy side thrust. It was not the kind of surge that comes off a significant low, but it suggested a second wind for the rally.

Initially it didn’t happen, but Friday’s rebound showed promise so I’m sticking with most of the picks from last week and earlier.

1311 stocks met the initial screening criteria in the current screen. 4.5% of them rendered signals on Friday. That’s a typical percentage of new signals on a given day. But the fact that they were evenly split between buys and sells suggests that the market is going nowhere fast. The theory of this method is that more of  the picks will move in the right direction than not. Otherwise, why bother.

Given the mixed picture, however, I didn’t see much new and interesting in this week’s signal list. I added just one on the long side, and no shorts.  I’ll start tracking the new pick as of Monday’s opening price. I’ll also close out 2 shorts and one buy as of Monday’s opening price. Those charts show increased potential to go the wrong way.

This will bring the list to 13 open picks, of which 12 will be longs, and 1 is a short.

As of Friday, the average gain of older and newly opened picks was 5% with an average holding period of 22 calendar days. That was a drop from an average gain of 8.5% on an average holding period of 25 calendar days the week before.

All of that drop was due to new picks mostly starting out in the hole. There’s nothing unusual about that. Gotta give the newbies room to breathe, with the idea that enough of them will move the right way to give us a positive result overall.

The table and charts of open picks are below (subscriber version only).

Table (subscriber version only)

Charts (subscriber version only)

Technical Trader subscribers click here to download the complete report.

The strategy and tactics opinions expressed in this report illustrate one particular approach to trading. No representation is made that it is the best approach, or even suitable for any particular investor.

These picks are illustrative and theoretical. Nothing in this report is meant as individual investment advice and you should not construe it as such. Trade at your own risk. 

Subscription Plans

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