Miner Breakout

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The Miners broke convincingly above the declining trend line on Tuesday.

gdx

I received plenty of emails today asking if the Miner’s breakout on Tuesday signals that day 14 hosted an early daily cycle low. The evidence suggest no. The Miner’s first 10 daily cycles since emerging from the bear market bottom back in December, 2015 averaged 23.7 days. The previous 2 daily cycles ran 49 and 39 days respectively. So 14 days historically is just too early for a DCL, so we will label it as a half cycle low. That makes Tuesday day 22 for the daily Miner cycle. A new high on day 22 shifts the odds towards a right translated daily cycle formation.

The second reason for labeling Tuesday as day 22 for the Miners is the status of the daily gold cycle.

gld

Gold is the driver to the precious metals market. Gold only had a mid-cycle consolidation which makes Tuesday clearly day 19. The new high on day 19 shifts the odds towards a right translated cycle formation. Which aligns with where the Miners are in their daily cycle.

sos

The Miners delivered a large Selling on Strength number on Tuesday. Often times these large Selling on Strength numbers appear at or near cycle tops. Which is another reason that supports a day 22 labeling for the Miners.

In Wednesday’s Mid-Week Report I plan to discuss where this places gold and the Miners in their intermediate cycle and tie that in with what the dollar is doing.

Bearish Inclination

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Gold continues in its triangle consolidation.

gld

Since emerging from its yearly cycle low in December, gold peaked in March. While gold printed a 28 day daily cycle low on March 28th, gold has not yet formed a failed daily cycle to confirm the intermediate cycle decline.

Gold delivered a false bullish break out on Thursday, day 18. Gold is currently its timing band to print a daily cycle low. Now a break below the lower triangle stem will confirm that gold has begun its daily cycle decline.

But it appears that the Miners may be leading the way lower.

gdx

The Miners printed a bearish reversal last Wednesday, which was day 19. The Miners formed a daily swing high and breached the daily cycle trend line on Friday. Today the Miners delivered more bearish follow through to confirm that the Miners are declining into their daily cycle low. A peak on day 19 assures us of a right translated daily cycle.

Our expectation for both gold and the Miners is to begin their decline into their respective intermediate cycle lows. A failed daily cycle confirms the intermediate cycle decline. Both gold and the Miners appear to be forming right translated daily cycles. Therefore I suspect that both will need to form one more daily cycle. And that next daily cycle will form as left translated cycles and fail, leading to the intermediate cycle decline for both gold and the Miners.

Black Gold

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We will begin tonight looking at something that I do not spend much time on here but I do include an update on in the Weekend Report: Oil.

$ WTIC dailyhttp://postimg.org/image/3kidtbw0z/

Since peaking above 107 in June, oil has been locked in a steady yearly cycle decline. Oil has now printed two straight failed daily cycles and currently sits in the timing band to print a daily cycle low. Since August there has been a bullish divergence developing on the daily True Strength Indicator. Now late in the timing band for a daily cycle low we see that Oil has printed a bullish reversal on big volume. There is a good likelihood that oil printed a daily cycle low. A swing low and a break of the declining trend line is needed to confirm a new daily cycle. And for those of you that read the Weekend Report will know that this new daily cycle could also mark a new yearly cycle.

I think that gold is also seeking out its yearly cycle low. In order to decline into a yearly cycle low, there needs to be a failed intermediate cycle. Today gold printed a failed intermediate cycle.

$ GOLD weeklyhttp://postimg.org/image/iyhtcu295/

Gold’s weekly cycle peaked on week 5 and is currently at week 14. There is enough time left in the intermediate cycle to allow for one more failed daily cycle to print for gold.

But here is something to keep an open mind about — Gold has now printed its lowest point of the year following the peak in March. So, technically speaking, gold could be in the process of forming a yearly cycle low. Therefore gold could deliver a bullish surprise once a daily cycle low prints and launch into a new intermediate mediate cycle.

A Miner Trend Change

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The Miners were down again today. They have been down 7 of the past 10 days.
Despite that, it looks as if the Miners are about to have a change of trend.

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The Miners last printed a right translated daily cycle low on 9/26/12. Since then they have formed 8 consecutive left translated, failed daily cycles. These cycles were characterized by all peaking on day 10 or earlier, most of them peaked by day 6. What is significant that the current daily cycle peaked on day 18, virtually locking in a right translated nature to this daily cycle.

There is other evidence of a change in trend is surfacing.

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First off you will notice that MACD formed a higher low while the Miners were printing their yearly low in late July.

Second, I want to draw your attention to the amount of time that the Miners have closed above the 20 MA. There was three days late December into early January. Then there was really nothing until the Miners closed for 5 days above the 20 MA in late March. May into June saw the Miners close above the 20 MA for 8 straight days. Then, of course, there is the current daily cycle that saw the Miners close above the 20 MA for 13 days.

Now I want to back out to a view of the monthly chart.

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Here is the monthly miner chart dating back to 2007. Below it is the monthly True Strength Index. Only four times since 2007 has there been a bullish crossover on the monthly TSI, indicating a monthly change in trend. I have notated these and shown how much the Miners rallied after printing the bullish TSI crossover.

You will notice that the monthly TSI is about to deliver another bullish crossover.

Now, let’s go back and take a closer look at the current daily cycle.

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As previously mentioned, this cycle peaked on day 18 and now stands at day 27. Since September only 1 daily cycle stretched past 24 days and that one ran 28 days. So the Miners should print a daily cycle low any day now. Assuming that the right translated nature stays intact, then that sets up an expectation for the next daily cycle to go on to make a higher daily cycle high, confirming a new trend.

Since a lower low was printed today, tomorrow will be the earliest a swing low can form. A break above 238.75 forms a swing low.

A once that swing low forms, that will likely present a golden buying opportunity…

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Smoke Them if you Got Them …

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We discussed last night that we were still waiting on trend line breaks to confirm a new daily cycle.

We can see that gold, corn and the CCI index all broke their respective declining cycle trend lines to confirm new daily cycles.

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So while we have confirmed new daily cycles, the weekly charts still need some work.

Gold has yet to form a weekly swing low…

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Both Corn & the CCI Index have formed weekly swing lows and on the cusp of breaking the declining weekly cycle trend lines.

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Once those trend lines surrender, then things will really be smoking …

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