Miner Reversal

The Miners broke out to a new daily cycle high on Thursday.

Breakouts that occur late in a daily cycle cycle tend to not have follow through. Partly because of there not been many days left in the daily cycle. Over the past 2 years the Miners had 15 daily cycles that averaged 32 days from trough to trough. Thursday was day 27 for the daily Miner cycle, which places the Miners in their timing band for a daily cycle low. The Miners formed a bearish reversal on Thursday. The bearish reversal eases the parameters for forming a daily swing high. Then a close below the breakout level will signal the daily cycle decline.

Miners Deliver Bullish Follow Through

The Miners broke bullishly above the 50 day MA and the 200 day MA on Thursday. They delivered bullish follow through on Monday, closing 6.32% higher on the day.

Monday was day 19 for the daily Miner cycle. A new high on day 19 assures us of a right translated daily cycle formation. That aligns with the Miners being in a daily uptrend. They will remain in their daily uptrend unless they close below the lower daily cycle band.

We will need to keep an eye on gold as the Miner’s daily cycle starts to mature.

Gold is approaching the 1800 resistance level. Gold hitting this level will have good odds of sending the Miners to seek out their daily cycle low.

Miner Breakout

The Miners broke out above the 200 day MA on Thursday.

Back on Tuesday was noted that the Miners delivered a bullish surprise by forming a swing low. We were looking for a break above the 200 day MA to indicate that the 3/16 low was not only a daily cycle low, but an intermediate cycle low as well.

The Miners not only closed above the 200 day MA, but also closed above the upper daily cycle band.

Closing above the upper daily cycle and ends the daily downtrend and begin a daily uptrend. It also is another indication that the intermediate cycle low has been set.

Miner Progress

Last week when the Miners formed a swing low off of the day 12 candle, we discussed the possibility that the Miners will be testing the 200 day MA. On Monday they made progress.

The Miners are working through a triple resistance zone comprising of the declining trend line, the 50 day MA and the 200 day MA.

On Monday the Miners closed above the declining trend line and tested the 50 day MA. Above that is the 200 day MA. A close above the 200 day MA will right translate this daily cycle and indicate that March 16th was not only the daily cycle low, but the intermediate cycle low as well

Miner Swing

The Miners formed a swing low on Thursday.

The Miners were stopped by resistance at the 200 day MA and declining trend line last week. They formed a swing high and broke lower, closing below the 10 day MA on Tuesday. The Miners have been in a daily downtrend. In real time, rejection at the 200 day MA on day 8 followed by closing below the 10 day MA on Tuesday looked is if the Miners were setting up for a left translated daily cycle formation which would continue the intermediate cycle decline.

However, the Miners recovered the 10 day MA on Wednesday. Then delivered bullish follow through by forming a swing low on Thursday. This sets the Miners for a possible test and breakout of of the 200 day MA. Those with a higher risk tolerance can enter long positions, using the 10 day MA as the stop. A safer entry would be waiting for a close above the 200 day MA.

Miner Inflection Point


 
The Miners have rallied close to 60% since printing the daily cycle low on March 16th. But on Thursday they hit an inflection point.

Thursday was day 8 for the daily Miner cycle and the Miners ran into resistance at a triple resistance of the converging declining trend line, 50 day MA and the 200 day MA. The formation of a swing high here would set the Miners up for a potential left translate daily cycle which would indicate a continuation of the intermediate cycle decline. However, a bullish break above this inflection point would signal that the Miners are early in a new intermediate cycle.

Miner Recovery

The Miners broke below the previous daily cycle low last Friday to form a failed daily cycle. Since then they have recovered.

Friday was day 16, which is too early to have expected a daily cycle low to form. But since then the Miners formed a swing low and recovered the 200 day MA on Monday. Regained the 50 day MA on Wednesday and delivered bullish follow through by closing convincingly above the 10 day MA on Thursday to signal a new daily cycle. A close above the upper daily cycle band will have us label day 16 as the daily cycle low.

Throwing The Baby Out With The Bath Water

With the Dow Jones down another 1190 points on Thursday and the S&P down another 137 points, it is undeniable that stocks are declining into their yearly cycle lows.

February is month 14 for the yearly equity cycle, placing stocks late in their timing band for a yearly cycle low. Stocks have already broke below the monthly trend line and is breaking below the 10 month MA. Stocks are forming a huge bearish monthly reversal which will ease the parameters for forming a monthly swing high. A monthly swing high is required for stocks to complete their yearly cycle decline. Since stocks formed a higher monthly high in February, the earliest a monthly swing high can form will be in March.

And as stocks are dropping down into their yearly cycle lows, they are taking other sectors right along with them.

The Miners are also forming a bearish monthly reversal. This is month 9 for the yearly Miner cycle, placing them in their timing band for a yearly cycle low. Like stocks, the Miners formed a higher high in February. Therefore the earliest a monthly swing high can form in March. Then the Miners should go on to close below the 10 month MA in order to complete its yearly cycle decline.

This is month 13 for the yearly oil cycle, placing it in its timing band for a yearly cycle low. Oil was rejected by the converging declining 10 month MA and the 50 month MA and is breaking lower. And with stocks dragging everything down, I do not expect to see oil bottom until stocks print their yearly cycle low.

The Miners Join The Party


 

The Junior Miners broke out of consolidation on Tuesday. The Miners joined the party on Wednesday.

The miners had been in a multi month consolidation since peaking in September. Over the past couple of weeks they were being squeezed by the declining 10 day MA and the rising 50 day MA. The Miners rallied on Tuesday then delivered bullish follow through on Wednesday by closing convincingly above the declining trend line. Closing above the declining trend line confirms that that day 55 was an extended DCL

After rallying strongly for the past three days the Miners got a bit stretched above the 10 day MA. They may need to crawl along the declining trend line in order to allow the 10 day MA to catch up to price. The Miners are in a daily uptrend and closing above the declining rend line should trigger a trending move.

Miner Risk/Reward


 

On Monday we discussed that a break below the (red) trend line would send the Miners into a daily cycle decline.

The Miners printed their lowest point on Tuesday, which was day 55, placing them late in their timing band for a daily cycle low. The Miners formed a swing low on Wednesday, off of support from the 50 day MA. The Miners then delivered bullish follow through on Thursday to signal a new daily cycle. A close above the 10 day MA will have us label day 55 as the DCL.

Long positions can be entered with the stop being placed below Tuesday’s low. Until the Miners break above the upper trend line there is a risk of being whipsawed as the Miners continue to work through the multi month consolidation. Waiting on a break above the declining trend line will reduce the risk of being whipsawed at the expense of missing out on part of the potential rally.