Below is a weekly chart for the $SOX which is under going an important breakout and backtest of the one year blue triangle consolidation pattern. Reversal points #2 and #4 were both double bottoms for the blue triangle which formed on the 13 year S&R line at 545. The next area of overhead resistance will come in at the previous high at 690 or so.

The monthly chart shows why the 545 support and resistance line is so important to the big picture. It extends back in time 13 years or so when the blue 5 point flat top triangle reversal pattern formed and broke to the downside. The support and resistance line  then reversed its role to support once the SOX broke back above it in 2014. There is also some nice Chartology on this long term monthly chart as shown by the 10 year bullish falling wedge. Note the little red bull flag that formed just below the top rail right  before the breakout and then the blue triangle that built out as the backtest. This sector has lagged some of the other areas within the technology sector but it may play catch up going forward as long as the S&R line at 545 continues to hold support.

Today I would like to show you some more charts on some if the different stock market indices we looked at in the last Weekend Report. Last weekend we looked at alot of the bull market uptrend channels that are still in place since the 2009 crash low. It’s always important to keep an open mind no matter how strongly we believe things to be when it comes to the stock markets. Everyone can’t get in at the bottom and everyone can’t get out at the top and then there is the consolidation phase that trips up both the bull and the bears alike.

Lets start with a daily chart for the INDU which I’m showing a large trading range that began during last August’s big decline labeled with the red #1. The INDU then rallied back up to the 17,950 area, red #2, and started to form that seven point bearish falling flag which I thought was going to be a bull flag until the price action broke below the bottom rail which led the the second low in January and February of this year which formed a double bottom, red #3. The INDU has rallied strongly again and is within 435 points of reaching the top of the trading range again. Just for argument sake, if the INDU reaches the top of the trading range it will have  completed the third reversal point at 17,950 which would be an odd number of reversal points creating a possible big double bottom. Keep in mind this is only one scenario at this time and there is a lot of work to do before we can even begin to call the price action a double bottom.

Below is basically the same chart as the one above which has the moving averages on it. This past week the 20 day ema crossed back above the 200 day simple ma with the 50 day ema now rising strongly. During big trading ranges like this it’s not uncommon to see them cross back and forth before either the bulls or the bears setup the next impulse move out of the trading range. Once that happens they will get a nice alignment to them that will show the impulse move.

This next chart is a weekly look at the INDU which shows an even bigger trading range going back over two years. It’s not the cleanest trading range I’ve ever seen but the brown shaded support and resistance zones, as large as they are, have held on multiple test. As strongly as the bears have tried they have not been able to move the INDU below the bottom of the support zone on numerous occasions starting way back in 2014. No matter how bearish things become, when the price action is trading down in the support zone the bulls manage to find a way to rally the INDU higher. The same thing is happening at the top of the big trading range at the resistance zone. One slight advantage the bears have right now is they have created a lower high at reversal point #3 which maybe deceptive as I’ll show you in a minute.

I know many don’t see this next daily chart for the INDU as a possible outcome but regardless of what I may think or anyone else for that matter a setup is taking shape that could blow the roof off the INDU. Last week the INDU tested the top rail of a possible triangle consolidation pattern and backed off a bit telling us it’s hot and to be respected at this point in time. This is a critical inflection point for both the bulls and the bears. The bears need to reverse the price action and create another leg down and complete the 5th reversal point which would make this a triangle reversal pattern to the downside. On the other hand if the bulls are in control they should be able to move the INDU above the top rail creating a triangle consolidation pattern to the upside. Again this scenario is still on the table with no confirmation in either direction yet but it gives us a road map we can follow which is better than no road map at all. This big trading range is going to be one of two things a consolidation pattern or a reversal pattern.

I would like to show you how this possible triangle consolidation pattern fits into the big picture of the bull market that began at the March 2009 crash low. As you can see from this longer term perspective the blue triangle pattern is showing an indecisive trading range with a lower high and a higher low. Until we see some type of reversal pattern form the bull market remains intact. Maybe the 5th reversal point will hold and the triangle will end up being the reversal pattern. But, and there is always a but, since the INDU is in a bull market until proven otherwise the odds favor a breakout to the upside. It’s also possible that the INDU declines from this point but finds support on the bottom rail of the blue triangle forming a sixth reversal point similar to the bullish rising wedge which formed between 2011 and 2012.

One thing I’ll be watching very closely over the next several weeks will be to see how the price action interacts with the top rail of the blue triangle. The perfect breakout scenario would be to see the price action hit the top rail and have a mild decline. Then if the bulls are truly in charge the next rally attempt would take out the top rail on heavy volume. Then for confirmation I would like to see a backtest of the top rail from above.

The 20 year monthly chart for the INDU does a good job of showing you the bull market that began in March of 2009. Until we see a reversal pattern form of some kind it is what it is until proven otherwise.

I promised myself I wouldn’t post this next long term monthly chart for the INDU as it has been frustrating watching the breakout and backtesting process over the last several years when I first posted the bullish possibility. As long term members know I call this very large pattern on the INDU, THE JAWS OF LIFE, which is the opposite of how most analysis see it. Most call it the JAWS OF DEATH. You can see the blue triangle that is basically forming on the top rail which is generally a bullish development. This is about as clear a picture you’ll see anywhere on the long term perspective for the INDU.

This last chart for today is the exact same chart as the one above but this time I’m showing it as a line chart. I really do know how bearish most folks are on the stock markets right now but when I look at this long term chart for the INDU I can’t make a bearish scenario at this very moment. If anything it looks super bullish especially if the blue triangle gets broken to the upside. This isn’t my opinion it’s what the charts are strongly suggesting.

It’s time to go out and hide some Easter eggs for the Grand kids. Bottom line, keep an open mind to any eventuality that may arise. All the best…Rambus

Today felt like a short covering rally during the bear market years in the PM complex only in reverse. Days like today can make one think that the rally over the last two months is all she wrote for the new bull market.. Did the baby bull die at birth ? Maybe , but I’ll need to see more proof that the bear market for the precious metals stocks, that ended on January 19th of this year is back.

During a bull market it’s nice to see new highs being made even if it’s for the short to intermediate term time frame. Then to confirm a new uptrend we need to see higher highs and higher lows being made. Since the January 19th low we’ve seen the PM stock indexes making higher highs but we’ve not seen a higher low put in yet because the rally has been so strong. Tonight I would like to show you the new bull market for the GLDX, global explores, using horizontal support and resistance lines. You can apply the same principal to the other precious metals stock indexes like the HUI or the GDX.

During the bear market years it was very rare to see a higher high made on any of the precious metals stock indexes. I believe during the 4 1/2 year bear market there were just a couple occasions when we saw a slightly higher high made before the bears took over and moved the price action lower. That hasn’t been the case since the January 19th low.

Lets start by looking at a daily eight month chart for the GLDX and then work our way back in time to see how the bear market unfolded and how the potential new bull market may unfold over time using just the horizontal support and resistance lines. On this daily chart you can see the two month rally off of the January 19th low that only had a one or two day decline before the bulls took over and rallied the GLDX higher. Finally during the end of February of this year the GLDX has begun to consolidate that first rally phase chopping out a sideways trading range that is still in progress. Note the bullish crossovers of the 20 day ema, 50 day ema that have crossed above the 200 day simple moving average. Now note the two previous highs labeled #1 and #2 which the GLDX took out with no problem at all. Note how the GLDX gapped above both S&R lines and then backtested them from above before the price action moved higher. It’s subtle but it shows resistance reversing its role and turning into support. There is no doubt that this index is overbought but that’s why consolidation patterns form, to relieve the overbought condition. This eight week rally has taken out two previous highs which is bullish.

Looking at the 14 month daily chart for the GLDX it shows the price action taking out a third high that was made during the bear market. It could barely make a higher high during the bear market years, but now in less than two months it has taken out three previous highs without any hesitation whatsoever. This is a change in character that hasn’t been seen in over four and a half years which needs to be recognized at a minimum. The new trading range that is forming between 21.00 and 24.50 is healthy and should be expected. Nothing goes straight up without correcting from time to time.

This next chart goes back 18 months and shows a fourth high was taken out with this first impulse move up in the GLDX. After breaking above the fourth high by a little over a point, exhaustion finally set in and the current consolidation phase is taking shape.

This next chart shows 30 months of price action which is now starting to put our first impulse move up in perspective. The middle of our current trading range is forming on the fourth support and resistance line. Once our current trading range finishes building out a move up to the fifth high should be in order. If we’re truly in a bull market the GLDX will have to make higher highs and higher lows along the way.

This last chart for the GLDX shows the entire bear market starting at the head in 2011 all the way down to the recent low in January of this year. The brown shaded support and resistance zone, red fives, is where I think we may see a lengthy consolidation pattern build out which will be much bigger than our current one. Once our current trading range ends it should be a fairly easy run up to the brown shaded S&R zone between 31.00 and 33.00 as there were no consolidation patterns that formed on the way down.Some call that area a thin zone I call it reverse symmetry as shown by the red arrows. Once the GLDX breaks above the brown shaded support and resistance zone with the red fives on it, the next price objective would be the old neckline at 47 that formed its massive H&S top which this chart only shows the head, right shoulder and neckline.

Below is a weekly chart for the HUI which shows a similar setup we just looked at in detail on the charts above. When I first labeled the bear market low as a double bottom I used the red arrows to show how the HUI might move up to the next S&R line at 185 or so. Well here we are with a consolidation pattern under construction. This is actually what we want to see happen at the beginning of a new bull market. If the HUI crashes through the previous high at 140 that is where I will have to reconsider the new bull market thesis until then I’m in the bull camp. All the best…Rambus