GCRU- Weekly Trading Service

- GCRU- Weekly Trading Service

●●● GCRU #698 ●●● July 20, 2016 (in its 15th year)

IN THIS ISSUE U.S. DOLLAR REACHES 4 MO HIGH BREXIT CONTINUES TO DOMINATE VIX TRIGGERS A SIGNAL Open Positions 19 Abbreviations 20 MARKET LEADERS Gold (futures) 6 Silver (futures) 7 US Dollar Index 8 Crude (futures) 9 Interest Rate 10 Yr T No (TNX) 10 Copper (futures) 11 D. Industrials & D. Transports 12 HUI & Adv/Dec Line 13 STOCKS ProShares UltraShort S&P 500 (SDS) 15 ProShares UltraShort Crude Oil (SCO) 16 Agnico Eagle Mines Ltd (AEM) 17 ProShares Ultra 20+ Year Treasury (UBT) 18

“Ideas come to you… not necessarily working and sitting at a desk…” – Carl Icahn– 1

IT'S ABOUT TIME

he markets are still trying to correct other currencies that are declining, and not the excesses. Some have started and necessarily due to the dollar rising on its T others seem ready to start. own merit.

The dollar index popped up above a key We put the dollar and the 10 year yield on resistance to a 4+ month high yesterday. our Chart of the Week. You can see they Crude oil is rolling over and starting a tend to move similarly, especially since decline. It looks ready for a push down. So last November when they both fell far this sluggish crude price is not affecting together. The Brexit vote essentially the stock market. distorted the yields as well when investors ran to the bond market for safety. And the But it's a matter of time. The stock market 10 year yield fell to record lows. has been reaching record highs daily, but the rise looks limited, at least for the ST. Investors ran to both the gold and bond Earnings season is here, and so far they've markets. And this too caused the gold been disappointing while sentiment loses universe to rise even more. The Japanese its luster. We're keeping our SDS. are also buying gold to rid themselves of negative rates. The IMF lowered their global economic outlook after the Brexit vote. And this But these distortions are calming down, lower global growth is also hurting the oil and all systems point to higher yields price due to slower demand potential and upcoming, and following a further rise in ample inventories. the dollar.

This is why we recommend keeping your The dollar is also getting a boost from the put spread and position in SCO. possible notion of an interest rate rise by the Fed. But this looks like this hope will Meanwhile, housing starts rose more than fade with time. expected in June which is a plus for the dollar. They both could rise ST to the dashed green line on the chart as a final target The dollar index is bouncing up from the level. That is, near 2% for the 10 year lows since May, and especially since the yield and near 100 on the dollar index. Brexit vote. The plunging British Pound and then the falling yen over the past week This would then be a great time to buy has been helping to push the dollar up. bonds.... And most likely gold too.

Plus, other currencies are sluggish. This Looking at the Chart Below, you can see could all continue giving the dollar gold now resisting at its March 2014 high strength. But this is basically why gold near $1380. This is happening while the and the dollar are moving together. It's the indicator is forming a double top at the

2 high area. This now finally means gold is The U.S stock market continued to rise this poised for a downward correction. past week. It reached new record highs. But red flags popping up.

From weak earnings, to a strong dollar and rising yields to a lingering non- confirmation of the Averages and VIX.

You can see the S&P 500 over the last 2 ½ years (Chart on Page 4). The volatility index, more commonly known as the VIX, helps give a good indication when the market is near a temporary high area.

Note how VIX is falling to a low area, dipping below 12. This low area tends to coincide with tops in the market, see the red numbers. This alone is saying the upside is limited, and to not be surprised to see the market decline coming up soon.

Due to signs of weakness, we’re holding on to our position in SDS and be ready to sell on a bounce up.

If this happens at the same time the gold price is correcting, we could see gold If gold closes and stays below $1320, shares fall in a volatile correction. So far, initially, and then $1280, it could test the gold shares have been resilient. They're $1200 level and possibly the mega trend holding near the highs, but we'll have 23 month MA at $1186. But even if it patience and buy on weakness. does, it would still be very bullish for this turnaround year. We’re keeping AEM and looking to buy near key support levels. More in the chart We'll want to buy gold, gold shares and section below. silver at that time.

We'll keep the positions we have, and take advantage of upcoming weakness to buy more. This is our goal.

Our strategy this week is to keep a close eye on $1320 and $1280 levels on gold, $45 support level in crude, and see if the U.S. dollar index can hold above 97. Some of our profit targets are fast approaching. Consider taking partial profits at each target.

Good luck and good trading,

Omar Ayales Chief Trading Strategist GCRU www.goldchartsrus.net A division of Aden Research Group

MARKET LEADERS

U.S. DOLLAR INDEX SEPTEMBER 2016 (DXU16) 7/19/2016 CLOSE= 97.108

DEC

JAN BROKE ABOVE BULLISH FLAG POLE! 100 MAR

JAN HIGHS IS NEXT KEY RESISTANCE JUN 92 MAY SPINNER (3, 16, 16) MOMENTUM RISING... 2 0.5 -1 -2.5 D J F M A M J J New Recom Stay out.

The U.S. dollar index has the "con"! The dollar had an exciting week with Treasury yields rebounding from the lows. The dollar broke above 96.50 on a 2dc confirming the bullish flag pattern with upside target near 100. The dollar is now very bullish above 96.50, and it has solid support at the May uptrend near 93.50. Spinner has been declining from its highs, breaking below MT MA showing a weakening tendency. However, its steady uptrend since Feb is telling us any potential downside will likely be short lived and the dollar is poised to resume its rise. We recommend keeping your cash in dollars for now as the dollar is poised to continue outperforming most other currencies, including gold ST.

LIGHT CRUDE OIL SEPTEMBER 2015 (CLU16) 7/19/2016 CLOSE= 45.45

BEAR FLAG FORMING JUN DOWNSIDE TARGET AT 41 52 JUL 50

44 ST SUPPORT LEVEL 42

APR 38 SPINNER (3, 16, 16) BEARISH 2 -0.5 -3 A M J J

Put Spread Nov 2016 33/30 Bear Put Spread at $600 (Mar-30-16).

Recom: Keep your short positions.

Crude found some support at the 45 level while it consolidates a decline since Jun. It's also forming a bearish flag above its ST support, and Spinner remains weak below its MT MA and the zero line. This tells us if crude breaks below 45 on a 2dc, it'll confirm the bearish pattern and a decline to the lower 40s would then be likely. Keep in mind, the Jun downtrend near 48 remains key. A break above this level could shift momentum drastically to the upside for crude. We continue to hold bear put spreads and a full position in SCO (inverse ETF to crude oil). Keep your positions as more downside is likely.

CBOE Interest Rate 10 Year T No (^TNX) 7/19/2016 CLOSE= 1.558 US$ MAR RESISTING AT MAY 1.98 DOWNTREND MAY 1.92 1.86 1.8 1.74 1.68 1.62 1.56 FEB 1.5 1.44 1.38 JUL 1.32 SPINNER (3, 16, 16) AT KEY RESISTANCE, NEAR OVERBOUGHT 0.1 0 -0.1 -0.2 F M A M J J

CBOE Interest Rate 10 Year T No (^TNX) - Chicago options

The 10 year yield reached a ceiling near 1.60 after rebounding from its all time lows. Spinner rose to the highs showing limited upside and thereby confirming strong resistance for the 10 year yield at the May downtrend near 1.60. If TNX rises above 1.60 on a 2dc, it would then be positioned to rise to the Mar downtrend near 1.80. However, if it fails, it'll likely fall back to the Jun lows. Expect for rising yields to be supportive of a stronger dollar which in turn would put downward pressure on commodities and currencies.

COPPER SEPTEMBER 2016 (HGU16) 7/19/2016 CLOSE= 2.263

OCT TESTING KEY RESISTANCE 2.420

MAR APR 2.320

2.220

2.120

2.020 JUN

JAN 1.920 SPINNER (3, 16, 16) BULLISH, BUT LOOKING TOPPY NEAR OVERBOUGHT 0.15 0.05 0 -0.05 -0.15 O N D J F M A M J J

Copper rose to the Oct downtrend this week, reaching a 2+ mo high! However, copper has yet to break clearly above the Oct downtrend near 2.27 showing weakness. Spinner is rolling over near a high area. This tells us the upside may be exhausted ST. If copper fails to break above 2.27 on a 2dc, it'll show weakness and could then decline to its first support, the Jun uptrend near 2.15. Copper's stronger support is at the Jan uptrend near 2.05. A lackluster resource sector is indicative of a weak global economy which could continue to affect corporate performance and therefore put downside pressure on stocks.

SPDR DOW JONES INDUSTRIAL (DIA) 7/19/2016 Shares Transportation Average (^IYT) 7/19/2016 CLOSE= 185.42 CLOSE= 142.97

186 DOUBLE TOP 148 NEW HIGHS! 184 MAR APR APR 182 JUN 144 JUN 180 178 140 176 174 136 172 170 132 168 DOW THEORY NON- 166 128 CONFIRMATION 164 JUN 162 124 160 158 120 156 FEB 154 JAN JAN 116 SPINNER (3, 16, 16) SPINNER (3, 16, 16) ROLLING OVER AT OVERBOUGHT 6 TOPPY AT OVERBOUGHT 6 3 3 0 0 -3 -3 -6 -6 -9 -9 J F M A M J J J F M A M J J MACD (12, 26, 9) BULLISH BUT APPROACHING HIGH AREA MACD (12, 26, 9) BULLISH BUT APPROACHING OVERBOUGHT 3.5 5.25 1.75 3.5 0 1.75 0 -1.75 -1.75 -3.5 -3.5 J F M A M J J J F M A M J J

New Recom Stay out.

The stock market remains very strong, reaching new highs on a daily basis. The Industrials are showing impressive strength. The Transports, on the other hand, remain lackluster despite recent surging strength. The Transports are still resisting below the Mar/Apr double top showing signs of weakness. By not rising to new highs, the Transports are triggering a Dow Theory non-confirmation. This tells us the stock market remains within a bear market despite the recent rise to new highs. Notice Spinner for Transports is rolling over from an extreme high, telling us upside is limited ST. To see a real trend reversal and a renewed bull market in stocks, the Transports must rise above their all time high, above 9,200. We'll continue to hold on to our position in SDS, even though the stop loss was triggered almost two weeks ago.

ADEN GOLD STOCKS ADV/DECLINE 7/19/2016 HUI GOLD BUGS INDEX (HUI) 7/19/2016 CLOSE = 4576 CLOSE= 267.37 4610 JUN 280 UPSIDE WEDGE STILL 270 4590 MAR TOPPING DEVELOPING 260 4570 250 JUN 240 4550 230 220 4530 210 JUN 4510 200 MAY 190 4490 180 170 4470 160 4450 150 DEC 140 4430 130 MAY 120 75 DAY MA IS 4410 KEY SUPPORT 110 100 APR 4390 JAN M A M J J J F M A M J J

SPINNER (3, 16, 16) NEARING ZERO SPINNER (3, 16, 16) TESTING UPTREND 50 30

25 15

0 0

-25 -15

MACD (12, 26, 9) RISING WITH STRENGTH MACD (12, 26, 9) LOOKS GOOD ABOVE ZERO & MT MA 25 10 10 5 0 -5 -5 -20 -10 M A M J J M A M J J

Consolidation… Following a bullish breakout earlier this month, HUI is now consolidating near the highs despite weakness in gold. The sideways pattern is turning into a bullish flag with upside potential at 320. To confirm the pattern, HUI must break clearly above the flag pole on a 2dc above 273.50. Spinner declined from overbought levels and it's now at a key uptrend, near the zero line. This tells us momentum remains on the upswing as long as Spinner holds at its uptrend. The A/D Line, on the other hand, is showing signs of exhaustion as it's starting to break below a rising wedge of its own showing a decline to the 75 day MA (4500) is possible. Keep in mind, however, the A/D Line must break below 4570 on a 2dc to show weakness that could lead a potential decline. However, if the A/D Line holds at this ST support (4570), it could resume its rise and lead gold shares higher. A/D Line's Spinner is showing some weakness by breaking below its MTMA but remains firm with upside potential by staying above zero. On the downside, HUI has been forming an upside wedge pattern with a downside target at the Jan uptrend near 235. To confirm weakness, HUI must break below 260 on a 2dc. Mixed signals during gold share consolidation. We recommend keeping a close eye on the key resistance and support levels above. A break in either direction will be forth telling of HUI's next move. 13

STOCKS

PROSHARES ULTRASHORT S&P500 (SDS) 7/19/2016 CLOSE= 16.69

25.5 JAN FEB DOWNSIDE WEDGE WITH UPSIDE TARGET AT 18.50 FORMING 24.5

23.5

22.5

21.5

20.5 JUN MAY 19.5

18.5 DOWNSIDE WEDGE WITH UPSIDE TARGET AT 19 FORMING 17.5

16.5 SPINNER (3, 16, 16) BOTTOMING? 1.5 0.5 -0.5 -1.5 J F M A M J J ProShares UltraShort S&P500 (SDS)-NYSEArca 18.90 (May-4-16), 18.55 (May-11-16), 18.85 (May-18-16), 18 (Jun-2-16), Long at: 18.30 (Jun-15). Stop: Sell on a rebound to 18.90 or better.

New Recom: Sell at 18 or better.

Is the stock market ready for a correction from its bullish rise? Stocks have been rising with strength, but there are several signs of caution everywhere. Dollar strength, weakness in crude, a lackluster resource sector and the volatility index is approaching the lows, to name a few. The chart above shows SDS (inverse ETF to the S&P 500) forming a downside wedge with an upside target near 18.50. A downside wedge suggests the downside is limited and a rebound to the Feb downtrend near 18.50 is likely. Spinner is forming a bottom near an extreme oversold level, confirming a limited downside. Although our stop loss was triggered over a week ago, we've been holding on 15 to our position waiting for a rebound. The charts tell us that the moment is approaching. ProShares UltraShort Bloomberg Crude Oil (SCO) 7/19/2016 CLOSE= 92.24

160 APR HIGHER LOW CONTINUE... 150

140

130

120

110

100

JUN 70 SPINNER (3, 16, 16) MOMENTUM RISING STEADILY 10

-10

-30 M A M J J ProShares UltraShort Bloomberg Crude Oil (SCO)-NYSEArca Long at: 82 (Jun-2-16), 74.50 (Jun-8-16). Stop: 2dc below 78.

Profit Target: 95 (almost reached!) & 115

New Recom: Keep your positions. Sell half at first profit target.

Dollar strength continues to put pressure on crude which in turn is fueling SCO's rise! Notice SCO uptrending consistently since Jun. Lower highs show a clear path upward. Also, Spinner remains in full upswing showing momentum rising at a steady pace. SCO is testing its 75 day MA (93.50). A clear break above this level on a 2dc above 94 would confirm strength that could boost SCO past the 100 level. On the downside, the Jun uptrend at 80 is key. A break below this level would reverse SCO's uptrending course.

Upside potential outweighs downside risk. Keep your positions for now and be ready to 16 sell at profit targets.

PROSHARES ULTRA 20+Year Treasury (UBT) 7/19/2016 CLOSE= 98.62

110

106 APPROACHING WEDGE TARGET 102

90 JUN 86

82 APR 78

74 JAN FELL TO EXTREME OVERSOLD SPINNER (3, 16, 16) LEVELS = LIMITED DOWNSIDE 8 4 0 -4 J F M A M J J

ProShares Ultra 20+ Year Treasury (UBT) -NYSEArca Buy on a decline to 94 and more near 90. Place stops at 2dc below 88. New Recom: Profit targets at 104 & 120.

UBT declined further as Treasury yields rebounded higher this past week. UBT continued to decline after breaking below its rising wedge with a downside target near 94. Notice Spinner sinking below zero and approaching an oversold area showing limited downside ST. Keep in mind, bonds remain bullish on an intermediate basis and we recommend buying on weakness.

Quoting GCRU is permitted provided GCRU name, website address ABBREVIATIONS & subscription price are given. 1-day close (the share price must close above or below the indicated price level, All charts in GCRU are daily prices. 1dc before our recommendation is activated) 2dc 2-day close (consecutive) Subscribers can obtain free online chart updates for all gold shares bot bought in GCRU via: www.bigcharts.com. To view Canadian stks please CAD$ Canadian dollar use CA as prefix (ie, to view Agnico Eagle (Toronto) you must use H&S head & shoulder CA:AEM). LOC line on close

Note: U should NOT feel our recommended prices are set in LT long term concrete. If mkts suddenly feel hot or cold to U, or dramatic news MT medium term occurs, U can buy or sell, or stop at slightly higher or slightly lower NL neckline prices. It also hinges on your experience level. Some people can use PF portfolio our prices as guides & know when they can take bigger risks. PO price objective Recom recommended Spinner: Spinner is an in-house momentum indicator (not always RH&S reverse head & shoulder shown on charts). Momentum indicators use the rate of change in RS relative strength price to determine predominant energy flows. Spinner trading ST short term signals are generated when the faster timing line crosses above or Sym/tri symmetrical triangle below the slower confirming line. Upside crosses in the lower range Tgt target of positive territory offer the most reliable signals for longs; Unch unchanged downside crosses in the top range of negative territory for shorts. Vol volume Avoid trading against the timing line, ie, buying/selling if the timing Wk week line is in corrective mode (against direction of trade) unless the Ystdy yesterday confirming line is positioning for a new 'confirming cycle'. It's C close important to always be aware of location, direction & cycling phase of the confirming line. Spinner signals are more effective in trending mkt's than in trading ranges where indicators such as Stochastics & Williams %R should be used.

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