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Posts Tagged ‘gold stock newsletter’

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Market Fails as Fronteer (FRG) Jumps On Long Canyon Discovery

In Stock Movers on August 19, 2010 at 8:41 pm

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The S&P 500 broke out of a bearish rising wedge pattern last week after failing to hold the 200 day moving average four different times.    My bearish views were confirmed last week with a high volume breakdown after the Federal Reserve gave a sour report on the state of the economy.  Trading became highly volatile before the announcement.  In previously published articles, I warned that the Fed would ease and do everything within their power to flood the markets with cash, which has been bullish for gold and mining stocks.  The several gap downs on the S&P are hard to short as the market may rally to try to fill those gaps.    Although I have downside targets, I would look for a countertrend days to enter if going short.

Today’s break of the 50 day moving average was a key move as the probability of the 50 day moving average to cross the 200 day moving average to the upside is diminished.  Many were concerned that the bearish death cross would be a whipsaw, meaning markets would revert higher.  However, the bearish death cross is becoming more confirmed and pronounced as the 200 day begins sloping over.

Stocks key technical break today of the 50 day moving average on high volume shows there is little support as the risk appetite wanes.  The rally in treasuries are showing signs of a double deflationary dip, similar to the 2008 bear market as investors fear that the economy is on shaky grounds.

I believe that the chances of S&P moving into new lows are very high.   Today’s break of the 50 day moving average is confirming both the bearish head and shoulders pattern and death cross.

The S&P market action is demonstrating that the two day rally above the 50 day was not strong enough to maintain support.  Now the 50 day will once act again as resistance.  Volume did come in higher signaling major distribution. However, when a market transitions from a bull to a bear, each subsequent failure at the 200 day drives out the bulls who still believe that the decline is a buying opportunity.  After the third or fourth failure usually a full blown bear market begins.

Despite the Fed’s promise to amp up the struggling recovery by flooding the markets with cash and the latest jobs bill from Congress benefiting government and union employees, their major constituents, investors are losing confidence in Washington’s attempt to prevent another bear market.  I expect a breakdown into new lows over the next few weeks.

Despite all the weakness in the equities market, many mining stocks I am following closely are breaking out as gold is on its way to test new high territory.

Fronteer Gold which I have highlighted to my subscribers came out with their best drill results yet at their Long Canyon Project.  This project is being viewed as one of the great new high grade gold discoveries in Nevada.  These results in Nevada will be part of a new resource estimate on this project which should be a driving force for this company over the next few months.

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Deflationary Crisis Part 2, Will This Time Be Different For Gold and Silver?

In Market Analysis on June 29, 2010 at 8:45 pm

Stocks went down sharply today on concerns over consumer confidence and indications that show that the economy is stalling in China.  China has been a leading market in this recovery and its bull market has helped the price of industrial metals and base metals.

Over the past few weeks I have highlighted that the market has given signs of a major deflationary crisis and economic slowdown.  Today these signs became apparent with a significant sell off on high volume and a break into new lows for the S&P 500 and Nasdaq.

Today major institutions sold equities and sought shelter in treasuries and the dollar.  Gold and silver both sold off early in the day but gold fought back and closed up and silver was able to recoup some of its losses.  Gold and silver are still in a uptrend and above both the 50 day and 200 day moving average.  Gold and silver miners also appear to be close to a major breakout.

The S&P 500 and Nasdaq had a significant break of previous lows on high volume.  I alerted readers several days ago to buy inverse etf’s when the markets failed to regain the 50 day moving average for the second time.  Many times after this second failure the market has a major breakdown.  The time to short is when the averages fail at the 50 day not when it makes new lows as many less experienced traders are doing now.

Many traders are fearing that silver and gold may be a top here as they are comparing 2010 to 2008.  I understand that fear and am monitoring that situation closely.  I have received a lot of requests to comment on the situation.

At the moment I believe that we will not see a correction in precious metals like we saw in 2008.  There has been a global concerted effort for governments to devalue currency and assist the economy with unprecedented spending and cheap dollars.  The Euro is on the verge of a collapse and there are major sovereign debt issues that is spreading to more countries.  I do not believe the U.S. government will be immune from those debt issues.  The United States has high unemployment, weak consumer confidence, a huge amount of debt and poor GDP growth.

Gold miners appear to be on the verge of a major breakout into new pre credit crisis highs.

The chart above shows the relative strength of the gold miner etf to the S&P 500.  A break to 51 on that chart would show great relative strength to the market.  During this market downturn since May 6th miners and bullion have shown good relative strength which does not make me conclude that we are having a repeat of 2008.