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Posts Tagged ‘gold timing newsletter’


Triple Top Breakout For Gold After 6 Month Consolidation

In Market Analysis, Stock Movers on April 1, 2011 at 7:56 pm

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It is the best of times for equities and precious metals and the worst of times for the U.S. dollar.  It is prudent to focus on the sectors with long secular uptrends as these patterns tend to last longer than expected and produce the greatest returns. Gold (GLD) and Silver (SLV) are in a decade long uptrend as geopolitical uncertainty and rising debt levels have caused many investors to seek the safe haven shelter of real money. In July 2010, as the European Crisis was the prominent topic of worry, gold reversed higher and made a major move on central bank plans to ease. This continued through October and November, when the precious metal trade was very overbought. For the past six months, gold has consolidated as the dollar took a respite before hitting new lows. A breakout in precious metals and continued weakness in the US dollar to all time lows could radically impact our investments. In late January, my buy signal was activated when gold reached its 2-year trend support. During this time we saw precious metals reach very oversold levels. Even the strongest trends need time to pause. For six months gold bears have put up resistance. But it may end soon and this breakout may be powerful.  Gold may follow

Now we have a six month rectangle where gold has vacillated between the $1300 to $1450 area. The battle is raging between buyers and sellers. Gold bears are not allowing it to break above the $1450 area yet and we may see a further shakeout before the next major high volume breakout, as there are a lot of shorts. I would add on pullbacks, especially as odds are on the bulls’ side for a major breakout. These long pauses in the uptrend usually result in major moves to the upside rather than bearish tops which usually end in parabolic moves. Don’t fight the odds, don’t fight an uptrend, and look for a breakout above $1450 which will bring us closer to my late January target of $1600.

Many Fed members are trying to support the gold bears by talking about exit strategies as the US dollar reaches record lows. These news items with central bankers should be bullish for the dollar, yet it is having difficulty sustaining any counter trend rallies. Most moves up in the dollar have been short lived and new record lows are being breached. Investors are realizing the record deficits and obligations will force the central bank to keep interest rates low and devalue the US dollar, so they can pay back their debts with a devalued currency.

I will continually monitor whether or not this breakout from the box in gold is authentic. Volume needs to come in and we should see gold’s ability to hold new highs. I firmly believe that precious metals will continue their uptrend and the shorts will have to be stopped out once we significantly break through resistance. It is normal to see short term profit taking at new record highs. Most box patterns like this are continuation patterns, meaning that this consolidation will only be a pause. If gold closes 3% higher than $1440 we could see a major short covering for precious metal bears. The US dollar is having a series of declining highs (Bearish), while gold makes higher lows (Bullish).

Gold (GLD) made a triple top breakout breaking above $140.  Since the long term trend has stayed intact and since we have had a significant correction in January where gold reached long term support, there is nothing technically that should make one believe this is a major top or a bull trap.  Although there may be a slight chance of that, the odds are in the bulls favor as trends tend to continue longer than expected.  Pullbacks in precious metals should be times to add.  For three weeks gold has consolidated at new highs forming a bullish three weeks tight formation.

Make sure to stay tuned as breakouts must be monitored.

For investors who need more in depth and intra-day analysis of the precious metals, rare earths and uranium sector find out more about my premium service free trial by clicking here.

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The Tidal Waves Of Fear and Greed In Precious Metals

In Market Analysis, Stock Movers on January 21, 2011 at 4:38 pm

With weather beaten gaze the fisherman scans the waters, watches and waits and then at the perfect moment, he casts his line. So we who are anglers for fish of silver and gold study the swirling waters and heave our hooks of small bait in hopes of catching the Big One.

The marketplace in precious metals is more complex than the ocean with its swirls and eddies and cunning currents designed to confound even the most skillful.  Yet the flows of fortune are constant if we but learn to read them. So we keep a firm hand on the rudder as long as the major wave in precious metals, uranium and rare earths is on the secular upswing. We ride the waves through their minor down drafts. Periodically, the moves catch in our throats and turn our stomachs. Still we hold on to our technical tiller and ride the major wave. We welcome such turbulent waters or down drafts as buying opportunities to make even more profitable catches.

It is important to take profits when there is euphoria and to patiently wait for levels when fear escalates and long term support is found.  In precious metals and the markets we have seen a huge tidal change in emotions from euphoria to fear. Gold and silver are having a healthy pullback and will be presenting additional buypoints.  It is moments such as these in the gold and silver secular bull market where one must be strong and not feed into the emotion that shakes out many traders from the long term trend in higher precious metals. Many advisers are becoming increasingly bearish which should signal now is the time to look for opportunities. Remember the market will make you euphoric and fearful at the wrong times. This healthy pullback we are experiencing is shaking out some of the momentum traders who were buying in the fall when the euphoria was extreme. This turned out to be a top and at that time the consensus was overly positive. Now the China Rate Fears is a way to shakeout retail investors and provide an opportunity for institutions and experienced traders to buy “real” money on sale.  Eventually precious metals will turn as deficits and debt ceilings are increased and the U.S. dollar breaks into new lows. The municipal bond crisis is just beginning and soon states will be asking for handouts.

We may see further bailouts from the federal government as many states are in danger of defaulting. The bankrupt states are already asking Washington for assistance. This devaluation of the dollar that Geithner and Obama are asking China for is to help the US pay off its debts and be able to raise its debt ceiling with cheap devalued dollars. This should be bullish for precious metal prices where investors will seek shelter from soaring government deficits and the possible loss of the U.S. dollar as the world reserve currency.

As opportunities await for the inevitable turning of the tides you are invited to join a free 30 day trial subscription at http://goldstocktrades.com/premium-service-trial so that you may follow my continuing perception of the tidal conditions in gold, silver, uraniums and rare earths.

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This Trading Method Is About to Signal Another Buy On Gold and Silver

In Market Analysis on July 21, 2010 at 3:59 am

Trading against the market herd, also known as going contrary can be quite profitable, but timing is another challenge entirely .  Many contrarians make calls too early as irrational markets tend to stay irrational too long for most investors to stay in them.   Nevertheless, when used in conjunction with other technical tools it can provide excellent market entry points that are high reward and low risk when structured correctly.

In these past few weeks since my article on the death cross and why specifically this cross is quite bearish due to other technical signs, I have been bombarded with emails and links to Barron’s and Marketwatch which claim the death cross when back-tested is a contrary indicator with no statistical advantage.  Word to the wise, be careful of what you read in the widely published media reports.  A technician worth his salt knows if a death cross is real and if you need to be wary of a market downturn, similar to the market decline of 2008.

Remember that Barrons, CNBC and MarketWatch are in the business of advertising, which depends on their circulation.  Many of their ads are supported by major corporations who want their readers to be bullish rather than bearish.

What has concerned me lately in gold was the amount of media promoting the possibility of gold skyrocketing during the recent Sovereign Debt Crisis, where many fled the Euro to buy treasuries, the dollar and gold.  Today there was speculation that may threaten banks who are not lending.  This is becoming a deflationary crisis and investors are now concentrating on treasuries.  Mortgage rates are at all time lows, lending is drying up and housing starts are plummeting.  There are worries about U.S. Debt, higher taxes and increased government intervention in the private sector.  This shakeout in precious metals is giving investors another opportunity to jump into this bull market without being caught up in the hysteria.  To enter the trend with additional capital, it would be wise to buy when the conditions are oversold.

I have written about the use of oscillators to show short term buypoints in an uptrend.  I am seeing this happening again with gold.  Gold is about to hit an 18 month trend line, which has been successfully tested 6 times.  This is a valid and significant trend line that needs to be monitored closely.  Oversold conditions coupled with long term trend support leads to highly profitable times, as indicated in the chart below.

While learning to trade, I was taught to be a patient lion waiting for the best possible opportunity to pounce.  Lions wait intently until they are sure of optimal results: a  profitable trade.  Now as a trader of gold and silver, I see opportunity approaching.  The best way to play this market is by buying gold and silver when it hits the lower support trend line and is oversold, and selling as it approaches the rising resistance line.  This rule forces you to enter when the conditions are oversold but still in an up market, giving you very minimal downside risk.  Each time gold has rallied into new highs, the first correction to that trend line has been the counter trend bottom in the next major move.

Investors should be concerned if there is a break in that trendline as it has proven to be valid over the past 18 months.  There are many similarities with silver.

I believe silver is a great buy here at $17, especially as this is a true deflationary hedge.  Eventually the public will want real money, which is gold and silver.  Silver has the possibility of making a major run as it is way below all time highs.  During this time when it is oversold and coming in play with long term support, I would position myself for a move higher from the $17 area to $21 by the end of 2010.