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Posts Tagged ‘silver stock newsletter’

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Silver Making Triple Top Breakout

In Market Analysis on September 3, 2010 at 6:37 pm

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Point and figure charts are one of the oldest and purest charting methods in the field of technical analysis.  Point and figure charts are not commonly studied and practiced by technicians today as in the past.  However, I use it as a simple indicator of areas of supply and demand and to indicate new trends.  Warren Buffett said, “There seems to be some perverse human characteristic that likes to make easy things difficult.”  Especially in the field of technical analysis, analysts seem to love making complex formulas when in reality it is completely unnecessary.

Point and figure charting is a simple method of plotting price alone.  It helps the chartist understand support, resistance and specific congestion areas.  Congestion areas are areas of price where there was a previous battle of supply and demand.  Often times when the price reaches this area it is difficult to break through. However, when the breakout does occur a major move begins.   These charts are excellent at identifying specific price and relative strength breakouts.

Silver has just made a triple top breakout which signifies a possible major trend higher.  Triple top buy signals are very powerful and hint at a move higher.  Unlike bar charts projections are based on a horizontal count rather than vertical.  This silver triple top breakout which may occur shortly could initiate a rise to $27.  This target is also confirmed by the bar chart analysis which I showed on Sunday’s update. On the point and figure relative strength chart a breakout has already occurred.

Usually relative strength breakouts precede price breakouts and confirm the move higher.

Never in history has the gold to silver ratio been so high and a reversion to the mean could mean a significant move in silver.

Disclosure: Own silver and silver mining shares.

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Banking Reform Pushing Financials Lower and Silver Higher

In Market Analysis on June 25, 2010 at 2:41 pm

Major mining indexes appear to be approaching a major breakout point fueled by the sweeping overhaul and takeover of banks.  Banks have been under pressure from a continuing recession, high unemployment, a weak housing market and now more government oversight and audits. This does not help a recovery process for housing or financials.  These are two industries where I need to see strength to believe in a real economic recovery.

Financial are under a lot of pressure.  In the past 6 months, the financials have had 7 major weekly distributions verse 1 major accumulation which leads me to believe that this bearish crossover could lead to a major financial decline.  Notice how the financials when it broke into new 52 week highs it was on low volume which means it didn’t have the momentum to really hold those highs.  This is also evidenced by the declining momentum indicators.  The financials had 5 major weekly sell off in the 8 weeks of April and May.  The bearish crossover pattern plus the failure of the financials to hold the 200 day leads me to be long term bearish.

On the other hand Silver, Gold and Miners all appear to be reaching new breakout points.

Silver is very close to a 3 year breakout and I would not be surprised if over the next couple of weeks silver makes a move into new 36 month highs. If this move breaks $19 on silver, which is a major resistance level my target would move to $30 an ounce.  Silver has shown increasing demand as it has found support at the rising trendline support and is at the verge of a major breakout.

The connection between the financials and silver is showing that more investors are moving away from investment vehicles which are exposed to debt, government regulation and weak economic growth.  Investors want their assets in real money which is silver and gold.  Keep an eye on $19 silver and a breakdown of XLF past $14.

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U.S. Economy Breaking Down, Attempts To Prevent Deflation Failing

In Market Analysis on June 22, 2010 at 8:44 pm

The United States is facing a crisis of a rising dollar and a recession where basic  industries over the past several months have experienced a nasty decline.  This condition is a concern for policy makers as the federal stimulus appears to be wearing off.  The economy seems to be slowing and cash, treasuries, silver and gold appear to be the area of strength.

One bellweather blue chip Alcoa is down over 25% the past 6 months.

In January after breaking into new 52 week highs Alcoa experienced a nasty reversal and has been in a 6 month downtrend.  Meanwhile, the U.S. dollar is rallying as well as gold and silver.  This is a major deflationary sign.

Yesterday’s move to disconnect the yuan to the dollar was a mutual decision for both governments to stem the global deflationary crisis by devaluing the dollar.  The U.S. government has done everything they can to prevent a deflation by keeping interest rates at all time lows, buying back treasuries to keep mortgage rates low and a massive federal stimulus.  Now this latest move is another attempt to use China to decouple its currency, devaluing the dollar.

Although yesterday’s attempt appeared to be bullish as every media outlet believed that this would help global economic growth and the U.S. Economy, the market showed that government intervention can not subdue nature’s law of supply and demand.

The reality is years of bad debt and easy money need to work its way through the system.  Eventually the markets and forces of supply and demand will reach equilibrium.  Now investors are protecting their wealth by moving into gold and silver and I have done the same.

Economically sensitive equities and basic materials need to be avoided.  It is an important time to preserve wealth by being in gold and silver during this next downturn.

Gold appears to be making a very bullish crossover pattern on its relative strength chart compared to the S&P 500 index.  Each time it has made this pattern over the past 3 years with both moving averages pointing upwards has been very lucrative to gold investors.

The transportation averages had a nasty reversal today to further prove that movement of goods is under pressure.  Transportation is the clue to see if economic recovery is continuing.  Today’s reversal is evidence of weakness and further proof that businesses and individuals are holding onto their cash.

Today showed strong resistance and failure at the 50 day.  This is an extremely bearish pattern.  We must be defensive.

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Fear of Deflation, A Weak Economy and Bad Global Debts

In Stock Movers on June 20, 2010 at 3:30 pm

Copper is an extremely useful indicator which shows the strength of the global economy and whether the economy is growing or decreasing. At the moment Copper is flashing a “red alert!” A very bearish crossover pattern means that copper could go lower for many months.

This pattern is taking place with a broken trend, weakening rsi and momentum. All these signals together makes the chance of a fakeout, bear trap or whipsaw less probable. Next target is $250 which is the 50% retracement.

The bearish copper pattern is taking place at the same time as an extremely bullish cup and handle breakout on gold. Many investors are finding gold and silver a better place to be right now rather than equities or commodities that are more susceptible to a weak economy.

I especially like silver here and have recommended UXG U.S. Gold which has made a huge discovery in Mexico. UXG is one of the leading stocks in the market right now up a 108% in the last 6 months. Although it is extended and I do believe there will be a pullback I am still extremely bullish on this company. In the next couple of weeks more news will be coming out summarizing the massive amount of work UXG is doing in Mexico.

Silver is going to follow gold and breakout into new highs and when that breakout is done a huge move could follow according to my point and figure charting. As you can tell by this chart that as the global economy is in danger people are buying silver. This is a sign of deflation, when the general public hoard silver and gold rather than being exposed to debt.

Silver is making a long term ascending triangle which is a bullish pattern and hasn’t violated any trend lines or moving averages. I predict silver on this next breakout could catch up with gold.

In a real economic crisis silver is a much more practical item as an alternative currency as it is much cheaper. A middle class person could easily cash in some dollars to by a roll of silver dollars verse buying gold coins.

The market is also predicting that interest rates are going to stay low as central banks fight deflation and hoarding of precious metals. This is illustrated by the move in utilities to reverse the bearish crossover signal. This signal is usually bearish unless there is a significant reversal close to the crossover.

Utilities is a sector which is extremely sensitive to higher interest rates. When this sector rallies it usually predicts low interest rates. The fear of bad debt globally and deflation is causing a rush to gold and silver and an easing from central banks.