I decided to throw in the towel on North American Palladium (PAL) today and sold my shares for $6.18. I dislike selling a miner at a loss, but it appears that the palladium metal is going to get taken down with the stock market as time goes on. Both have made lower highs and lower lows and, well, that's just plain bear market fodder. No sense in fighting it, so I sold.
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Click on the chart to ENLARGE
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The great news, however, is that gold has strongly broken above the bull flag on its daily chart and silver has moved itself right up against the slightly downtrending slope created by the high of two weeks ago. The HUI mining index also powered higher today. This must be the beginning of the final leg of the C wave.
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I posted a couple of stocks to the Tomorrow's Trades (Today!) page for tomorrows (Tuesday) trade. And here is a peak at each.
First is Aurizon Mines Ltd. (AZK). The chart sports a fresh trend line break of both the True Strength Index (TSI) and the Money Flow Index (MFI) indicators. The estimated earnings projections for 2011E and 2012E are the latest information from Kitco's Matlack report.
And second is Banro Corporation (BAA). The TSI and MFI setup is decent. What I find more compelling however is the successful testing and bounce off support at the 200 dma and the fact that this stock has been incredibly oversold. As of today's close, BAA is still nearly 32% below its high of March 7 just two weeks ago. In my opinion BAA is unlikely to remain this mispriced for long.
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My TSI Trading record has been updated.
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/images/quotes_special.gif)
amen to the BAA trade...bought some this morning myself.GOOD CALL JOHN
ReplyDeleteJohn-- You obviously find the TSI to be a good indicator. I'm a swing trader (not professional but doing very well), trying to hit the big pivots long and short in gold/silver/miners. (And by big pivots, I mean mainly the pivots for the A, B, C, D waves.) How good do you think the TSI is for achieving that? I'd appreciate anything you could tell me about how effective it is v. other indicators. (I actually just ordered Blau's book today because of you and this site.)
ReplyDeleteTHANKS for any insight you could give me. And thanks again for sharing all your expertise. (I'm a subscriber to Gary's site as well.)
John,
ReplyDeleteI am new to the website.
I am intrigued by the TSI and trying to familiarize myself with how you do things.
When you post a "tomorrow's trade today" do you buy at the open?
Do you use limit orders and if so how do you determine your limit?
Thank you.
Hey, that is an interesting question that has not been asked before. Well, I can tell you the answer but it will mean more if you find out and see it for yourself - perhaps I could also do a post or two to demonstrate the answer you seek. Or perhaps you could send me an email and I will return it to you with some charts attached.
ReplyDeleteBut to cut to the chase, the answer is that the TSI works great for capturing the timing of big pivots. The trick, besides understanding how the indicator works, it to vary the magnification of both the TSI indicator itself and the time frame examined.
So for example, if you want to get a really broad overview of these big pivots, you would examine a weekly chart and set the TSI to Wm. Blau's preferred magnification of (25,13).
What I did was begin with what Blau discovered and then took it to several levels beyond. At first I used TSI (25,13), then I cut that magnification in half and simultaneously used TSI (13,7) in a lower panal. That gave me signals faster so I cut that in half and added a third panal using TSI (7,4).
For a couple years, at least, I studied stocks with all three of these magnifications. At first the (7,4) was simply too fast for me. I could not think fast enough to keep up with it and its signals were something of a mystery to me.
Gradually however, I began to define the conditions that repeatedly gave me good signals. The ZERO crossover signal is one signal that Blau crafted into his formula. But to that I added the positive and inverse positive divergence and the negative and inverse negative divergence. And I also added the trend line break. Blau used moving average crossovers and they work - but the signals I further defined are faster and usually highly accurate.
Anyway, you can start with a 10 year weekly chart of the SPX or Gold and try the different TSI magnifications. I'll be curious to hear what you find out!
Thanks for the great question.
John -- You're so very generous with your expertise. Thanks for the reply.
ReplyDeleteActually, the experimenting you did with the TSI is what I've done with a variation of the CCI (Commodity Channel Index) in a much smaller way.
I've printed out your response, and may be able to attack the TSI at a future date. But, for now, my regular work and the rest of my life are keeping me incredibly busy. So I'm not sure at the moment when I can start working with the TSI.
Thanks again though. It sounds like a very powerful indicator.
$$$ - I like your screen name and thank you for writing.
ReplyDeleteYes, Tomorrow's Trades (Today!) is designed to give you a limit order price to use at the open. If the stock opens lower than the limit price, of course you will get your shares at the lower open price.
Once you have purchased the stock you can then place a GTC (good til cancelled) limit order to sell at the price I suggest, if you wish, or whatever price you are comfortable with.
Its kind of like catching fish - you put the hook with bait in the water (purchase the stock)and when the fish swallows the hook (limit order sell price hit), you just pull the fish out of the water, take your money with a profit, and do it again (and again and again). At least that is what I tend to do.
I think about various things to decide on the buy and sell limit order price. Lots of things actually. The TSI momentum is one thing, but also I look for where the stock may get stuck at key moving averages, where it is in relation to the Bollinger Bands, where there are short and longer term resistance lines, and so on.
Finally, I personally have done well trying to achieve small successes that are successful a very high probablity of the time. So rather than focus on which stock is going to appreciate 60%, I try to find situations that I think have a very high probablility of quickly making 6% or 8% or sometimes even 15%. If I can do this then I continually turn my money over and enter the next trade that I think will return 6% or 8% and so on.
In a sense it is a risk management system. When I get a decent and hopefully quick gain, rather than risk that it is all taken away from me next week or next month, I take the money and put it back in my pocket. Then I look for another similar situation and do it again.
I hope I have helped you in some way.
P.S. It sounds like with all the modifications you added to Blau's work (the positive and inverse positive divergence, etc.), you've become quite the Jedi Master with the TSI. This is good!! ;^)
ReplyDelete