Wow, what a day! I don't know whether I should laugh or cry.
*
Traders interpreted Ben's appearance today as suggesting there is no end in sight to the money printing machine.
*
But tomorrow is a new day. We'll see if investor's perception holds longer than this afternoon's very emotional reaction that sent gold to new all-time highs ($1,530.70), silver to a new closing high ($47.81) and the US Dollar to new lows not seen since August of 2008 ($73.31).
*
Yesterday I bought Great Panther Silver (GPL) and today I sold it for $3.62. This is the 15 minute chart I was looking at when I decided to sell. You will see that I *anticipated* the True Strength Index (TSI) indicator to be on the verge of a break and a sell signal. And when you look at the following chart of GPL showing today's close, you will be allowed to chuckle along with me that my anticipation was probably not my finest decision.
*
Click on any chart to ENLARGE
Well, here is the end of day chart. It turns out that the trend line break I was *anticipating* did not happen - not even after the stock made it higher some 25 cents to $3.87. Boy, did I leave a lot of money on the table. The TSI had it right all along and the interpreter got it wrong.
*
Anyway, I made two GPL charts to show the reader both my short-coming as a trader and how well the TSI works.
*
This is not the first time I have left a lot of money on the table, btw. It happens somewhat frequently - and those who have been reading by blog for a number of months know what I am talking about. Anyway, my attitude is to laugh, celebrate the success I do have, and look for the next trade.
*
Also, I more than doubled my position in GPL first thing this morning in another account and did not sell a single share. So I'm doing OK. Hooray!
*
Some readers have inquired about the current status of the mining index. This is a daily chart of the Market Vectors Gold Miners ETF (GDX). The Money Flow Index (MFI) indicator has a tiny trend line break but the TSI (7,4) does not. At a -.06 reading, the ZERO crossover BUY signal is close, but not quite there yet. What can I say? It looks good, but no BUY signal confirmed yet.
And finally, a daily chart of the US Dollar. Price hovered around $74 for most of 4 days, but today that consolidation area lost it's grip. Not a good sign for the US Dollar.
*
In a recent article I wrote that the speed the US Dollar crashes during the final leg of the gold and silver parabolic is about 20 - 25 cents per day. Stated another way, the US Dollar loses $1 in value about every 4 - 5 days. My calculation of the past 7 days is that the US Dollar has been falling at an even faster 33 cents per day average. At this rate, the All-Time Low of the buck ($70.70) could be reached in just 8 trading sessions.
*
My TSI trading record has been updated.
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/images/quotes_special.gif)
Damn dollar, horrible for my trip to asia, but hey, good for my precious metals lol
ReplyDeleteI was wondering if you also see a negative divergence on the GLD on the daily chart. Does this affect your decision on buying or will you buy on the gdx trendline break?
Thanks for the awesome work
John,
ReplyDeleteThis trade you just made with GPL is the kind of trade I wish I could make more often. BUY IT ONE DAY AND SELL IT THE NEXT DAY FOR A NICE PROFIT. NO WAITING. And wondering.... and hoping. I thought I would wait a couple days until at least after the fed meeting and then perhaps buy GPL. It's the second time I missed that stock. Nice going John. Maybe some of my own beaten down little mining stocks will follow GPL.
John, I'm a real noob, so please bear with. I'm wondering why the chart scale has an affect on TSI? For example, looking at the daily chart for GDX, as you state, TSI (4 7) is at -0.06. But when I view it on the hourly chart, it is at +0.48. Not only has it crossed the zero line, but has also broken through the moving average 50.
ReplyDeleteSince it obviously is affected by the chart scale, are all your theories about TSI based on the daily chart values?
Spidey - GLD does show a negative divergence with today's close but I just looked at the live gold futures trading this evening and the price has risen such that there is no longer a negative divergence. As far as buying, I have selected a few miners that could be bought in the morning and should do well.....just need time to write that post.
ReplyDeleteMonty - I laughed when I read your comment, as that is EXACTLY how I feel about it too. Truth be told, this kind of thing happens to me more often than just dumb luck. Look through my trading record and you will find a number a nice gains where I bought one day and literally sold the next, or day after that. It's the TSI and using it properly, and a little luck doesn't hurt.
Dave - hey, thanks for your comment and question. Each time frame generates a different TSI calculation, true. And you can use the TSI to trade, using the exact same buy and sell rules, on any time frame. When I am trading Dollar or S&P 500 futures I use the 5 and 15 min mostly...looking for trend line breaks, divergences, ZERO crossovers, etc. When I want to get an edge on something that looks good on a daily chart I will zoom in to the 4 hour time frame and see if I can time the buy or sell a little more accurately.
In simple terms, the TSI speaks truth on all time frames. On the 5 minute what it says is true for maybe the next 20 minutes. The 60 min chart may give you a great trade that last a few hours. The daily magnification, maybe 4-5 days.
And for goodness sakes, if what I wrote does not answer your question to your satisfaction, please post another question or write me (tsiTrader@gmail.com)...OK?
Hi John -
ReplyDeleteI am new here, and totally fascinated with your blog. Not only is this a very intriguiging method, but you seem like a genuinely warm and decent person, not to mention simply interesting.
I hope you won't mind indulging a rather ingorant, and a bit gullible, "newby" with a couple of questions:
1) I confess that, rather like a loyal but very unintelligent dog, I bought GPL this morning after reading yesterday's article. Obviously I wasn't at all dissapointed with the outcome. But the rub is, I don't have the understanding from your site yet to know that I should have followed with the sell this afternoon. So I am sitting here with this mining stock that looks great at the moment, but I think you are saying that there is a good chance of a pullback in early trading. I won't hold you to the outcome one way or another, 'cause I know this is my call, but would you try and sell first thing in the AM? I really don't want to screw this up!!! It was too much fun getting into this mess!!! (thanks for that fun by the way!!)
2) I have been trying desperately to figure out how you create the TSI index. I know you use stockcharts.com, but they don't offer the index on their basic charting, nor from what I can figure out, with their advanced accounts. I have asked several fairly seasoned traders that I know how you do this, and they are all scratching their heads. I also can't get the chart on the menu to work for some reason. Can you enlighten us on how you generate this index?
Thanks in advance again from someone with perhaps far more boldness than brains . . .
Phil
Hi Phil - and thanks for writing! I like bold people as long as they are respectful and not arrogant. You are all of that and even gracious. Also, I am pleased to learn that you made some nice ka-ching today! Honestly, I never know if anyone is ever buying anything I talk about so I appreciate your saying so.
ReplyDelete2) www.FreeStockCharts.com is what I use to make the charts with the TSI. If you have any problems getting that to work for you, please let me know. I also use www.ThinkorSwim.com
1) GPL - well I bought 7,000 additional shares this morning and have not sold a one of them. So obviously I am not thinking a guy has to sell GPL now or jump off a tall building. Today was the easy money and it will take much longer to double today's gain - but if you are patient I have every reason to believe it will happen in a matter or a week or two. I guess your choice is, do you want to take your cash and look elsewhere, or just be patient and let the bull market and parabolic C-wave do the rest for you.
hello john, whats your take on putting a call short period of time for gpl or buying the shares instead?
ReplyDeleteHello Anon - I guess your question is what do I think of buying call options on GPL for a short term trade vs. buying the shares?
ReplyDeleteHonestly, I am just real squeamish about options, so I would prefer to suggest just buying the stock.
I did buy some call options on SLV today and feel a little better about that because SLV is not a company that can come out and report that a mine has unexpectedly collapsed or something. But this position will remain a relatively small piece of my overall investment strategy.
If you feel yourself getting real greedy inside, the trade is wrong for you (my opinion). If you respect how badly you can get unexpectedly burned and can deal with that, that is OK.
John -
ReplyDeleteThanks for the response and opinion . . . you're the best!
I managed to generate the chart!(A step in the right direction). I'll be doing my homework!
Whoa! 7000 shares of GPL?!? . . . Ok, that settles it: for now I will stick with GPL, the bull market, parabolic C-wave, and . . . most importantly . . . John Townsend and the TSI trader!
I can see why this is your passion. You can have a lot of fun and make money too!
Phil
Well Phil, the TSI told me to dump all 7,000 shares at $3.95 this morning and that is exactly what I did. Much better move today than selling half at $3.62 yesterday.
ReplyDeleteLet me know if I can help you with your charts.
Hi John -
ReplyDeleteWould you be willing to post that chart? It would be a good case study.
Thanks!!
Phil
OK Phil - I just uploaded the post JUST FOR YOU!
ReplyDeleteThanks John - appreciate it. I sold my GPL and still made a nice 9% . . . thanks for the fun ride!!! I would like to see the TSI rational for unloading it. Frankly, if the TSI can give this kind of momentum analysis, then it truly is "worth its weight in gold!"
ReplyDeletePhil