Tuesday, April 5, 2011

We Have LIFTOFF! Also, Sold GDXJ ($40.25) Buy GPL ($4.23)

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AWESOME!  Today we finally got the huge breakout in gold and the miners that we have been waiting for.  Here comes the rest of the C wave.  Fasten your safety belts.
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Click on the charts to ENLARGE
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Here is a look at today's closing Amex Gold Bugs Index (HUI--X). Excellent True Strength Index indicator setups. Let the show begin!
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I have been trying to move gold related positions over to the silver side of the ledger.  Today I got that opportunity when I was able to unload my position in Market Vectors Junior Gold Miners ETF (GDXJ) for a small gain. Honestly, the setup on GDXJ is excellent. 
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I purchased call options on Silver Wheaton (SLW) and doubled my position in Great Panther Silver (GPL).  Meanwhile, GDXJ continued to go higher to the close and GPL lower. Short term, of course, that did not quite work out right, did it? 
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As you can see from the chart, GPL broke the wedge on the daily chart to the downside.  With what I know of Great Panther Silver I doubt this is the future direction of the stock and I am hoping I just bought it when it was not loved.  Time will tell.
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My TSI Trading Record has been updated.
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20 comments:

  1. AnonymousApril 5, 2011 at 5:43 PM

    John,
    I cannot thank you enough for the analysis you provide, and I mean that with the deepest sincerity. I think you and Gary must be angels of some sort. ;)
    -ckpac

    ReplyDelete
  2. Much4HimApril 5, 2011 at 7:10 PM

    What a big start. I can't really imagine (because I am relatively new to this) what the C-wave will resemble once the dollar heads to no mans land. Not looking foward to the crisis that will cause, but certainly it is wise to find a way to keep ahead of it.

    ReplyDelete
  3. ILUVPMSApril 5, 2011 at 8:16 PM

    Hi ho hi ho its off to silver i go.... :) yippppeeeeee..

    Thanks for you analysis! Keep up the good work and sorry for being giddy on your blog! (can you blame me though:) ??

    ReplyDelete
  4. MontyApril 5, 2011 at 8:28 PM

    John,
    another market technician I follow says that short term cycles are due to peak this week. What does he mean? How does that affect this nice breakout in the precious metals? I wouldn't mind a little pull back here to do some buying. SIL looks good, but it's running up so fast I'm afraid to chase it

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  5. John TownsendApril 5, 2011 at 9:00 PM

    Hi Monty - I am guessing this market technician is talking about the short term cycle of gold and not the stock market. What he/she is saying is that these little daily cycles of 20-25 days come to an end when price falls and then bounces up as it begins a new daily cycle.

    And, as we are not on Day 1 of the current daily cycle today but something more like Day 14 or 15, at some point fairly soon it is reasonable to anticipate price taking a breather and declining to finish the cycle.

    Cycles are measured from low to low. You start rising on Day 1 and at some point you have to drop some to create the low that concludes the daily cycle. Then the next cycle begins with price rising anew.

    I don't know what to tell you about SIL, but I look at this whole thing as lasting more than just several more days - so I am buying and planning to hold right through this daily cycle low stuff and well into the following daily cycle. I don't anticipate selling before well into May, in other words.

    I hope this helps you.

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  6. head scratcherApril 6, 2011 at 12:40 AM

    Hello John,
    Thank you for your blog post. A coil appears to forming on the S&P500, indicating a push down quickly followed by a big push up again. Do you feel that AG will perform independently of the S&P500 and continue rising until the gold daily cycle low?
    GPL has been performing poorly. Why did you double your exposure to it?
    How do u feel AG will perform in the short term?
    Thanks
    Eamonn

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  7. John TownsendApril 6, 2011 at 6:42 AM

    Hi Eamonn - AG has a mind of its own independent of the S&P500. It will continue to rise for the next 3 weeks, is my hunch. GPL has been performing poorly. If I had given it a little more thought I may have waited to see if it was really going to get its act together. I have seen this share dilution related price hysteria many times before and my sense is that there is first an overreaction - which is where I am presuming things are now - then when the scardy cats get shaken out the price goes up nicely. Time will tell if I got it right.

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  8. head scratcherApril 6, 2011 at 8:59 AM

    Thanks John. I love reading you blog, and you are very kind and helpful too in answering questions.
    I hope you make much $$$'s in the blow-off c-wave!
    Eamonn

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  9. Adam ChalmersApril 6, 2011 at 3:29 PM

    I've dollar cost averaged my CDE June $45 calls and I'm down to $.82 per contract. I don't plan on buying anymore.

    Do you still think I'm in good shape?

    ReplyDelete
  10. AnonymousApril 6, 2011 at 5:04 PM

    hello john,

    all PM stocks reversed this morning after opening higher, especially AG- does this look to you like the start of a short correction in the metals plus the stocks ?
    thanks

    ReplyDelete
  11. MontyApril 6, 2011 at 7:58 PM

    Adam,
    Why didn,t you buy calls closer to the money and with less time? I don't know how much experience you've had trading options, but I've had a lot of experience with them. I want to help you. Basically, buy calls just out of the money and with only 2 to 4 weeks till expiration. There has to be a big move in CDE and it has to be NOW! Buying extra time usually doesn't help you. Time costs money and so even if CDE reaches 45 buy June, you won't make much money. Of course if Silver blasts all the way to 50 CDE could go to.... who knows.

    ReplyDelete
  12. Adam ChalmersApril 7, 2011 at 10:42 AM

    @Monty do you think I should sell them? I'm up about 10% already. And I would definitely like your help. Thanks in advance.

    Adam

    ReplyDelete
  13. GeodesiqApril 7, 2011 at 4:06 PM

    Monty, how can I access your blog? I'd like to learn more about Options.

    ReplyDelete
  14. Adam ChalmersApril 7, 2011 at 6:25 PM

    @TSI Trader...

    My friend keeps warning me about some oscillator his dad has that says silver is at 92 (on the oscillator). Anything over 70 is cosidered over-bought. Care to comment?

    I think he's wrong and that we have until the end of May, beginning of June, before silver (and gold) have a big time correction. The reason I think we get the correction in May-June is because that's when QE2 ends. There will be a "perception" of indecision on the Fed's part but they'll ultimately commence QE3 to prop up the markets (This we already know). Come the fall gold and silver will skyrocket again. Traditionally, June - August is not a good season for the metals anyway.

    ReplyDelete
  15. John TownsendApril 7, 2011 at 9:20 PM

    Hi Adam -- I just watch the TSI. Both silver and gold daily TSI (7,4) have given buy signs and look incredibly bullish to me. Until there is a negative divergence or a trend line break we should tend to drift higher for now.

    However, we are getting late in the typical 20-25 day gold cycle and vulnerable to the inevitable decline in price that concludes each daily cycle. We are on Day 18 or so right now.

    A person with a quick finger on the trigger could buy/hold here until the TSI says sell, then wait for gold's daily cycle to bottom. At that point the TSI will confirm with a buy signal and that should be the beginning of the final parabolic daily cycle.

    I hope these thoughts help you.

    ReplyDelete
  16. Adam ChalmersApril 8, 2011 at 9:14 AM

    Thanks John. It does help assuming I understand you correctly. My take away is since we are in the late part of the 20-25 day cycle, we will see a bit of a drop off in price until the new up leg of next 20-25 day cycle. Is this correct?

    I'm just hoping my CDE options are ok. Monty has me a little worried. But you told me a few weeks back they should be ok.

    ReplyDelete
  17. SushiSiouxApril 9, 2011 at 5:03 PM

    John - many thanks for the postings. you write in a way the non trader can understand a bit.

    cheers,

    ReplyDelete
  18. John TownsendApril 10, 2011 at 2:38 PM

    Adam - you understand my best guess correctly. Options are kinda like playing with fire. Sometimes you get burned by them. To somewhat limit my risk I own options at a strike price that are comfortably in the money and with an expiration date not too far past the time I expect to sell. And for sure, they are a very SMALL portion of my overall portfolio.

    ReplyDelete
  19. AnonymousApril 10, 2011 at 6:12 PM

    WHATS YOUR D-WAVE TARGET FOR GOLD?

    ReplyDelete
  20. John TownsendApril 10, 2011 at 7:51 PM

    Anon - good question!

    http://thetsitrader.blogspot.com/p/gold-secular-bull-c-wave-data-and.html

    Each of the 6 previous C waves retraced a D wave that stopped when it equaled the top of the A wave of that ABCD pattern EXCEPT 2006, that D wave came no where near close to reaching the A wave top. Instead it retraced a perfect 50% of the C wave.

    So, to answer your question, if the upcoming D wave is like 5 of the 6, it will retrace to A wave top of this pattern, which is $1,000.

    If however this parabolic follows the script of the 2006 example, and if gold reaches $1600, the math becomes $1600 - $681 (C wave bottom)= 920 / 2 = 460 then $1600 - 460 = $1140.

    ReplyDelete

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