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In the pre-market this morning I was able to have all recent Tomorrow's Trades (Today!) BUY orders filled. I mistakenly set the SIL GTC buy to trigger at $24.70 rather than $24.60, so that is the price I payed. DGP cost me $48.00 and GLDX was also the suggested entry price of $16.60.
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I will update my TSI Trading record for these purchases ASAP this morning.
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The US Dollar has taken another tumble overnight (down .45%) but appears, for now, to have stabilized and is consolidating its nocturnal haircut.
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Today was another good day in the stock market for the precious metal bulls. Gold closed mostly unchanged, silver up nearly 3.5%, and those miners - the HUI index - closed a second day above it's 200 dma with a nearly 1% advance. The US Dollar, meanwhile, tried to advance but was turned back to close essentially unchanged.
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For today's charts, let's begin with a look at the US Dollar, then today's purchase of the 2X Miner ETF NUGT, and conclude with a pair of new trade ideas for the Tomorrow's Trades (Today!) service.
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This 4 hour chart of the U.S. Dollar Futures Index (DXYO) reveals that the True Strength Index (TSI) indicator recorded a negative divergence shortly after midnight last evening and the buck spent literally all of today dropping in response. Each of the three stochastics are pointed bearishly lower at this time, and the Demand Index notes that the pressure (volume) to sell the dollar has been significantly greater than the pressure to buy. My interpretation of these technicals is that for now, the dollar is going to head lower. And this, of course, is a good thing for the previous metals and their miners.
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Click on any chart to ENLARGE
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This is a daily chart of the Direxion Daily Gold Miners Bull 2X Shares ETF (NUGT) which I bought this morning at $32.00. I was not available to snap a picture of this when my GTC limit order was executed - this chart was made after today's close.
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There is lots of excellent technical details on the chart for those of you who want to study the behavior of the TSI, tripleStochastic and Demand Index indicators.
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I have chosen a couple of new trade ideas for tomorrow and have provided the details of the purchase and sales price on the Tomorrow's Trades (Today!) page if you should be interested.
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This is a daily chart of the Global X Silver Miners ETF (SIL). What I found striking was the similarity of the present setup when compared to that of the late January and February period. Honestly, pretty much every bell and whistle desirable is on this chart. Demand Index positive, Stochastic Momentum Index (SMI) positive, triple stochastics rising sharply out of oversold conditions, trend line break and ZERO crossover on the daily TSI (7,4) and Volume Flow Indicator (VFI) is rising sharply above zero.
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The other position I will attempt to take on the long side tomorrow is shown by this daily chart of Global X Gold Explorers ETF (GLDX). I have notated the bullish technicals on the chart.
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Other news: the other suggested trade for today, DGP, did not execute at the limit order price I set. I have made that a Good `Til Cancelled (GTC) order and if/when it trades at $48 I will be a owner.
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The details of this evening's trade ideas are here.
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The details of my trading record of Tomorrow's Trades (Today!) is here.
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My TSI Trading record has been updated.
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6 more days of school. Do you think I am counting them each day?
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Things are looking very favorable for precious metals and their miners, in my opinion. So this evening I am going to suggest two new trades as part of the Tomorrow's Trades (Today!) service I start a few months ago. But first, let's take a look at that influential US Dollar.
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This is a daily chart of the US Dollar Index (DXYO). I have been wondering whether the dollar was making a bull flag and going to charge to the sky, or whether it would soon roll over and possibly retest its early May lows. I am fairly confident I know which way that will resolve and so I will enter the market and do some buying tomorrow.
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Click on any chart to ENLARGE
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The interesting item regarding the True Strength Index (TSI) indicator on DXYO is that it has made a negative divergence with respect to the dollar's price movement. That's clue #1 that the dollar is likely to generally fall from here. Secondly, the TSI is but a hair from making an very critical trend line break. A single down day from here and I would think it is game over for the Dollar, for now. And finally, there is a year long trend line overhead that just is not likely to be breached on a first attempt.
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So I am thinking Dollar down for a couple weeks, miners and precious metals up for a couple weeks.
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If I am correct, gold should retest it all-time of $1570+, and the miners should (and already are) responding to gold's strength.
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My first trade will be DB Double Long Gold ETN (DGP). This daily chart shows the ideal setup which is a trend line break of the TSI indicator and includes a ZERO crossover. Also, the Money Flow Index indicator (MFI) has bottomed and shows that money has been pouring into DGP while price recently consolidated sideways.
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My other trade tomorrow morning will be to buy Direxion Daily Gold Miners Bull 2X shares (NUGT). This daily chart of the NUGT ETF shows the ideal setup that we just reviewed with respect to DGP.
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If you would like to get the details for the buy and sell price of either of these two equities, you may do so by clicking here.
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Also, if you would like to see the trading record of the Tomorrow's Trades (Today!) service, you may do so by clicking here.
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Hey, just 7 more days of teaching school and I am on summer vacation. Yipee!!! I look forward to having much more time to write on this blog and get back to doing more trades. If I can help you understand how to use the TSI indicator more effectively, please drop me an email, OK? tsiTrader@gmail.com
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Well, today it finally happened. After peaking some 5 or 6 weeks ago, Market Vectors Gold Miners ETF (GDX) finally gave us a nice looking BUY signal. This daily chart details the True Strength Index (TSI) indicator's BUY signal. The TSI (7,4) gave us a trend line break signal and the slower TSI (25,13) below appears ready to provide confirmation with a moving average crossover.
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Click on any chart to ENLARGE
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I have also identified the very similar TSI BUY signals that we got this past late January. Better than similar, they are practically identical!
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Time to load up. Cast worry to the wind. Bet the farm. Get rich quick.
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Or, maybe not.
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The price movement of the US Dollar has a great effect on the price movement of the precious metals and their miners. This next chart is a clone, time-wise, of the GDX chart. I have identified the late January breakout of the GDX as well as our current BUY signal for miners.
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While these two time locations compare identically on the GDX chart, I do not think the same can be said of this chart of the US Dollar. The late January time period was a concluding breakdown of the US Dollar from a long consolidation period. The current period appears to be a very brief consolidation following an explosive rally. These appear to be two entirely different animals.
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This final daily chart of the US Dollar ($USD) does provide a clue at what may be in store for the US Dollar in the very near future. While our current situation does not seem similar to the late January `11 time frame, it does have an uncanny resemblance to the November `10 time frame.
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In this case, price made a bull flag following an explosive rally, and this flag occurred just above the crossover of the 10 and 50 dma. The bull flag turned out to be the midpoint of a huge rally in the US Dollar.
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Our current situation is virtually identical. Compare the action of the RSI, Slow Stochastic and MACD for additional confirmation.
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If indeed the US Dollar is currently making a bull flag that is 'en route' to the completion of a huge rally, I guarantee you the miners are NOT going for the ride.
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Time to cast worry to the wind and bet the farm?
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Not for me.
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Let's see what the US Dollar does first, then make a good decision.
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While I wait for a clear BUY signal from the mining index HUI/GDX, I have been trading the US Dollar futures in my spare time and doing well with about 85% of my trades profitable. But I saw this Silver Falcon Mining (SFMI) setup, by chance, and decided to take a quick dive into the unknown.
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Click on either chart to ENLARGE
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The stock has a very firm multi-month level of support at $0.12, and it opened trade today at $0.14. But when I saw that it had traded at $0.09 in the mid-morning I thought that very odd. I looked at it later in the afternoon and saw it had traded to $0.07 and was presently just above $0.08.
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What in the world was the news that could account for the company literally losing 50% of its value in just a handful of hours? I checked it out as fast as I was able and determined that the news was news but not that big of a deal. The selling volume was incredible. Like 10X a normal day.
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I have seen this before. Some big elephant gets pissed off something does not go its way (company press release) and then decides in immature emotional frustration to take an elephant sized dump, right then and there, on everything and everyone below its 'you know what'.
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Everyone, including the ants, have got to be prepared for these *outbursts* to run. And run they did today, into whatever shelter could be found.
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But when the elephant has emptied its bladder and leaves in satisfied physical relief, life goes back to normal. The ants come out of hiding and the buyers return (including me). I have seen this scenario before and as long as there are elephants, I am sure I will see it many times again.
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Anyway, I bought SFMI today at $0.083 and sold at $0.097 about an hour later. I really did not want to own the stock, but this setup was beyond my temptation level, and worth a quick low risk 16.9% gain.
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Other things: the US Dollar closed today right on its 50 dma (basis June `11 futures contract /DX). The obvious question is whether the moving average will successfully hold the dollar as it takes a breather. If it does, I think we may get some clear signals for trading stuff like ZSL, DZZ, DUST, TZA, SDS, DXD and/or short other ETF commodity items. On the other hand, if the buck falls through the 50 dma it should set off the bullish bells and whistles for the precious metals and their miners. The TSI has not given me a great clue about how this will turn out, so if you see something I am missing there, send me an email, OK? tsiTrader@gmail.com
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My TSI Trading record has been updated.
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This post will begin with a look at the movement of the US Dollar today, then gold, silver and the HUI mining index, and finally leave you with a laundry list of trading ideas.
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When I got up this morning and looked at the US Dollar I had good reason to believe we were in for a powerful rally. I wanted to make a chart and tell people thinking about going long the precious metals or their miners to think twice, but I simply did not have time. I have to be at work when I have to be at work and there is no negotiation on that fact allowed.
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Click on any chart to ENLARGE
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This is a one hour chart of the US Dollar Continuous Contract (DX). Three things caught my eye as I quietly said, "oh-oh", to myself. First, the True Strength Index (TSI) indicator had made a bullish positive divergence overnight. This occurs when price continues to make new lows but the TSI makes a higher low. It is an excellent buy signal. Second, I saw a 3 day long descending trend line on the tops of the previous TSI highs that finally torpedoed into a rising TSI, thus yielding the bullish trend line break BUY signal. And third, the TSI was just crossing above the ZERO line - giving us a third BUY signal.
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And as you can see from the chart, the buck rallied up +0.70 in a single day, and that is a strong rally indeed. Gold and the stock market indices were off around 1%, but silver really took it hard - down 8.60% in a single day.
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Well, here is where the plot begins to thicken.
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This is a daily chart of iShares Silver Trust ETF (SLV). It turns out that today's drop came within just 58 cents of retesting SLV's recent crash low. But notice the TSI reading. It has strengthened significantly in the past 4 days. So much that if SLV were to trade just 58 cents lower, a bullish positive divergence BUY signal would easily be generated.
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And the plot gets even more interesting when you see the status of the Amex Gold Bugs Index (HUI--X). With today's sharp selling, HUI does not need to drop any further to generate a bullish positive divergence BUY signal. That's because it is already giving that signal with today's price action.
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OK. So does a bullish positive divergence mean 100% of the time that the stock or ETF will rise the following day? No. Does anything have a 100% guarantee in the stock market? No. But I'd say the odds are about 80% yes/20% no that miners rally tomorrow. And if that happens, it just may be enough to kick off a TSI trend line break BUY signal on things like GDX.
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Oh, and before I forget, here is the laundry list of stocks that, like HUI, finished today's trade with bullish positive divergence BUY signals:
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ABX, AEM, AU, AXU, CENX, CGR, CLF, DNN, DROOY, EGO, GBG, GDX, GFI, GG, GMO, GRS, KBX, MGN, NG, NGD, NSU, NUGT, SA, SIL, SLW, SRCH, SSRI, SWC, UXG and VGZ.
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This is a one hour chart of Hecla Mining Co (HL) which I sold today at $8.64. I was pleased that it rallied up from a low of $7.85 reached 3 days ago and that I was able to just get my account back to all cash. Also, a couple days ago I bought 120 call options on HL when it was around $8.05 and I sold them all yesterday for a nice gain. HL was good to me but I am happy to move on, just the same.
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Click on the chart to ENLARGE
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This is a 4 hour chart of Direxion Daily Gold Miners Bear 2X shares (DUST). I share this chart to suggest there is good reason to be hopeful the miners will get the show on the road soon. As DUST is an inverse ETF of the miners, when this chart falls apart it will also coincide with the miners breaking out. The chart shows a number of favorable details and we will keep an eye on how this progresses. For now, anyway, the likes of GDX, GDXJ and HUI have not broken out.
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My TSI Trading record has been updated.
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Now that gold has taken a well deserved breather, the silver parabolic has popped and the miners have shrugged their shoulders for the past 4 weeks (as though not interested in the slightest with the excitement of their volatile mentors), I think this is a good time to review how the True Strength Index (TSI) indicator has performed recently and see what it is telling us about what comes next.
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Before we begin that review, let me acknowledge that I really do not know if the C-wave for gold is over. If it is not, perhaps the miners will finally get off the bench and run onto the field. But silver, in my opinion, has popped and I cannot fathom another immediate parabolic rise for it. Certainly it should retrace some of its fall soon, but I doubt it makes more than a full retrace to near $50.
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I also wish to acknowledge that not only am I human, but that the TSI indicator is a "far better man than I". As we will discover, it performed its job of calling the buy and sell trades with uncanny accuracy. And I cannot say the same of myself, by a long shot.
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Let's get started with a look at the weekly chart for that little trouble maker, silver.
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Click on any chart to ENLARGE
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The top portion of the graphic is the chart I posted on Sunday April 10. The bottom portion is a look at weekly silver from today's vantage point.
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When I wrote this post I was trying to figure out how much longer until the silver parabolic would explode. Using the TSI readings at previous silver parabolic highs as my guide I extrapolated that the 2011 parabolic would explode when the TSI reached approximately .90 and in a range of 3-5 weeks from April 10th.
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The lower portion of the chart shows that indeed, the TSI peaked with a reading of .91 after 3 full weeks. The TSI nailed it and to tell you the truth, I did not even notice. I was not paying attention. Go figure.
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Scorecard: TSI 1 John 0
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Now let's see about the daily chart of silver. The top portion of this graphic was posted along with my dialog regarding pre-market activity on Monday April 25th. I dutifully noted the exhaustion gap on the 1 hour view of silver's activity and the possible reversal candle in progress on the daily chart.
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The True Strength Index performed beautifully with a precision timed trend line break SELL signal AND delivered a negative divergence SELL signal as a bonus.
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The lower portion of the graphic is today's view of the rocket ride. The four hour chart on the left side gave us 3 clear SELL signals before the real carnage began. The daily chart on the right gave us 2 excellent trend line break SELL signals in addition to the obvious negative divergence signal.
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Hey, it does not get any better than that. I mean, unless this indicator has the ability to just place the trades for me, what more could I possibly ask for?
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Over the years I have studied these TSI setups for hundreds, if not thousands, of hours. So when I saw this in real time, I knew what I was looking at.
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But curiously, I did nothing. Not that there was much to do because I had already sold out my positions. But I guess I could have shorted silver, or something.
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Scorecard update: TSI 2 John 0
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Well, let's see what was going on with gold as the silver show took center stage. The top portion of this graphic of weekly gold was presented with my post of April 10th. Here again I was trying to assess the TSI data which included all previous C-wave tops and see if I could find some clues for when and how the current gold C-wave would conclude.
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Four of six previous C-waves concluded with a weekly TSI reading of .80 or higher. Good evidence, but not conclusive. All six C-waves did conclude with a trend line break of the TSI indicator, but I presumed that was kind of a given.
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The lower portion of the weekly gold graphic shows that gold's TSI reading did top above .80 last week (.84) and that gold came tumbling down with a trend line break of the TSI indicator.
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Also, it is notable that most sky high "nose bleed" TSI readings result in a complete break down in price. (See blue rectangles for examples). But price does not always break down, as you can see.
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For now I can say that the TSI is falling and above ZERO - and that, by the definition of how the indicator works, means price is either consolidating sideways or falling. Clearly price is falling of late.
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However, any time the TSI turns up when reading above ZERO, it means that price is absolutely rising. It is indeed possible, if not likely, that after such a vicious sell-off price will rise and, of course, the TSI will rise as well. It's something to keep an eye on going forward as a BUY signal.
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Scorecard for this round was a draw. Now the score is: TSI 2 John 0 Draw 1
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And finally a look at those fast asleep miners. The top portion of this graphic was published with my post on Monday April 18. I noted the timely TSI BUY and SELL signals of previous trend line breaks and eagerly looked forward to a HUI performance to equal that of 2008, if not rival that of 2006. The TSI showed that we were, on April 18th, on a SELL signal and I surmised that the BUY signal would take its turn at the plate next.
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Well, guess what? The TSI has still not given us a BUY signal. And looking at price movement since that date I'm kinda glad it didn't. Score another TSI point for keeping us out of miners and one point for my following directions (for a change).
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Final Score: TSI 3 John 1 Draw 1
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Now here is the situation with the miners. When the TSI is as deep below ZERO as it is now, a trend line break with some measure of consequence is not necessarily imminent. But at present something close to 95% of all miners have a current TSI reading that is BELOW ZERO. That is incredibly oversold and mark my words, you will get a bounce in this situation. But as I attempted to show with the use of blue rectangles in the lower portion of the graphic, a bounce does not necessarily mean a rally. It can just as easily mean a bounce and more downside and pain. Hopefully the green trend line I have drawn is decisively broken by the end of the week. Even better if the TSI then rises and makes a ZERO crossover into positive readings.
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So the TSI beat me 3 - 1. That's both disappointing and encouraging. Disappointing because I realize my experience has not yet caught up with my knowledge. But encouraging because I am positive I have a great trading tool I can get better at both understanding and using for trading success. And I will do all that I can to help others use it, too.
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Lately I have received quite a few emails expressing puzzlement about the True Strength Index (TSI) indicator when viewed at various time frames. I usually try to explain that the indicator does have different data values on different time frames, but they all speak truth - truth in the context of the time frame, that is.
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Either my answer is perfectly understood or it is perfectly confusing. I don't know which because after my answer, no one ever writes back.
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So how about this? After dinner this evening I decided to do a trade shorting the US Dollar futures contract (DX). And what I will show you is what the setup looked like on the 60, 30, 15 and 5 minute charts when I took the trade - and how the 75 minute trade turned out.
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I use the ThinkorSwim software and 3 indicators: True Strength Index (7,4), TripleStochasticHL (default), and Demand Index (13).
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Here is the 60 minute chart with what caught my eye.
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Click on any chart to ENLARGE
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Here is the 30 minute magnification and what I saw that encouraged me to short the US Dollar.
The 15 minute chart created less than a minute after the previous two charts.
And finally, the 5 minute chart which is the one I keep my eye on the most during these surgical operations.
OK, so how did my little evening entertainment trade turn out? Well, this chart was snapped just after I decided it wasn't worth it to stay with the trade any longer. I covered my short at 73.205.
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So after 75 minutes I earned the profit from a move of 8.5 points. The bottom was 2.5 points lower than my closing trade.
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I had fun practicing my skills and hopefully provided some new information that a reader or two will find helpful. Let me know?
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Oh, and the money. Yes. Well, 1 contract that moves 1 point (.01) makes $10. I had 4 contracts, so each 1 point (.01) move I had correct was worth $40. The entire move was 8.5 points (.085) so I made $40 X 8.5 = $340. Commission costs were $8.88 to sell 4 contracts and $8.88 to buy the 4 contracts back. Net profit $322.24
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Hey, more than I made today at school, that's for sure. And faster than writing this post, too!
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Feeling in a slightly humorous mood, this light hearted post will offer a glimpse at the irrational and ridiculous current market pricing of mining stocks in general, and Hecla Mining Co (HL) in particular.
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Yes, I own Hecla Mining stock as you may recall. But I am not selling it - no matter how crazy it gets during the rest of this week. And I'll show you why with a weekly chart in a moment, but first let's look at the HL daily chart.
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Today Hecla reached $8.17. Hecla has bottomed around $8 a few times in the last 6 months. And it has reached $11 a couple times, too.
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But somehow it just seems irrational that silver and gold have risen so much in the past 6 months, the stock market has risen a lot too, and what the heck is wrong with poor Hecla?
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OK - let's have a look at the weekly chart.
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Humm..... kinda looks like a cup with handle pattern. Well, that makes me feel better I guess.
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Earnings: Profitable last year. Projected 50% gain in net earnings per share for 2011. That's not too shabby.
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But look at that price action in relation to the price of gold. The stock's price now is lower than in 2004 when gold was just $430 an ounce.
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And for that matter, silver reached a high of $8 in 2004. Today it was $42.
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YOU HAVE GOT TO BE KIDDING ME!
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This stock, and the miners in general, are so mispriced it is irrational and unbelievable. But that will change and real soon. Not in the next day or two, but soon thereafter. In a couple short weeks $8.42 for Hecla Mining is going to seem like a fairy tale.
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Money always finds its way to the most undervalued assets. In today's market, that is the precious metal miners.
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(This article was written today by Toby Connor / Gary Savage, my partner of the GoldScents website. If you are interested in having access to the daily and weekend reports we produce you may consider a subscription to our service here. John)
After what should be a brief pause this week commodity markets will move into the greatest rally of the last decade. As usual I will stay focused on the precious metal markets. They have been the leaders during this entire move out of the `08 bottom and they will see the largest parabolic move of all commodities during the final leg up.
I've noted in the past that consolidation size is usually a good leading indicator of how large the following rally will be. Gold just consolidated for 5 months. That is going to produce a massive rally. It's already produced a large move and it's just started.
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Gold and especially silver have already come much further than I originally expected at this stage of the game. I was looking for gold around $1650 and silver at $50 by the top of this C-wave. Silver has already reached that level and gold tagged $1575 yesterday. This has unfolded in only the first two daily cycles. The third daily cycle is where the real parabolic gains are going to occur.
The third and last daily cycle higher during the semi parabolic move in `09 added 200 points in a little over a month.
The coming parabolic move will be significantly more powerful than what happened in `09 as this will be a final C-wave move. We should easily see a 300- 350 point move in gold and it's anyone's guess as to how far silver rallies during the final parabolic finish. $65 or even $70 isn't out of the question.
Now for the downside. The final dollar collapse is also going to drive the rest of the commodity markets wildly higher. That will include the energy markets. Oil is due for a brief move down into its cycle low this week too. Once that has run its course we will see oil soar higher, possibly even reaching the `07 high of $150.
$150 oil collapsed the global economy in `07 and the economy was in much better shape with much lower unemployment than it is now. In an environment of already high unemployment $150 oil and soaring food prices are going to drive the global economy into a recession even worse than what we suffered in `08.
Social conflict in the Middle East and many emerging economies is going to intensify. People in depressed countries already can't buy food to feed their families, what do you think will be the response if food prices double again?
The world is about to pay the price for Bernanke's attempt to print prosperity and it is going to be a very steep price and cost many lives.
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