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.
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.
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.
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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John,
ReplyDeleteThanks for another very helpful post. Your analysis is absolutely remarkable.
I jumped in to GDX following Gary's (SMT)recommendation last week, and added to it midday today. I was just thinking about NUGT and here you are laying out the case for buying it! Talk about timing! Thanks to your breakdown I feel even more confident in my decision to buy it. Can't thank you enough for all you do.
I'm also happy that you'll soon be able to post more often, as I check every day to see if you've added anything new. Happy summer to you from a former teacher!
gold miner:I think this time John u are right on the money,but the rally could be only 2 weeks short,like last summer and then again Fat Boys will try to pop up the dollar again.
ReplyDeleteJohn,
ReplyDeleteBefore I read this post, I was planning on buying DGP today, and also AGQ. What are your thoughts on AGQ, the TSI looks about the same as DGP to me.
Thanks
Harry
ckpc - thank you.
ReplyDeleteHarry - the TSI says silver is heading north and until it says otherwise, silver is heading north. The TSI brilliantly called the top in silver to the day....if not literally to the hour. But of course even I found it difficult to believe at the time. Next time I will believe what I see, and ask questions later.