Earlier today I was pondering what price might be a reasonable entry point for either the Market Vectors Gold Miner ETF (GDX) or just some mining stocks in general. I started staring at the daily GDX chart and immediately I started imaging I was seeing a repeating pattern.
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This is weird, but I visualize a guy on a trampoline. I imagine his body weight descending from high above the ground, accelerating toward the trampoline mat - as stock price accelerates towards a bottom.
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Then his feet reach the mat, his inertia pushes the mat down until finally, for a split second, his body is traveling neither down or up. Then the mat flings the guy back up into the air, propelling him with all the residual energy that is left over from the encounter. And up he goes.
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But how high up he will soar depends on the energy used to launch him in the direction opposite of gravity.
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But back to GDX. So anyway, using a Fibonacci retracement tool I confirmed that I was indeed imaging a repeating pattern. Not only imagining a repeating pattern. There really was a repeating pattern. And the repeating pattern was a 50% retracement pattern.
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| Click on the chart to ENLARGE |
Here is the daily chart of GDX going back about 8 months. I colored each price move with a 50% retracement differently and then numbered them. There were 8 in all.
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And by the way, I got the answer to my original musing question - what would be a reasonable price to buy GDX?
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The trampoline suggests about $54 would be a 50% retracement of the most recent rally. I think I'll set a limit order to buy at right about that price and see what happens. :-)
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John,
ReplyDeleteI was looking at miners Friday and I am in agreement with you; I think that gold as well as miners and the ETF are looking at a couple of days profit taking.
I might buy some around 54$, or maybe some ABX or SLW, both of which are probably due for a pullback as well.
Good evening John,
ReplyDeleteAbout this last post..... Hmmmmmmmm
Hi John, don't you expect a further rally? GDX TSI 25,13 just moved above 0,00 and 25,13 pointing higer.
ReplyDeleteWhat about buying DUST during after the trend reversal and then GDX at the bounce?
Gold and silver are not traded in a free market. Please see http://www.babybulls.com/PDF/11-06-04_RANTING_ANDY_2011_COMEX_GOLD_MANIPULATION_PICTORIAL.pdf
If you can't beat them, join them. Hold physical and trade paper.
John,
ReplyDeleteDo you see this holding true for the futures price of gold as well? Also, if gold is due for a C wave move, can TS give short term reliable trading signals allowing the occasional 50 pt swings to be traded profitably?
MrMiyagi - sounds a lot like my plan (so I like it)!
ReplyDeleteMonty - Hmmmmmmmmm back at you.
Verra - Yes, I expect a further rally in GDX, gold and all the rest of it. I think the new intermediate rally has *just* begun.
DUST/GDX - yes would be the plan for a very skilled nimble trader.
BabyBulls link - I personally have difficulty following cynical rants with great interest, but that is just me. I would have more preferred reading his synopsis of gold's trading pattern than trying to figure it out with 200 detailed charts and commentary. If you or someone else would be so kind to boil that down into a few paragraphs I would really appreciate it.
That said, what I never hear ranter's explain is how these "manipulators" make any money. It is one thing to *cap* the price of gold at 8 am by selling a kazillion contracts, but what good is that if you do not buy the contracts back later at a lower price?
If they are buying the contracts back at a lower price, well, is that manipulation also? Should we rant about that too? And if they are not buying the contracts back at a lower price, seriously, they receive $$$ when they sell the contract but they are totally screwed if they do not buy it back at a lower price.
Duke - yes, the TSI works great for that purpose. See the link above that Verra provided to get some idea on the hours of the day that you should be on the edge of your seat.
John,
ReplyDeleteI sent you an email using your tsitrader@gmail.com. Hope you got it. Just wanted to thank you for the post on inverse positive divergences.
John
ReplyDeleteLike you, I had a tough time with the "rant." Why doesn't someone talk with ex-employees of the "plunge protection team" and confirm the activities of the government? There's a whistle blower out there somewhere.
With gold bullion's strength here, what should we look for in price action for a trade on the sell side and for a re-entry?
Duke
Hi John,
ReplyDeleteWhat do you think 10 would look like based upon these 9 you've shown ?
Much
Duke - if I judge something to be true, I am of course, willing to believe it. I mean, if it is true, it is true and that is the end of it. The rant makes a lot of great points that are easy enough to see. But I am not so convinced that is the whole story. If someone could answer the questions I posed then perhaps I could swallow the conclusion of the rant. But until that happens, I am very skeptical. It's like hearing a lawyer argue for his client without the benefit of having all the facts. It sounds convincing, but is it the whole truth?
ReplyDeleteTrades? I am doing nothing. Everything I wrote previously seems to be valid at the moment. A deft trader could likely get in and out of DUST. GDX will likely correct to $54 in the meantime. I personally am hoping to sell out TZA at something close to breakeven ($35.58) and buy some miners when GDX reaches $54. That's about it. Just being patient.
Much4Him - what an extremely clever question. It really caught me by surprise. My answer: 4.
ReplyDeleteCouple more days like this John and the S&P will reward you (and me) for the patience shown.
ReplyDeleteI'm not privy to TSI but did TZA just flash a buy signal?
ReplyDeleteLoren
Hi Loren - www.FreeStockCharts.com will allow you to be privy to TSI.
ReplyDeleteYes, buy sign indeed - but at this point the daily TSI is so far below the ZERO that it is a dicey signal, at best. 4 hour buy signal is above ZERO now so I am guessing this could last a day or two more. The daily 50 dma is at 36.52 - my hunch is that price finds that a turn back point.
John,
ReplyDeleteI mentioned a few days ago about the casino stocks being up on a down day (Friday?).
They are down nicely today and I took a small put position on LVS.
In other news, 3 more days of more-or-less like this and TZA/SPY will be back to their end-of-June points