15 days, 5,200 miles, 10 states, elk, bear, wolves, deer, bald eagles, moose, the Space Needle and San Juan Islands as memories, I'm welcomed home to 109 degree weather and a lawn in dire need of a good mowing. Anyway, I had a great time with my family with little time/opportunity to watch the markets and looking at my account value I guess I didn't miss too much.
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The day before I left I bought shares of Direxion Gold Miners Bear 2X ETF (DUST) at $40.30. Before the close I was ahead a few bucks but placed at stop at $40.30 (thanks Verra) so I would not worry about the trade on my vacation. Of course DUST opened down the next day with a huge gap and my stop order was not executed. I have been holding those shares for over two weeks now while being aware that gold was moving to all-time new highs.
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Rather than panic and sell at a loss I saw good reason to hold on as the momentum of GDX appeared to be faltering. This morning I reeled in my line and was pleased to see that somebody else now owns my shares at $40.30. Nothing gained, but nothing lost (except $2.00 for buy/sell commissions). I hoped that DUST would retest the price trend line that it gapped through just after my purchase - and that appears to have been a good guess.
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Gold appears to be on Day 18 of it's daily cycle. I imagine this cycle peaked yesterday and will be a few days yet before it concludes lower. This time I will be buying miners, not shorting them. It looks to me we have some very good times ahead with gold's new intermediate cycle having just gotten underway.
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Meanwhile, the head and shoulders possibility for the SP-500 still looks viable and I will continue to hold my slightly 'in the money' position in TZA. This chart yields a look at the SP-500. TZA is a 3X inverse ETF that makes money if the stock market declines.
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My TSI Trading record has been updated.
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Sounds like a nice trip, welcome back.
ReplyDeleteGood to have you back sir...just in time for some juicy buying opportunities when gold reaches its daily cycle low.
ReplyDeleteJohn,
ReplyDeleteWhat signals do you use to identify cycles, how do you know when you reached a intermediate bottom, and daily cycle bottom?
Thanks
Harry
Welcome back Mr. Townsend. BTW what does Jiggety Jig mean? :)
ReplyDeleteMrMiyagi - and thank you for joining me at this blog.
ReplyDeleteAnon - yes, juicy opportunities indeed are just before us. AEM got clobbered today and I was literally 5 cents away from buying it this afternoon, when common sense returned and I lowered my bid $2 to $55. This company has had 7 or 8 consecutive quarters strongly in the green but share price is no different than a year ago, or two years ago, for that matter. That's just plain silly. It could be an easy 40% gainer once things turn again.
Much4Him - Hi. Jiggety Jig, if I recall correctly, comes from some fairy tale or fable I was read when a very young child. It simply means 'no worries, everything is carefree and OK' (ie good to be home).
Harry - it is easier to ask your excellent question than to answer it, but I'll give it a try.
Concerning gold: a daily cycle is normally between 20 and 25 days. Cycle days are counted from trough to trough. This means that a cycle begins with price rising and concludes with price falling.
Each cycle has a high price that is reached either before or after the midpoint day of the cycle. A daily cycle of 21 days, for example would have a midpoint day of 11. A 25 day cycle would have a midpoint day of 13, and so on.
In a bull market the highest price of the cycle almost always occurs after the midpoint day. Opposite for bear market cycles.
These daily cycles are nested within a larger cycle often referred to as either the weekly or intermediate cycle. Gold's intermediate cycles tend to be 4.5 - 6 months in duration. With that in mind you can see that an intermediate cycle would then be made up of many 20-25 day daily cycles.
As with daily cycles, bull market intermediate cycles top to the right of their midpoint. Opposite for bear markets. An intermediate cycle of 6 months would have its highest price occur after the third full month. If it tops before that time period, it is considered a failed intermediate cycle and bearish.
I guess the last thing I will add is that when a bullish intermediate cycle is nearing its conclusion, it is common for the final daily cycle to appear as a failed or bearish daily cycle. This is one clue that an intermediate cycle correction is about to knock the wind out all the fun - at least for a short while.
Harry, there is more to tell you. But maybe this was too much already. Let me know what you would like to learn about next, OK?
John,
ReplyDeleteSince were on day 18 of a daily cycle, the TSI, as best as I can see is showing a sell signal if your looking at the 1-4 hour charts, but the daily chart is not yet in a sell signal. I'm riding GLD, and UGL for the C wave.
I'm looking to add more after the daily cycle bottoms, which I'm amusing will be some time next week. Which TSI indicator would you use to start buying some more? I was thinking of watching the 2 or 4 hour chart, and buy some more when it signals a buy, or do you any other suggestions for me.
What is your preferred indication that we've reached a daily cycle bottom?
Thanks
Harry
Welcome back!!
Good evening John,
ReplyDeleteGlad you're back, although perhaps you would rather do a little more vacationing.
I need to make some money and the opportunities are flying all around but I can't seem to nail one down. I noticed the possible head and shoulders in the SP500, and I see a negative divergence in gold and silver on the 4HR and the daily. What's the game plan? M-
Harry - well, I can tell you what I am looking for (expecting) and you can take it for what it's worth (if anything). I look for gold to possibly retrace down to $1580 and the daily TSI (7,4) to make it down to zero or slightly below. Then, a trend line break as the daily TSI begins to rise above zero would do it for me.
ReplyDeleteLast summer, on this very day (July 28), I perfectly nailed the bottom of gold's intermediate cycle using the trend line break technique on a 1 hour chart of TSI (7,4) and MFI (10). Probably just dumb luck, but read the post around that day or a day or so later for details.
Monty - hi. Well, I don't see any miners at this moment that I think are TSI buys, but some ETFs look interesting.
AGA, DTO, DUG, ERY, INDZ, YANG, ZSL
John,
ReplyDeleteIs this your source of income?
And if so, can I sit and watch and learn your technique? I'll buy you lunch!
ReplyDeleteMrMiyagi - you will be disappointed to learn I am a public school teacher, not a professional trader - though I am a partner with Gary (Goldscents), if that counts for anything. Thanks for your flattery and I am happy to share anything I have learned with you freely.
ReplyDeleteI bet your students can use money/financial schooling more than anything else...
ReplyDeleteI've always thought that the educational system was uber-weak on money management teachings.
John,
ReplyDeleteI was checking out the TSI on GDX and there appears to be some positive divergence on the 1 hr chart. Am I reading this accurately? I may take this as a trade.
http://content.screencast.com/users/Patrick555/folders/Default/media/380027c8-8067-4a75-b6ef-c4739d45b1c8/divergence.png
Wish I had you as a teacher when I was in school many years ago. Always enjoy your posts
ReplyDeleteMrMiyagi - yeah, I agree. Public schools do a really lousy job of preparing kids for the reality of money management.
ReplyDeleteFor that matter, public schools do a really lousy job of preparing kids to think beyond their immediate realm of the next 5 minutes.
Evidence - witness the idiocy of the current decision-makers in politics who are providing their voters with their 'vision' for America. We the People are getting exactly what we voted for and were educated to 'understand' ie tolerate.
Patrick - I do see what you are talking about. Best of all I appreciate that you are using your TSI skills to think through the current situation.
You may prove correct that GDX is a buy at this price level, but I am not convinced whatsoever. I could see this continue to fall to 56.13 where the 50 dma lives, or to $54 where both the lower Bollinger Band and price downtrend line live on the daily chart (draw using 4/8 top and 4/18 top prices).
The daily TSI is in free fall below ZERO. That is never a good sign nor a buy signal.
welcome back john
ReplyDeletecould you show gold and a tsi evaluation this weekend. im from smt and gary is seeing many bearish clues. just wondering what the tsi tells us at this point
jeff