I do believe gold's (/GC) low achieved last Thursday ($1539.4) is going to stand as a historic low for years and years to come. I also believe that the US Dollar (/DX) peaked that same day (April 4) at 83.66 and we will not see the US Dollar reach this level for a long long time, if ever.
The True Strength Index (TSI) indicator is a very sophisticated and elegant low-lag momentum indicator that I have studied most days and nights for the past 7-8 years. It yields very accurate BUY and SELL signals on any time frame and on any investment instrument using various techniques, a couple of which I would like to show you in this post.
Dozens of mining stocks are presently setting up very nicely in preparation for beginning a huge rally that will catapult the entire sector higher for at least the next year and a half as gold first reaches new highs then heads above the $3000 milestone.
A select few mining stocks are now flashing some of the TSI BUY signals I have studied and found to be quite reliable over the years. I'll identify this special group and show you the TSI signal that validates my assertion with a chart of each. My hunch is that these miners/ETFs will prove themselves to be among the very early horses out of the gate, and headed for a race to the stars.
I've decided to focus on weekly charts this time around and believe this perspective will provide us with a vision for the upcoming months.
We'll note that each miner is demonstrating the positive divergence BUY signal. This signal is given when two consecutive TSI indicator lows are rising, while the corresponding lows of the price candles make lower lows. In this case the TSI indicator is saying that price is way out of line with respect to the momentum of its movement (ie. price has fallen too much and will now be corrected upwards).
Also, several of these miners demonstrate what I consider an even more powerful and reliable TSI BUY signal - the trend line break. This signal is generated when the trend line drawn by connecting consecutively lower TSI highs finally slams into a rising TSI. The rationale for this analysis technique working so well, as best as I have been able to figure anyway, is that the very momentum of price trend (in our case downward price trend) has been broken and both the price momentum and price trend have now begun to completely reverse direction.
In alphabetical order, the 10 miners/ETFs I have selected to share with you are:
1. AEM - Agnico-Eagle Mines Ltd.
2. AUY - Yamana Gold Inc.
3. EGO - Eldorado Gold Corporation
4. EXK - Endeavour Silver Corp.
5. GDXJ - Market Vectors Junior Gold Miners ETF
6. GPL - Great Panther Silver
7. GLDX - Global X Gold Explorers ETF
8. NUGT - Direxion Gold Miners Bull 3X ETF
9. SSRI - Silver Standard Resource
10. UGLD - VelocityShares 3X Long Gold
And now for a look at the weekly charts:
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| Click on any chart to ENLARGE |
Of these, EXK and AUY get the nod from me. Why? Well, simply because their TSI readings of -0.14 and -0.18, respectively, are closest to generating a third and powerful TSI BUY signal which is the ZERO crossover. Once the TSI crosses up through ZERO into positive readings you need to hold on tight and enjoy the ride.
Well, that's it. Hey, and don't forget to keep a little cash on hand to pay all those capital gains coming your way. :-)
John
tsiTrader@gmail.com
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Talk about the stars being in alignment, my goodness. You've got my itchy trigger finger wavering around...ready to squeeze (buy). Thanks John for another faultless analysis.
ReplyDeleteOh btw I don't need to hold any cash, because I wont be taking any gains (money off the table). This will be the next great boom in stocks and it will have longevity. Hold the miners from here on out...they have untold value which the market will appreciate in good time.
And yet gold and miners plummet again!!
ReplyDeleteI say, "Do not hold your hopes too high. Be prepared for the worst case senario."
If (a big if) the bears win this colossal battle, we (the gold bugs) are doomed.
Gold must defend the support line by any means!!
Will it? Only God knows.
Anon - oh baloney. Turn off your computer and take a nap.
ReplyDeleteI think you are wrong about the US$ ,it is going to be one of the strongest currencies for 2013
ReplyDeleteparis
Well Paris, printing $85B in make believe dollars every month is
ReplyDeleteabout the stupidest way imaginable to make the US Dollar rise.
But that is what Bernanke is doing. Add to that the fact that the
other side of the world is quickly figuring out how to trade with
each other using their own currencies rather than the US Dollar,
and you get a double whammy.
The old law of supply and demand says that when the supply of dollars
is increasing and the demand for dollars is decreasing there is no way
the dollar will increase in value. How could it?
The damn desperate desperados of debt, debacle, and doom deserve to die directly. Little Cyprus looks a lot like black plastic rectangle with white dots on it and is tippy. Thanks, John, for naming names here!
ReplyDeleteMichael - they do put on a heck of a show, don't they?
ReplyDeleteJohn, Are we going to see $1,450 gold before end of this month? It's painful to see PM stocks keep sliding.
DeleteGold came to $1,525.60 this morning. Are we going to see $1,450? By which week in April or May? Can you give me your prediction, John? I still own plenty of PM stocks. My mistake that I didn't set stop loss. Very sad!
ReplyDeleteYCW - every C-wave has been corrected by at least 50%. Most corrected
ReplyDeletemore in the range of 61.8%. The 38.2% level of the previous C-wave
was at about $1520. Today gold fell through that level. Either this is
a very short term break and gold regains $1520 or gold could head for the
more "normal and minimal" 50% retracement ($1395).
At this point, we have conclusively defined that we are still in the D-wave.
What follows is the explosive rally of the A-wave. My expectation is most
if not all of my miner positions will be in the money by this summer.
Miners have obviously been beaten to an absolute pulp. The questions is going to be, how MUCH they go up in the medium term. 2008/2009 bottom led to a double within just a few short months. Maybe that's to aggressive, but perhaps 50% rise by the summer?
ReplyDelete