Using the TSI to Nail Both the BUY and the SELL

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I wasn't going to do this, but a reader asked me if I would mind making a chart to show how I used the True Strength Index (TSI) to buy and sell my Great Panther Silver (GPL) trade. You may recall that I sold my position from my TSI Trader account yesterday.  What I did not tell you was that in another account I had doubled this position and had not sold any shares - well, not until today, that is.
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Click on the chart to ENLARGE

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This is a 15 minute chart of Great Panther Silver (GPL).  I bought GPL at $3.26 a couple of days ago using the TSI.  Then this morning I used the indicator to sell the other half of my double position at $3.95. 

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Both signals were generated by a trend line break of the indicator.  The buy signal occurred just below the ZERO crossover, which is ideal.  The sell signal occurred just after a negative divergence had been made (higher high in price but lower TSI high).
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Pretty kewl, huh?

(Shhhh.....just don't tell anyone how it works, OK? 
Let' just keep this a well-guarded secret and use it to make lots of money!)

BUY HL at $9.49 in Pre-Market

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I just bought Hecla Mining Co (HL) in the pre-market for $9.49. Chart of HL in previous post.
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My TSI Trading record has been updated.
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Tomorrow's Trades (Today!) for Thurs. April 27, 2011

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I have waited a month to share new trade ideas for my service Tomorrow's Trades (Today!). You can access that webpage here. There you will find exact limit order prices for the buy tomorrow and selling price when that price is reached.
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The details of my past trade ideas and record can be examined here.
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1. Entree Gold Inc (EGI)
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Click on any chart to ENLARGE

2. Hecla Mining Co (HL)

3. New Gold Inc (NGD)

Sold GPL - $3.62 Miners and the Dollar

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Wow, what a day! I don't know whether I should laugh or cry. 
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Traders interpreted Ben's appearance today as suggesting there is no end in sight to the money printing machine. 
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But tomorrow is a new day. We'll see if investor's perception holds longer than this afternoon's very emotional reaction that sent gold to new all-time highs ($1,530.70), silver to a new closing high ($47.81) and the US Dollar to new lows not seen since August of 2008 ($73.31).
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Yesterday I bought Great Panther Silver (GPL) and today I sold it for $3.62.  This is the 15 minute chart I was looking at when I decided to sell.  You will see that I *anticipated* the True Strength Index (TSI) indicator to be on the verge of a break and a sell signal. And when you look at the following chart of GPL showing today's close, you will be allowed to chuckle along with me that my anticipation was probably not my finest decision.
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Click on any chart to ENLARGE

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Well, here is the end of day chart. It turns out that the trend line break I was *anticipating* did not happen - not even after the stock made it higher some 25 cents to $3.87. Boy, did I leave a lot of money on the table.  The TSI had it right all along and the interpreter got it wrong.
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Anyway, I made two GPL charts to show the reader both my short-coming as a trader and how well the TSI works.
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This is not the first time I have left a lot of money on the table, btw. It happens somewhat frequently - and those who have been reading by blog for a number of months know what I am talking about. Anyway, my attitude is to laugh, celebrate the success I do have, and look for the next trade.
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Also, I more than doubled my position in GPL first thing this morning in another account and did not sell a single share.  So I'm doing OK. Hooray!
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Some readers have inquired about the current status of the mining index.  This is a daily chart of the Market Vectors Gold Miners ETF (GDX).  The Money Flow Index (MFI) indicator has a tiny trend line break but the TSI (7,4) does not. At a -.06 reading, the ZERO crossover BUY signal is close, but not quite there yet. What can I say?  It looks good, but no BUY signal confirmed yet.

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And finally, a daily chart of the US Dollar.  Price hovered around $74 for most of 4 days, but today that consolidation area lost it's grip. Not a good sign for the US Dollar. 
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In a recent article I wrote that the speed the US Dollar crashes during the final leg of the gold and silver parabolic is about 20 - 25 cents per day.  Stated another way, the US Dollar loses $1 in value about every 4 - 5 days.  My calculation of the past 7 days is that the US Dollar has been falling at an even faster 33 cents per day average.  At this rate, the All-Time Low of the buck ($70.70) could be reached in just 8 trading sessions.
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My TSI trading record has been updated.

BUY GPL at $3.26

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Well, I could not resist.  I finally broke down and bought a new mining position.  For several days I had been short the US Dollar with futures contracts, but covered them early this morning.  Flush with more cash I guess I just got back into the buying mood.
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Click on the chart to ENLARGE
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This is a daily chart of Great Panther Silver (GPL) which I bought for $3.26 today. If you are wondering which True Strength Index (TSI) indicator buy signal I used to make this purchase, well, I don't have a name for it.  At least not just yet, but I am open to suggestions.
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The signal I used today is just the opposite of the one I do have a name for - the nose bleed. The nose bleed sell signal is when the TSI (7,4) reaches such a high stratospheric level that the only thing one can do is sell because that kind of momentum is impossibly unsustainable.  The TSI (7,4) is at such a high altitude that compared to all readings in the past year, it beats them all.  And, the high altitude, of course, causes a nose bleed. If you don't sell right away the profits you could have pocketed will be bled from your account. Absolutely true.
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Before buying I did a quick check of the latest projected earnings data for GPL available at Kitco.com, and that checked out (see chart for that data). And I checked for the latest news to account for the huge sell-off, but found nothing in particular. Then I looked at the daily volume and that sold me on the stock.  The volume for yesterday and today was in excess of 7M shares - each day.  For a stock with a float just over 100M, that is a lot of selling.  My conclusion, believing that smart money sells into strength, was that this amounted to dumb money panic selling. Hey, I don't mind buying under those conditions at all.
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Just for yucks I noted the price of silver bullion on the chart at three price points. Need I say any more?
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My TSI Trading record has been updated.

A Game of Chess, Anyone?

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I've been anxious to rebuy some mining positions for a couple of weeks now, but just haven't seen the setup that is right for me.  We had a buy signal many days ago on the Market Vectors Gold Miners ETF (GDX) but I could not bring myself to take it.
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Click on any chart to ENLARGE
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If you are interested in pondering some of the finer skills of using the True Strength Index (TSI) indicator, this post may interest you.  I'd like to show you why I did not take a perfectly good buy signal the other day and how my decision has played out so far.
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This first chart of GDX shows where we were when the buy signal from a trend line break of the TSI first appeared on the daily chart. Not only did we get the trend line break, but the TSI was rising and clocked at -.03.  Surely another positive day would cause the TSI to rise further and generate another buy signal - the ZERO crossover!
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But like a chess player trying to think a couple of moves ahead, I noted that the previous TSI high was +.67.  And I noted that the previous high price associated with that reading was $64.14.  Hummmm......... 
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What would happen if GDX price were to rise a few points?  Wouldn't it make a higher price than $64.14?  Yes.  But would the TSI, then at -.03, make a higher high than +.67? NO WAY. 
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And if the TSI did not surpass +.67 that would surely create a negative divergene and most likely bring the Tower of Babel crashing down. Heck, who wants to buy just days in front of a crashing tower?  Not me.

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So I opted to wait.....believing the GDX would be coming back down, thus creating a much easier TSI to not only use for a trend line, but also surpass when price resumed its next rally.
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This second daily chart of GDX brings us up to date as of this morning's early trade.  Sure enough, price did rise and nearly reach the old price high.  And sure enough, the TSI at that point was no where near the previous +.67. 
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Price has recently fallen as I hoped, creating a new TSI high point from which to draw a new trend line. I hope that in addition to the upcoming trend line break of the TSI (7,4) we see a subtle change in direction from the slower trending magnification of the TSI (25,13).
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Also, the last time GDX descended to its 50 dma it was supported for a few days, before falling below.  If that happens this time, honestly, that would be ideal for me.  It would push the TSI that this morning was at -.20 all the way down to -.50 or so.  And then, like holding a ball under water, the release unleashes energy that propels the ball, or in this case GDX, to defy gravity.
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Some time ago I read that a person said, "In the stock market, there are no certainties.  Only probabilities".  And that statement struck me as very true.  There is no certainty that my chess move was the best move possible.  But I do think it has a very favorable probability. That was my move. 
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Your turn :-)
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Silver - Look Out Below?

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Overnight the silver continuous futures contract (/SI) made it up to $49.82 following a sizable bullish gap opening to begin last evening's session. Since attaining this overnight high silver retreated and having found support at $47.85, is trying to make a comeback - at this writing trading around $48.05.
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On the left side of this chart is the 60 minute look at the situation and the right side of the chart is the daily view.
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Click on the chart to ENLARGE
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The charts raise more questions in my mind than answers, unfortunately.  Such as, will the daily candle turn into a red reversal candle later today? Have the trend line breaks and negative divergence sell signals on the True Strength Index (TSI) correctly foretold the future? If silver does continue to retreat further will support at $46 hold?