• AUY - Apr 16 201420140416
  • $CDNX - Apr 03 201420140403
  • EGO - Jan 16 201420140116
  • GDX - Apr 01 201420140401
  • GLD - Mar 24 201420140324
  • $GOLD - Dec 17 201320131217
  • HMY - Mar 26 201420140326
  • KOL - Mar 06 201420140306
  • NEM - Mar 26 201420140326
  • NSL - Oct 02 201320131002
  • PWE - Mar 21 201420140321
  • SIL - Mar 27 201420140327
  • $SILVER - Mar 27 201420140327
  • TNK - May 21 201320130521
  • XVX.TO - Apr 03 201420140403


Long-term Trades- Setups

Long-term Trades are trade or investment ideas that have the potential for significant returns over a longer-term period, typically several months or more. This category of trade ideas might be useful for the longer-term swing trader or investor looking for investment ideas to supplement their existing portfolio and prefers a less active, more hands-off approach to investing.

Apr 162014
 

AUY (Yamana Gold Inc) will be added as an Active Long Trade & Long-term Trade idea around current levels (8.10ish). As this is an attempt to catch a bottom in the stock which has now fallen over 60% from its peak just over 6 months ago, AUY should be considered an aggressive trade. That, coupled with the inherent extreme volatility in the gold mining stocks, favors a downward adjustment in position sizing on this trade (as little as 1/2 – 1/4 my typical position size).

What I like about AUY, other than the fact that I continue to believe the gold mining sector may still likely be in the early stages of a new bull market that began in late December, is how the stock has broken below this key weekly support line. This breakdown may likely prove to be a bear-trap (i.e.- a false breakdown), with prices moving sharply higher if it does not stick. It could take a week or so for prices to close back above the weekly support line and if so, a higher probability, more conservative entry (or add-on to an initial position taken here) would be on a weekly close back above that level (roughly 8.40). Another technical development supporting the bullish case is the fact that we have positive divergence either in place or forming on the weekly, daily & 60 minute time frames.

Once again this is a potential high risk/high reward long-term trade idea. With the first target (T1) 24% overhead and the final target (T3) about 55% higher, one must factor in the total dollar loss if the trade does not work out. Using a preferred 3:1 R/R ratio, that would allow for a stop about 8% lower if targeting T1 and about 18% lower if targeting T2. Of course tighter stops can be used but when trading the mining stocks, I find that trading a smaller position size to accommodate for more liberal stops significantly reduces the chances of being prematurely stopped out on trades that go on to hit their profit targets as the daily price swings in the mining stocks are unusually large.

 

Apr 032014
 

XVX.TO is an Active Long & Long-term Trade idea that was first added as a setup on Jan 17th (click here to view the previous notes if interested in this trade). Since that last post, the $CNDX (TSX Venture Composite Index) did go on to trigger an entry on the trade by clearing the 980 resistance level. From there, the exchange gained about 7% before coming back in to make a successful backtest of the 980 level (resistance, once broken, becomes support). All-in-all, the price action on the $CNDX remains constructive and with prices still trading above but close to that 980 support level, still offers an objective entry or add-on for a long-term trade or investment in the XVX.TO.  To reiterate, my preference is to use the $CNDX chart for timing entries & exits in the XVX.TO. Updated daily charts below.

$CDNX daily April 3rd

$CDNX daily April 3rd

XVX.TO daily April 3rd

XVX.TO daily April 3rd

 

Apr 012014
 

I took the day off yesterday and will be out of the office most of today but just wanted to post an update on GDX (Gold Miners ETF). As per the update posted on Wednesday of last week, my alternative scenario still has GDX making one final thrust lower to kiss the 23.00 horizontal support level + 61.8% Fibonacci retracement level. My primary scenario still has GDX bottoming on Thursday and moving higher from there.

So far, yesterday’s move lower in the mining stocks closed to print a higher low in the sector so there’s a good chance that today will either see prices drop below last week’s low of 23.27 (and likely bring prices down to the 23.00 area) or the GDX starts moving higher in an attempt to take out Friday’s reaction high of 24.35, which would be bullish and likely propel prices towards the first near-term target of 24.70.  I still give only slight odds to my primary scenario & as such, continue to scale into the mining stock as this point vs. a full position.  Updated 15 minute & 60 minute charts below.

GDX 15 minute April 1st

GDX 15 minute April 1st

 

GDX 60 minute April 1st

GDX 60 minute April 1st

Mar 282014
 

GDX (Market Vectors Gold Miners ETF) has broken above the downtrend line/bullish falling wedge pattern shown on the previously posted 15 minute chart. The updated 15 minute chart is posted below along with 3 potential near-term targets, for those only looking for a potential quick trade on the mining sector.

GDX 15 minute March 28th

GDX 15 minute March 28th

Mar 272014
 

SIL (Global X Silver Miners ETF) is offering an objective long entry or add-on to an existing position as it backtest the primary downtrend line. SIL was one of the top picks in the mining sector added to the Live Chart page in December while the sector was bottoming. SIL went on to hit both the first target (downtrend line) and then hit and far exceeded the second target (T2) before reversing just shy of T3 (15.43). SIL has almost reached the 61.8% retracement of the strong run from the Dec lows to the Feb 24th high, which is near the lower-end of a healthy retracement for what could prove to be the initial leg of a new bull market (which of course, is still yet TBD but remains my preferred scenario at this time).  As such, a long entry or add-on around current levels with the appropriate stops below looks to offer an attractive R/R for swing traders and longer-term investors targeting T3 or T4.

Click here to view the live chart of SIL (silver miners ETF)

Click here to view the live chart of $SIVLER (spot silver prices)

SIL daily March 27th

SIL daily March 27th,

Mar 262014
 

NEM (Newmont Mining Corp.) is one of the trade ideas that was added to the Live Charts page on Dec 31st as one of my top picks in the gold & silver mining sector for 2014. From there, NEM went on to hit the first profit target (T1, which was the top of the wedge pattern) about 3 weeks later, then made one final thrust back to the bottom of the pattern before finally breaking out and going on to hit the second target (T2) on March 17th. From there prices immediately reversed and have now come back to test the pattern from above. This backtest provides an objective re-entry into NEM for those who booked partial or full profits at T2 as well as an objective new long entry for those looking to add some exposure to the sector.

NEM daily March 26th

NEM daily March 26th

When trading the sector, I find it imperative to adjust my position sizing lower that usual in order to allow for the larger than normal stops that are required to successfully trade such a volatile group of stocks as the gold & silver miners. As always, risk & reward go hand-in-hand and this increased volatility and above average loss potential is made up for with above average gain potential. I often use a “shotgun” approach to the sector by diversifying my exposure amongst the individual mining stocks with the most attractive chart patterns although trading GDX (Gold Miners ETF), GDXJ (Junior Gold Miners ETF) & SIL (Silver Miners ETF) certainly make sense for those preferring simplicity or seeking to mitigate volatility in their portfolio via the diversification offered by ETFs.

Mar 262014
 

HMY (Harmony Gold Mining Co.) is one of the top picks in the mining sector that were added to the Live Charts page a few months ago around the time the sector bottomed.  After recently hitting the third profit target a couple of weeks ago, HMY reversed and has now pulled back to the former T1 level, which is now support (see daily chart).  Zooming down to the 60 minute time frame, we can see that HMY is approaching the bottom of the Feb 14th gap which is also the top of a thin zone on the volume at price histogram (horizontal red & green bars). Additionally, the 50% Fibonacci retracement level of the powerful run off the Dec lows in HMY to the recently March 14th highs lies just below the bottom of the small support zone that runs from about 3.10-3.15. Essentially, this gives HMY a cluster of support around current levels & increased the odds of a reaction. I would give slight odds to a reversal here vs. my alternative scenario which would have prices continuing lower towards the bottom of that thin zone (2.90-2.95 area) before any meaningful bounce.

click here to view the live chart of HMY

HMY 60 minute March 26th

HMY 60 minute March 26th

HMY daily March 26th

Mar 262014
 

GDX has now completed the pullback that I was expecting, at least enough of it to start adding back a fair amount of exposure to the sector after booking profits in mid-Feb & March. GDX has now hit a key support area defined by the support shelf (series of reaction highs) from late Jan/early Feb as well as the 50% Fibonacci retracement of the powerful run from the Dec 23rd bottom in the sector to the March 14th highs.

Although my alternative scenario is a continued move lower to the 23.00ish area, which is the bottom of that same late Jan/early Feb consolidation zone as well as the 61.8% Fib retracement of the same initial run off the Dec lows, I’d rather begin adding back exposure now as with both GLD and GDX at decent support levels as well as key retracement levels, the buyers could step in soon. My plan is to add back about a 50% position in the gold stocks (GDX and select individual miners) while continuing to add exposure (i.e.-scaling in) on either a move down to the 23.00 area (my alternative scenario) OR on a breakout (and possible backtest) of this bullish rising wedge pattern shown on the 15 minute chart below. The first charts below are the previous & updated GDX 60 minute charts (showing how the larger bearish rising wedge pattern has played out so far), followed by the 15 minute GDX chart showing what appears to be a bullish falling wedge pattern forming as GDX falls to the aforementioned dual support levels on the 60 minute time frames.

Mar 242014
 

After the recent failed breakout/bull-trap, GLD (SPDR Gold Trust) has pulled back to a key support level which is defined by multiple gaps over the last 8 months or so. That, combined with the fact there are some potential positive divergences forming on the 60 minute charts makes this an objective time to start adding back some exposure (or initiating a new position) in GLD and/or the mining stocks including GDX, which is also now approaching a substantial support level which is best viewed on the 60 minute chart.

Click here to view the live daily chart of GLD

GLD daily March 24th

GLD daily March 24th

Mar 212014
 

PWE (Penn West Petroleum Ltd) will be added as a new Growth & Income Trade Idea here around the 8.50 level with a suggested stop on a solid weekly close below the uptrend line. This Canadian energy stock recently cut its dividend but is still paying out an attractive quarterly dividend of 14 cents for a current yield of 6.59%. The stock does have decent horizontal resistance about 30 cents overhead at the 8.80 level. Therefore, one could also wait until that level is cleared before initiating a new position or adding to an initial position taken here.PWE daily March 21st

Growth & Income Trades are longer-term swing trade or investment candidates expected to generate an above average dividend yield and capital appreciation. Growth & Income Trades are a sub-category of the Long-Term Trades category. As several Growth & Income Trades recently hit their final profit targets about a month ago, I will be working to add some new trade ideas to this category. As always, any trading or investment ideas are welcomed. Please use the Contact page to forward any trade ideas, including any high-yielding stocks or closed-end funds that might look compelling.

Click here to view the live chart of PWE

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