Sep 042014

I was asked my current thoughts on gold, silver & the mining stocks today along with the fact that the Bollinger Bands are tightening and my reply was this:

Not much to add to what I posted on Tuesday which was that the price action in both GLD & SLV that day has near-term bearish implications on both the metals and the miners. I’d like to see how the week finishes out before making any decisions on my positions but with the BB pinching and the Tuesday’s bearish price action in the metals, the possibility for a flush-out move to the downside is certainly elevated at this time. Continue reading »

Sep 042014

The X (U.S. Steel Corp) Long-Term Trade has now hit the final target, T4 at 40.50, for a gain of 127% since entry. X is a good example of the difference between the regular Long Trade Ideas and the Long-term Trade Idea. As stated back in the original post on May 3, 2013 when X was added as an Active Long-term Trade: “… I am adding X as a Long-Term Trade Idea.  The Long-Term Trades category included trades that have relative long expected holding periods (measured in months or even years) and typically have price targets well into the double-digits.  Often these Long-Term Trade ideas will also appear in the normal Long Setups or Active Long Trades categories, which includes the bulk of the trade ideas on  Most of those trades are swing trades with an expected holding period which can be expected to last days, week, or months but with a typical holding period of around 6 weeks or so.”

Consider booking full profits at this time (X has actually now surpassed the final target and is trading well above T4 now at 40.76 as I type) as the R/R no longer warrants remaining long in this trade. Although not all Long-term trade ideas are successful or reach triple-digit gains, X is a good example of the difference between the typical swing trade ideas and the Long-term Trade ideas shared on RSOTC. This trade took 16 months to play out and like all Long-term trade ideas, patience and relatively wide stops are required for such trades with above average holding periods and return potential. The previous & updated weekly charts are posted in chronological order below for a quick visual how this trade played out. (note: T4 was added as the final target back on Sept 18, 2013 at the time the first target was hit).

Sep 032014
AAPL daily Sept 3rd

AAPL daily Sept 3rd

As a follow-up to last week’s AAPL Looking Toppy post, after today’s high volume sell-off that took AAPL down well over 4% earlier today, I’m seeing a few technical developments that have further strengthened the bearish technical outlook that was previously outlined for AAPL (Apple Inc.):

  1. The RSI has now clearly fallen below the previously highlighted cluster of overbought readings, a common occurrence once a near-term (or more lasting) top in price has been reached.
  2. A very bearish bullish engulfing candlestick on high volume. Given, there is still 2 1/2 hours left in the trading session as I type this so things could change by the close, but if AAPL were to close at or near today’s low (so far), today’s candlestick will have engulfed the last 10 trading sessions. Even if AAPL were to manage to rally into the close the stock is still likely to print some type of potential reversal candlestick.
  3. Barring a very sharp & sustained upside move in the stock from here, the MACD is poised to make a bearish crossover which is not only a stand-alone sell signal but such a crossover would also confirm the potential bearish divergence that I had pointed out last week.
  4. Today’s large move lower is also a failure of the recent breakout to new all-time highs in AAPL as prices has taken the stock back below the Sept 21, 2012 former peak in AAPL.
  5. Finally, if this bearish rising wedge is to ultimately break to the downside, prices are current trading around the typical distance from the apex where price break below/above wedge patterns.

It will be very interesting to see if what happens on Tuesday when Apple is expected to unveil its new products. Will the news trump the charts or are any tricks that AAPL has (or doesn’t have) coming already priced into the stock? Being that the we are less than a week away from the new product launch, I’m not going to add AAPL as an official short trade idea at this time. My preference would be to see prices break below the bearish rising wedge pattern, especially after the dog & pony show in Cuppertino new week is behind us.

click here to view the live, annotated daily chart of AAPL

Sep 032014

Today both CORN & WEAT are trading below their recent consolidation ranges, which was mentioned a both a possibility as well as a potential criterion for those preferring a tight stop on these trades. In the previous (original) post on CORN, it was stated that an entry at that time would be somewhat aggressive as CORN has significant resistance not far overhead at the top of the July 21st gap, which is where the recent pop in CORN reversed when prices failed at that level.

As with the related WEAT ETF trade, today’s break below the recent trading ranges in both ETFs can be used as a tight stop for more active traders or those preferring to keep a tight rein on losses. However, as also stated in the previous post, CORN was also added as a Long-term Trade Idea with a suggested stop some below the 340 area on $CORN (spot corn) prices. As with the previous weekly chart & this updated weekly chart, the two most likely scenarios are drawn with the green arrows that show prices either breaking above the recent consolidation zone (much less likely now) or continuing lower to the S1 support area around 340, which is now the more likely to the two. Note how the MACD line is starting to curl up but has yet to make a bullish crossover, thereby yet to confirm the potential positive divergence that is forming although it does look likely by if/when price fall to the 340 level. Note: The chart of $CORN is an End of Day (EOD) chart of spot corn prices, meaning that the chart is only updated after the close of trading each day. Hence, I will use the daily chart of CORN (ETF) as well as corn futures in determining my entry & exit points.

As CORN is now trading well below the 25.60 tight stop level, it will be considered stopped out from the Active Long Trades category (typical swing trades) but will remain as both an Active Long-term Trade & Long-term Setup until/unless we get a solid weekly close on $CORN below the 340 support level.  As the daily chart of WEAT is very similar to CORN, I will also consider the Active Long Trade on WEAT stopped out on the break of support while leaving WEAT on as an Active Long-term Trade idea for now with stops TBD soon.

Click here to view the live, annotated weekly chart of $CORN (EOD spot corn prices) or click here to view the live, annotated daily chart of CORN (ETF).

Sep 022014

Both GLD (Gold ETF) and SLV (Silver ETF) experienced relatively large gaps below support today which can only be viewed as near-term bearish technical events. GLD has made a solid gap below the large symmetrical triangle pattern that was recently pointed out on the 4-hour time frame which is unarguably bearish price action. One potential bullish development is the fact that significant rallies on GLD have started from similar oversold levels (see the yellow annotations on RSI below). Next key support lies around 119.50.

Along with the symmetrical triangle pattern on GLD, I had also pointed out this bullish falling wedge pattern on the 60 minute chart of SLV, which prices broke above last week. Today’s gap down in SLV sent prices back well within the wedge pattern which makes last week’s breakout a “fakeout” or failed breakout. Failed breakouts are also clearly bearish technical events that are often followed up with additional selling. However, it is certainly worth noting that SLV still has bullish divergences in place on both the MACD & RSI (on the same 60 minute time frame previously shown). Therefore, it could be argued that we have some “glass half-empty or half-full?”, bearish vs. bullish cross-currents in the near-term technicals for both gold & silver.

For now the longer-term outlook on both remains bullish but both gold & silver are not far from very critical long-term support levels which, if broken, would certainly dampen the case that a new bull market in gold & silver is underway. My plan regarding the exposure that I recently added back to the mining sector is to sit tight on my positions for now and watch to see if GLD & SLV follow through to the downside following today’s bearish price action or not. Keep in mind these are only intraday charts although the 4-hour symmetrical triangle on GLD is also on the daily time frame.

Aug 292014

NEM (Newmont Mining Corp) is starting to move above this recent basing pattern (shaded area), which bodes well for the longer-term bullish case. Also note that I have added a new final target, T5 at 33.90. This new final target lies slightly below the large gap & horizontal resistance level on this 10-year weekly chart.     click here to view the live, annotated daily chart of NEM


Aug 282014

GFI (Gold Fields Ltd) was one of my top picks covered in the July 30th Gold & Gold Mining Sector video.  At the time, had pointed out the nice basing pattern that GFI had formed with the next buy signal to come on a break above the 4.38-4.40 resistance level, which GDI has clearly taken out this week. This gold mining stock has shown some nice relative strength lately having gained 16% since that video was posted less than a month ago while the gold mining sector (GDX) has just chopped around since then and is currently trading slightly below its July 30th close.

GFI was added as a Long-Term Trade setup when the video was published and following the breakout above the 4.40 resistance level, is now considered an Active Long-term Trade. However, despite the recent bullish price action in GFI, I did want to point out that GFI is now approaching a key long-term resistance level that comes in around the 4.70 area as shown on the weekly chart below. Any solid weekly close above that level will trigger the next long-term buy signal for an entry or add-on to an existing position in GFI. Of course, as always, it is imperative to manage your positions in the individual mining stocks along with the charts of both gold ($GOLD/GLD) & the gold mining sector ($HUI/GDX) as the success or failure of these trades, especially when positioning as long-term swing or trend trades, will largely depend on where gold prices are heading.

Bottom line: Although some gold & silver stocks have outperformed the mining sector and may trigger buy signals as they break out of bullish chart patterns or above key downtrend lines or resistance levels, gold & silver, although still looking bullish from a longer-term perspective, remain in somewhat precarious technical positions at this time and still have some work to do in the near-term in order to help solidify the case that a new bull market is underway. Therefore, make sure to use stops and position sizing commensurate with your own trading style & risk tolerance when trading the miners along with proper diversification, particularly if trading individual names vs. the diversified mining ETFs such as GDX, GDXJ, & SIL.