World Of Wallstreet

FWIW: Chart Review... Reflation Trade Still On (Weakly Though)

Just completed my pretrading chart review. Going to go long gold futures for a short term trade.

 

Here's the charts I find interesting. Don't have time to actually cut and paste the charts into this post.

 

BKX breakout. Banking stocks looking strong. http://stockcharts.com/h-sc/ui?s=$BKX&p=D&b=3&g=0&id=p82408217738&a=170899848

SPX at possible double top with RSI near recent highs. http://stockcharts.com/h-sc/ui?s=$SPX&p=D&b=3&g=0&id=p49012226722&a=135880573

TRAN breaking out. http://stockcharts.com/h-sc/ui?s=$TRAN&p=W&b=3&g=0&id=p27605170565&a=192632403

Dollar is in a triangle. Should continue higher. http://stockcharts.com/h-sc/ui?s=$USD&p=D&b=5&g=0&id=p67231887895&a=166258920

$SOX (semiconductors targeting recent highs). http://stockcharts.com/h-sc/ui?s=$SOX&p=D&b=3&g=0&id=p42005753032&a=193325190

30 year treasuries are still flirting with a reverse head and shoulders disaster. Makes "them" want to suppress gold. http://stockcharts.com/h-sc/ui?s=$UST30Y&p=W&b=5&g=0&id=p17225051855&a=187469066

Copper is consolidating just below a double top. http://stockcharts.com/h-sc/ui?s=$COPPER&p=D&b=3&g=0&id=p98691673496&a=134781029

Gold, last fibonacci gone, 50 day break down, targeting 1050 with quadruple witching coming out next week with FOMC next Tuesday. Short term long futures trade only based on interventional release only. http://stockcharts.com/h-sc/ui?s=$GOLD&p=D&b=3&g=0&id=p84653420881&a=183320883

Gold/Silver back to 65. The reflation trade is saved! http://stockcharts.com/h-sc/ui?s=$GOLD:$SILVER&p=D&yr=2&mn=0&dy=0&id=p65548417530&a=167283469

$HUI is targeting 360 from 420 based on fibonaccis and moving averages. http://stockcharts.com/h-sc/ui?s=$HUI&p=D&b=3&g=0&id=p19309140442&a=163272346

Silver looks barely ok. http://stockcharts.com/h-sc/ui?s=$SILVER&p=D&b=3&g=0&id=p89006582352&a=127980389

Crude is at the top of its channel with the RSI where it tends to run out. http://stockcharts.com/h-sc/ui?s=$WTIC&p=D&b=3&g=0&id=p69244740568&a=147631240

Uranium is on the train to nowhere. This is what housing (the next bubble) is going to do. http://stockcharts.com/h-sc/ui?s=U.TO&p=W&b=5&g=0&id=p48072889684&a=139978060

The overall picture is that the reflation trade is sort of on, but not really strongly. The gold picture (and HUI) is colored by the recent suppression. We'll see what it looks like early next week. I'm expecting a pop in this sector after the 30 year treasury auction completes.

MontyHigh, www.worldofwallstreet.us

Tobinator: Euro PIGS and Charts

"Editor's note: World Of Wallstreet welcomes a contribution from Tobinator the most highly rec'ed poster on the IV precious metals board (click here)and editor of the free, quarterly Heavy Metal Investor newsletter (click here). My comment on this is "What a bearish looking set of charts. I should have gone short Friday before the close."

Good Evening.  I certainly understand bbb's frustration with this emerging, grinding downturn we've been at the mercy of since early December.  That start corresponded to the US dollar's reversal.  Today's disappointment in the jobs (but not that much) sent the broad markets down to where by mid-afternoon are reversal took hold and rallied the index just into the green.  The late day rally probably was fueled by fat shorts taking profits and having a possible weekend rescue package that could stoke markets.  My feeling is the carefully crafted bull rally from Mar - Dec 09 needed to not have the mid-afternoon sell off take hold else have a technically damaging drop on Monday.  On the surface from a pure chart perspective, today's rally signals a reversal though I need much more data before I am convinced.  My gut tells me that the rally may be more of those with an interest in keeping markets up came in to support them and not that market sentiment suddenly changed to the positive.

 

What was refreshing was the HUI is even though the Dow was at its lows, the PM shares were barely down.  It could be that shorts decided to cover due to gold being in a real strong region of support.  There is also the element that if the ECB blinks and bails out the PIGS (Portugal, Ireland, Greece, and Spain), the US dollar could fall significantly fueling a gold rally.

 

We have a real interesting situation brewing in Europe.  The ECB is talking tough about the PIGS but there is a real risk of turning the recent upset in an outright panic in the world markets.  I think if they bail them out, they will not do any real reform and consequently find themselves in the same situation.  The longer this thing festers the worse it's going to become.  Technically many markets are in tenuous positions and vulnerable for deep retracements of last year's gains.  Ultimately, I think European politicians are as spineless as US ones so a major bailout is probably going to occur soon.

Tobinator

 

Broad Market, Financial and Real Estate Indexes,

 

Dow - Short Term,

http://stockcharts.com/h-sc/ui?s=$INDU&p=D&yr=0&mn=7&dy=0&id=p27719459135&listNum=3&a=135845786

 

DJ Financials Index - Short Term,

http://stockcharts.com/h-sc/ui?s=$DJUSFN&p=D&yr=0&mn=7&dy=0&id=p94178258421&a=174311274&listNum=5

DJ Real Estate Index - Short Term,
http://stockcharts.com/h-sc/ui?s=$DJUSRE&p=D&yr=0&mn=7&dy=0&id=p87779149377&a=177053474&listNum=5

Financials Select - XLF,
http://stockcharts.com/h-sc/ui?s=XLF&p=D&yr=0&mn=8&dy=0&id=p99175096869&a=185122021&listNum=5

Nasdaq - Short Term,

http://stockcharts.com/h-sc/ui?s=$COMPQ&p=D&yr=0&mn=8&dy=0&id=p78745450752&a=173645180&listNum=3

 

S&P 500 - Short Term,

http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=0&mn=7&dy=0&id=p30411714276&a=135847211&listNum=3

 

 

Select Commodities & US Dollar Index,

Gold - Short Term,

http://stockcharts.com/h-sc/ui?s=$GOLD&p=D&yr=0&mn=6&dy=0&id=p57701274077&a=170173768&listNum=3

 

Gold - Medium Term,

http://stockcharts.com/h-sc/ui?s=$GOLD&p=W&yr=2&mn=6&dy=0&id=p92932880573&a=159670699&listNum=3

 

HUI - Short Term,

http://stockcharts.com/h-sc/ui?s=$HUI&p=D&yr=0&mn=6&dy=0&id=p19668576846&a=185381680&listNum=3

 

HUI - Medium Term,

http://stockcharts.com/h-sc/ui?s=$HUI&p=D&yr=0&mn=9&dy=0&id=p79677338358&a=170859893&listNum=3

 

Natural Gas,

http://stockcharts.com/h-sc/ui?s=$NATGAS&p=D&yr=0&mn=7&dy=0&id=p41547490395&a=146051370&listNum=3

 

Oil - Short Term,

http://stockcharts.com/h-sc/ui?s=$WTIC&p=D&yr=0&mn=6&dy=0&id=p75208704251&a=131180076&listNum=3

 

Platinum - Short Term,

http://stockcharts.com/h-sc/ui?s=$PLAT&p=D&yr=0&mn=6&dy=0&id=p37802033323&a=108052216&listNum=3

 

Platinum - Medium Term,

http://stockcharts.com/h-sc/ui?s=$PLAT&p=W&yr=2&mn=2&dy=0&id=p81968746814&a=148511149&listNum=3

 

Silver - Short Term,

http://stockcharts.com/h-sc/ui?s=$SILVER&p=D&yr=0&mn=7&dy=0&id=p34934828921&a=131179498&listNum=3

 

Silver - Medium Term,

http://stockcharts.com/h-sc/ui?s=$SILVER&p=W&yr=2&mn=6&dy=0&id=p87330002534&a=113688540&listNum=3

 

US Dollar - Short Term,

http://stockcharts.com/h-sc/ui?s=$USD&p=D&yr=0&mn=6&dy=0&id=p34038309347&a=167022136&listNum=3

 

US Dollar - Medium Term,

http://stockcharts.com/h-sc/ui?s=$USD&p=W&yr=2&mn=2&dy=0&id=p80020589757&a=148768934&listNum=3

Watching Technical Analysis "Work"

Here's a quick example of Technical Analysis "Working".

As you can see, Palm popped up in response to recent good news (selling their phones into the Verizon and AT&T networks). The interesting part is how far it popped. As you can see it popped right up to that horizontal resistance line just under $13 and has bounced off.

Its this kind of thing (along with the behavioral economics supporting it) that makes me count technical analysis as a useful tool.

MontyHigh, www.worldofwallstreet.us

Weekend Chartworks: Changing My Macro Outlook

Here's what I see in the above S&P chart covering the crash and what follows:

• The absence of volume between 1050 and 1200 operates basically like a gap. There's nobody who can get a sense of relief, psychologically, by selling anywhere in that area. Technically this makes me expect the rally to continue until we get to some resistance (volume of buyers who have been trapped as losers and can feel like they "broke even" by selling.
• At 1222 is the last fibonacci and also the resistance just discussed. I expect serious resistance at that point.
• Generally the chart looks pretty bullish above the 50 and 200 day moving averages.
• The RSI doesn't look overbought at all.
• The volume, while not high, seems steady from June onwards.
• A rising stock market has been good for commodities and precious metals.
• Overall this looks like a pretty bullish chart to me at least for another 10% or so. Party on Garth.

The US dollar is in a nice, steady downward channel that pretty much lines up with the 50-day moving average. Its oversold according to the RSI and could jump up to the top of the channel and the 50-day, but the downward trend looks pretty well established. A falling dollar is good for commodities and precious metals.

The baltic dry goods weekly chart seems to have bottomed. Indicates that global industrial activity has bottomed and is picking up. 

The CCI commodities index has broken out to the upside and is targeting a further rise of another 10% of so. At this point, prices are already up 30% year over year. If/when the target is achieved prices could be up 50% (or more) year-over-year. This, plus the falling dollar, plus the stock market rising on injected liquidity (not earnings) together paints a picture of rising inflation. More about this later.

The copper chart is a really nice looking chart at this point (ok, I've been wrong about copper):

• Breakout above the psychologically significant $3.00 point after consolidating a couple of months. This breakout took place during what is seasonally a weak point in the calendar year.
• It also has a confirmed breakout about the 50-day moving average and is securely above the 200 day moving average.
• The RSI is not overbought.
• By the way, both Zinc and Lead (Pb) are back above $1.00.
• So metal prices are back at the point where miners can make serious profits. 
• I expect I'll buy, in my mother's account, some PCU (nice dividend yielding copper producer).I bought some Fortuna Silver (FVI.TO) this week (a Peruvian silver miner with a lot of zinc and lead byproducts) [hat-tip to Inca Kola News (IKN) news letter which has been recing this stock for quite a while).

The Gold / Silver ratio is trending downward nicely residing securely under the 50 and 200 day moving averages. A falling gold / silver ratio indicates an absence of fear (observe what happened during the end of 2008 when fear was rising). This is occurring while both gold and silver are rising. Together this is another "inflation is coming" indicator.

What can I say about the gold chart that hasn't already been said. Here's some notes from the weekly chart:

• Gold has a confirmed breakout above its all time high with three weekly closes above that high.
• The pattern preceding this breakout is a flat-top triangle formation which targets $1400. I don't know if it will go there or how long it will take, but that is what the chart says.
• The 10-week moving average (and the corresponding 50-day moving average) are at $1000. That leaves a tonne of support at $1000.
• On the daily, tick-by-tick 24-hour a day action I see buying coming in on every dip.
• Reports indicate that the Indians are buying at roughly the $1050 price and we believe the Chinese government is accumulating as much as it can without driving up the price. That leaves immense support for gold.
• Pretty darn bullish.

The HUI to Gold ratio is trending up nicely with the 50 day moving average as support and residing well above the 200-day moving average. This means that large-cap gold stocks are providing leverage (as they "should") and are rising faster than the price of gold. Junior producers / near producers (such as my favorites: Gold Resource Corp, Dynasty Metals And Mining, Troy Resources, Oceana Gold and Apollo Gold) have been enjoying even higher leverage. 

Uranium had an excellent week (and month of October) breaking out above the 200-day moving average, 50-day moving average (earlier this month) and a multimonth trendline. I don't hold any Uranium miners, but perhaps I should.

The crude oil chart looks a little overbought but is trending upwards very nicely (just like the rest of the commodities). I'm not an expert on this but I hear that the short-term fundamentals are not really that good with a decent amount of excess capacity and brimming inventory levels. If my perception is right it fits right into my overall macro outlook.

So, my overall macro outlook is as follows:

• The commodity, inflation trade is "on" with the charts for everything that does well with inflation (commodities, stocks, precious metals...) trending upwards nicely (and the US dollar trending downwards nicely). It looks like it can drive the S&P 500 at least another 10% higher and then we'll see what happens next. The trend is definitely on with no obvious signs in the charts that I see pointing to a reversal.
• I know that there is a strong argument that the USA economic outlook is really dismal, but it appears to me that the rest-of-the-world has bottomed and is recovering (or at least that all that liquidity is flowing into commodities).
• I think that my Jr producer gold holdings (I know, I'm a broken-record) are a great place to be with excellent upside based on pure value (asset and P/E) at anything close to current gold prices and with a very bullish technical and fundamental outlook for the price of gold.
• Although the charts say the inflation trade is "on" and I may start edging back into base metals, I'm more confident with the gold Jrs based on valuation and the technical and fundamentals supporting the price of gold.

Hope you found this helpful. I found it quite helpful for myself. The charts actually paint a much more bullish picture than I had when I started looking at them today.

MontyHigh, www.worldofwallstreet.us

Silver Chart Is Short-Term Ugly

The silver chart is plenty short-term ugly having:

• Broken down through the 50 day moving average.
• Broken down through the last fibonacci targeting a sub-12$ price.
• Broken down through a head and shoulder neckline targeting a 10$ price. 

In addition, the whole deflation idea is kicking back in.

I expect I'll be lightening up on silver holdings on Monday and probably going short something (copper, S&P, banking stocks) to hedge the rest of my Jr gold miners.

MontyHigh

Quite A Day Technically For Precious Metals

Here's some charts that seem noteworthy.

The US Dollar has broken down through key support and is targeting the low from Dec 2008. This is very bullish for precious metals.

30 Year Treasury Bonds are in a confirmed up-trend. The signal we are looking for as far as a major US currency crisis like Argentina experienced in 2001 is an major uptrend in long-term interest rates and/or and major fall in the US dollar. Both are happening, but have not reached the fevered levels needed to signal such a crisis.

Gold confirmed its earlier trend line and 50 day moving average breakout and has gotten to the 50% fibonacci. It is not yet overbought.
Silver has broken through nearby resistance and is targeting this year's high at $14.63. After that the last fibonacci to the $19.50 high from last summer is at $15.30. If it crosses that $15.30 it targets that previous $19.50 high.

The $HUI large-cap gold stock index has broken through the last resistance anywhere to be seen and is set to rise hard.

The $HUI/$Gold is in a nice up-trend and has broken out of a bearish rising wedge. It has broken through its %50 fibonacci number. Together, this means large-cap gold stocks are outperforming gold and look set to continue to outperforming gold.

The CDNX (proxy for Jr gold miners) looks overbought, but it broke through its 200 day moving average. There is no visible resistance in sight. Jr gold miners could really launch. How many indices can say that?

Overall, these charts are quite bullish for precious metals at a time of year where this is unexpected. I'm already "all in", but with almost no margin in my favorite precious metal Jr producers and near-producers.

I closed my silver short for a loss today, but my accounts closed with a new high for the year, up over 40% year-to-date.

MontyHigh, www.worldofwallstreet.us

Message Board Confessions: Behavioral Economics Behind Technical Analysis

Here's a quote from a Stockhouse message board post that is an example of the real human psychology that is behind, and gives validity to, technical analysis:

"As it recovers to the 2.50 range I'm gonna bail, get back my cash (I hate taking a loss) and buy some silver companies that have a desire to promote." [emphasis added]

A big part of what is called "resistance" by technical analysts is really a price level where a group of investors who, at current prices are "losers", bought in. As soon as the price gets back to that point they sell so they don't have to think of themselves as "losers". So, there is built-in selling at that price and thus its hard for the price to move through that level.

MontyHigh, www.worldofwallstreet.us

Noteworthy Charts 1/2/2008

The silver chart appears to be rising very nicely in a channel. Its near the top of the channel, but if it can make it thru $12 the fibonacci break targets $14. I'm not as jazzed about the silver fundamentals as I am about gold, but the technical action is very admirable. 

First Majestic (FR.TO) and SLW trade in a very correlated way with silver. They are both highly leveraged as the difference between 8$ silver and $11 silver is roughly the difference between genuine trouble and making money nicely. The FR chart is very interesting in that FR is in a strong up trend and its just broken the last fibonacci which means its targeting $3.25. I'm holding at least until then and will then reevaluate.

The USD dive-bombed to reach its head and shoulders pattern target and since has bounced enough to reach the first fibonacci. If it continues to rise it should be bad for gold, silver and the related miners. I'm watching this carefully.

The gold weekly chart shows a lot of hope and also shows that if $900 can be breached (with its fibonacci number) that the all time high is targeted. There are a couple of trendlines to be overcome as well on that ascent to a retest of last years high.

The daily chart is looks reasonably bullish with recent moving average breakouts and the last fibonacci being broken targeting $930. This would be enough to break the weekly chart's fibonacci and trend lines and target the all-time high. Gold is in a nicely rising channel.

On the bearish side, technically gold has formed a bearish rising wedge. Fundamentally, Indian and Turkish gold buying has collapsed recently, gold is due to be sold off by index commodity funds as part of annual rebalancing and the US dollar is showing some strength. Finally, things have stabilized, short term, in the middle east and some of that flight to safety buying may have dried up. In addition, the TED spread has fallen to the lowest levels since the crisis started, so there is less of a flight to safety fundamental right now. There are thus some bearish fundamentals. Most of these fundamentals are short-term fundamentals.

Of course, the theme of inflation following deflation due to all the money supply growth aided by bailouts and stimulas spending is, long term, very bullish for gold (and more so than ever). There's room for renewed flight to safety gold fundamentals in both the financial and geopolitical fronts as well. Falling mine supply and central bank selling further the bullish long-term fundamental outlook for gold.

From an interventional standpoint, if the general market can pop a bit, the Cartel may lay off gold and just try to keep it from making headlines.They have not done too much lately and could not prevent gold from ending the year higher than it started, so the Cartel seems to be less of a factor at this point.

By the way, LeMetropoleCafe.com (where I got the Indian and Turkish buying fundamentals) remains the best source for precious metal investing that I've found. The Midas daily commentary is where most of the juicy tid bits are found. If you've got a significant amount of money in precious metals you'll want to pony up for a subscription (or at least  give the trial subscription a twirl).

All in all, I'm cautious on the price of gold at this point for a couple of weeks and wouldn't be too surprised to see some range trading for a couple of weeks while the gold mining stocks continue to make progress. That's my best guess at this point.

Semafo (SMF.TO) is a turn-around, mid-sized, multi-mine producer in West Agrica which took a political hit a couple of weeks ago. The smallest of its three mines is in Guinea which just suffered a military coup. At first, the new government announced that all gold extraction should cease until mining concessions were renegotiated. Since then the military has backed off and mine operations continue at SMF's mine uninterrupted. This set of events has given Semafo a technical flat tire. Prior to the news, SMF was on a tear, having broken moving averages, long-term downtrend lines and the last fibonacci and targeting $1.60.

My fundamentals spreadsheet says SMF is an exceptional value with a price to operating cash-flow ratio of ~2 at a gold price of $800. I'm planning on sticking provided the technical outlook for both gold and SMF do not degrade too much further. One of the most admired mining analyst message board posters I know (name withheld pending permission) has Semafo as his second largest holding and is undeterred by the Guinea news. This stock is also recommended by Toby Hansen.

I find Minefinders to be a stock that I can trade. Its price action recently has been well correlated with the price of gold (but leveraged) and its liquid enough that I can get in and out with a reasonable trading position without perturbing the price. Its not as undervalued as Semafo (for $800 gold) and is not nearly as undervalued as the true Jrs I'm holding and looking at, but it does seem undervalued with an estimated 2009 price to operating cash flow ratio of 4.5 at $800 gold, provided the mine production meets guidance.

Its weekly chart shows that it has broken its downtrend.That's bullish.

The daily chat shows that its having trouble making it thru that 50% fibonacci resistance. I'm in the process of taking profits (a rare occurrence) and moving that money into some smaller, more undervalued gold miners.

Gold Resource Corp (GORO.OB), my largest holding, is in a strong uptrend. It targets $4.44 if it can decisively stay above that $3.50 fibonacci number. Monday's action will be important. GORO is financed, building its mine and the size of its high-grade resource continues to build. The management continues to be more "stockholder friendly" (more interested in helping the stock holders make money and less interested in selfishly taking care of number one) than other managements (partly because they hold 30% of the shares).

Metanor closed on its flow-thru private placements and, while not popping as much as others, has weathered a Jay Taylor downgrade and broken thru trend line resistance. It completed its first full quarter of production on 12/31/2008. A satisfying production announcement or good drill results could really get this stock moving. My spreadsheet estimates a 2.5 price to operating cash flow ratio for 2009 at $800 gold.

Finally, New Guinea Gold Corp (NGG.V) had a good week on news that the financing closed that it needed to ramp up production to being cash-flow positive (avoiding real trouble) and on a Jay Taylor recommendation reiteration.

The stock popped 50% on roughly $300K of stock trading (1.4M shares). This shows how illiquid these stocks can be and how much they can move if the fundamentals move in their favor. If you are swinging position sizes of 100K$ you are going to have to realize that getting in and out is going to cost some serious money. But there is also a good chance for spectacular results. Jay Taylor says this is a potential 10-bagger. It looks like a five to ten-bagger to me provide gold can stay above $700 for a couple of years and provided they can get their starter mine working and get a decent price for their main exploration project.

Technical Analysis: Gold Chart Is Prettyh Bullish

This is probably obvious, but the gold chart is pretty bullish. Here's some bullish factors (most important in my opinion first):

1. First fibonacci broken thru and held targeting the previous high around $938.
2. Psychologically important $850 break out has been tested and held.
3. Broke thru the 50 day moving average without looking back and the broke thru, fell back and broke thru again the 200 day moving average.

Is there any thing bearish about this chart (isn't it nice to look at both sides of the picture)?

1. MACD is at the same level where the last couple of times the price peaked.
2. RSI is at the same level where the last couple of times the price peaked.
3. Still under Frank1's downward trend line up there around the targeted $938 level.

Overall, it looks a lot more bullish than most of the charts I've been looking at. Am I missing anything?

MontyHigh, http://www.worldofwallstreet.us/

FWIW: Silver Chart Breaks Two Important Fibonacci Numbers

Using the standard fibonacci-based technical analysis, silver turned bearish last night as it broke the last two fibonacci numbers targeting a retest of $8.34. Silver is a heavily manipulated market IMHO, so I don't know if standard technical analysis applies, but I am now more cautious about silver than previously.

MontyHigh, www.worldofwallstreet.us

Weekend Chartworks

Here's some charts I found noteworthy this weekend (commentary immediately follows each chart):

The US dollar trend reversal (from up to down) remains in place. I think this is the most important factor driving the markets going forward (click here for more).

Silver looks like it has bottomed and turned up. Note the breakout from the 50 day moving average which has held. It could move back up pretty quickly. Its hard to believe it as above $13 just 9 weeks ago.

Look how much the First Majestic Silver (FR.TO) looks like the silver chart. Silver Wheaton (SLW) and Impact Silver (IPT.V) have very similar charts. I like First Majestic the best because I think its better positioned to handle sustained 8$ silver than SLW or IPT (less downside), has significant growth coming up, excellent management and is big enough to be a takeover target.

Gold looks pretty good here having regained the 50 day moving average and 50% fibonacci number. The next key resistance is $840. This is really important because gaining this value makes gold up year-to-date, which is better than just about any other form of investment. The Gold Cartel will not want gold to gain this distinction. Its also important as clearing the last fibonacci number targets a run to $940. I'll be looking to trade around that $840 value. Its worth noting that things can change and technical analysis doesn't always work. A little over a week ago gold lost its last fibonacci number targeting $680.

Semafo (SMF.TO) took a hit after announcing dilutive financing a couple days ago. Its bullish that it stayed above the fibonacci, trend line and moving averages. Semafo is still targeting $C1.60.

Yamana (AUY) looks pretty good having announced dilutive financing this week without taking a hit. Its cleared its 50 day moving average and has jumped out of that ugly downward channel. This is my favorite gold major (if you call it a major) right now, but I don't own any. Yamana claims that is has a very low cost of production even with reduced base metal prices, but I haven't dug into this to see if its really true.

Agnico Eagle (AEM) looks ok having bottomed and running in an upward channel. I don't like the look of its chart as much as the other gold stocks noted here.

The Metanor chart is much improved having bottomed and broken that downward trend line and overcome its 50 day moving average. I like this stock a lot from a fundamental perspective. Management has done a good job of meeting guidance. A bunch of $C.55 warrants expire this month which could clear the way for a nice pop as the first official quarter of production comes to a close.

I'm continuing to keep an eye on Uranium. It looks close to breaking out of the downward trend line.

Well, that's it. Just a little while ago every chart I looked at was simply dreadful. Things seemed to have bottomed and seem to be moving up now in the precious metal mining industry.

Of course, everyone reading my articles should remember who I am and what qualifications I bring to my stories (click here). Also for full disclosure, I own significant chunks of most of the individual stocks discussed here. Everyone should do their own due diligence and make their own investing decisions and not just listen to some voice on the Internet.

Leave a comment with a link to a chart or two you find interesting.

MontyHigh, www.worldofwallstreet.us

Noteworthy Charts 11/26/2008

Here's the charts that seemed most interesting to me during my review today. Leave me a comment with some charts (either by symbol or by link to stockcharts) that you think are noteworthy.

The USD is still flirting with a reversal. I believe that when the reversal occurs it will probably persist all the way to all time lows. A break below 85 is what most experts I read are looking for.

Gold looks better than it has looked in a while.

Silver also looks a lot better having found support around $9 and having broken out of its channel. A crossing of that 50 day moving average would make it look a lot better.

I'm mostly looking to short the financials, so I watch SKF. Right now, the financial look like they should continue pop back up bit further.

Here's a rarity: A bullish stock chart. I don't hold any Kinross gold.

Here's something even rarer: A junior gold producer with bullish stock chart. The profile of this stock is that this is a mine reopener with great rocks (really high-grade), but which has been disappointing with its production. The chart suggests that maybe they have got the production working well. I don't hold any SanGold gold, although I'm getting tempted.

Nice Charts

Here's some charts I think are noteworthy:

DJIA and S&P broke out last week. I don't want to be short anything general anymore.
DJIA
S&P500

EXN.TO (Excellon Resources) weekly - bullish rising triangle pattern. Now at the bottom of the pattern. Good entry point, but get out if it falls out of the triangle.

GORO.OB (Gold Resource Corp) - looks like its headed to 5$. Particularly nice since it went up on no news when gold took a hit Friday.

GSS (Golden Star Resources) - A perfect example of the use of Fibonacci numbers. Bounced of the 50% fibonacci and has regained the 38% fibonacci number. GSS is now targeting $4.30, the recent high.

QUA.TO (Quadra Mining) - Nice chart if you have been holding it. Its outside of the channel on the upside. I'm planning on exiting prior to what is expected to be quite a nice earnings announcement.

SLV (iShares Silver Trust) - Friday's close would have been a decent opportunity to go long for a gap-filling trade.

TNH (Terra Nitrogen) - Woulda, coulda, shoulda entered on Monday when it broke out of that rising wedge formation.

Monty High

Short Story: RVBD, TWM (UltraShort IWM) And PEIX Shorts All Doing Just Fine

All are profitable. Got a really nice entry with PEIX at $4.07 (high for the day). It closed down 6% from there. Nice start.

MontyHigh

Mission Complete... A High-Percentage Short, HANS

The gap closed, as expected, and I closed my HANS short (see post from a couple of days ago) for a 3% gain. That's technical analysis based short-term swing trading for you. Will consider reopening the short should the low at 34.44 be taken out.

MontyHigh

Bottom Not In? Looking For A High-Percentage Short? How About HANS?

Hansen's is a Investor's Business Daily (IBD) 100 darling that has fallen on hard times. What got me thinking about them was when I saw their stuff on sale with the price cut more than in half at the grocery store. If you are a consumer that needs save a money to pay for rising gas, what could be easier than switching from Hansen's premium sodas (and energy drinks) back to good old Coca Cola? I've already completed one successful short sale of Hansen's (and dodged that pop triggered by a Goldman Sachs upgrade).

I don't know about you, but I consider everything Goldman Sachs says to be spin for their own good. You just have to figure out what their trade is. Did they give it an upgrade because they have bought all they want and now want you to drive the price up or because they need to raise cash and want you to buy their position? I vote for the latter. I consider this upgrade to be an Goldman Sach's April Fools joke.

Let's look at the chart:

The stock price broke that support around $37 today and is now going to refill the gap which came about from that Goldman Sach's upgrade on April 1. So, let's see what Bulkowski's Encyclopedia of Chart Patterns has to say about filling upward gaps in a bear market. Here's an interesting observation from Bulkowski:"Surprising findings: The largest (upward breakout) gaps occur in bear markets."

Bulkowski has several classifications for gaps. This gap fills very nicely the Area gap. Here's what he says about area gaps: "Occurs in areas of congestion (trendless markets) and closes rapidly. Volume on the day of the gap may be high but returns to normal in a day or two. No new highs (uptrends) or lows (downtrends) occur after the gap. A distinctive curl as the gap closes is a key indication of this gap type".

Bulkowski's statistics for up breaking area gaps in a bear market (which is how I would classify the current situation for both the market as a whole and for Hansen's in particular) are as follows:

• Average time to close the gap - 3 days.
• Closed in 1 week - 93%
• Closed in 2 weeks - 100%

I expect I'll do open another smallish short position on Hansen's tomorrow. I don't believe the bottom is in the for the market as a whole and I think that Hansen's is likely to find its growth stunted by consumer's trying to save money. I'll close the trade when the gap closes, I expect. My stop will be a close above $37.50.

Let me know how you think this will turn out. Or wait a few days and leave some derision if it doesn't.

Monty High

Fun With Fibonacci's: My Look At Gold

Here's my look at gold. As predicted by the much admired Investor Village's Tobinator (Toby Hansen), gold started a correction from an overbought condition (the correction started one day later than Toby's warning). Toby has been impressing folks over at Investor Village with his technical analysis, so let's see if I've picked up any Fibonacci number tricks from him.

The chart shows the first Fibonacci support at $862. After the previous advance (also in the chart, ending in November) the price dropped back to that advance's first Fibonacci support ($773) and then started the recent advance. Its this kind of situation that has got me thinking there might be something to this Fibonacci number stuff.

There's more support around the second Fibonacci ($845) as support was established by the November high ($848). Seems pretty bearish to me if it breaks this support.

Last September the RSI came back from overbought in a fashion very similar to the price movement of the last two days (Jan 15 and 16). That is, with one big down day followed by a smaller downish day. In September, the price of gold then started climbing again. If the September pattern repeats gold won't need any Fibonacci support at all.

Monty

Roca Mining (ROK.V) Cup And Handle Pattern

This post revisits an earlier post (click here) about Roca Mining (ROK.V) which touted its cup and handle breakout chart pattern. So, how is that turning out? At first, due to the recent banking unpleasantness, things did not look to so good. Yesterday, ROK.V dipped to the first fibonnaci retracement level and held. Over night it announced (click here) promising, but only qualitative, drilling results and ROK.V gapped up today.

So, what does our reference, the Bulkowski's Encyclopedia of Chart Patterns have to say about what has occurred during since the breakout? Here's a summary:

• Bulkowski defines a "throwback" as a situation where the stock price retreats back into the handle. That's what happened with ROK.V.
• Bulkowski claims that a throwback occurs 58% of the time in a bull market. So what happened to ROK.V is not unusual.
• Bulkowski claims that the average rise for patters with a throwback in a bull market is 30%. That would place ROK.V's target price at 5.07$C.
• Bulkowski claims that it takes, on average, 11 days for a throwback to reach the breakout price level. So, I wouldn't be surprised to see it take a couple of weeks for ROK to advance to a new high.
• Bulkowski recommends placing a stop 0.15 below the low of the handle which is about $2.90 for ROK.V. I conclude that the chart pattern is not broken.

At this point I'm holding (and would be adding if my position was not already overweight) until the effect of the forthcoming quantitative drill results are announced or until that fibonacci retracement level 3.12$C is broken. I'm pretty jazzed about how bullish those drilling results are likely to be.

Of course, everyone must do their own due diligence and invest their own money.