Precious metal Review

We've had a few posts on precious metals, especially when they were crashing: precious metal support  and gold support . 

We wanted to review a host of precious metals that we follow.  As we're written in this blog and in our newsletter for years now -- for us gold is meant to be bought at support and not at breakouts (as opposed to tech for example).  

ABX held on the 200 SMA and can be bought on any pullback with stop on 200 SMA break.  First target is the 50SMA.

 As we posted real-time on StockTwits today we entered AEM swing at 69.77.  We think it can do 74.  Our stop now has been moved to break of 71.

 ANV fantastic price action -- note how buyers never even let it hit the 200 SMA and it's nearing new highs.  Too extended for us but we'll definitely pay attention on the next support cycle.

 BVN went through the 200 SMA but held on the longer time-frame ascending trendline .   Today it broke up through descending trend-line and looks good to go to at least the 50SMA.

 Our mistake in silver stocks was wanting too deep a pull-back.  Buyers snapped these up before our support got hit.   Note how 100 SMA held on CDE ( we wanted 21).

 EGO held right on support. 

 We would have picked up EXK aggressively on the 200 SMA but alas the daily support held -- very nice bounce and through the 50SMA.  Too extended for us -- we'll have to wait on this one.

 GDX went through on daily 200 SMA, and not much of a pattern here but...

As you can see, perfect weekly bounce on the 50SMA.  Very nice follow through and we bet there are many stops under that 50SMA.  That's the line in sand for gold position traders. 

GDXJ very clean hammer on the 200 SMA -- acts even better than GDX and has our full attention. Today it broke the trend-line and looks like an easy trip to at least the 50SMA above. 

 GLD undercut support and now has stopped at the 100SMA -- we were too cheap here wanting just a few more points downside before getting in and missed the boat.

 Through trend-line today and looks good to go for 50SMA visit.

 HL very nice clean bounce on support and 100 SMA.   The 50SMA above now will most likely slow down this bounce.

IAG very impressive chart here -- big break of trend-line on weekly.   Very impressive.

 Another impressive name here in the sector -- note how strong the stock held as the sector was hit in early Jan.  

 For the most part silver held support much better than gold -- MVG's 100 SMA was like a wall, now taking off.  Should see 50SMA easily.

 Our least favorite stock in the sector due to how messy/edgeless it is but worth watching because it's a significant portion of GDX.

 NG through trend-line with no problem today.  Nice clean chart.

 PAAS didn't hit our 200SMA level and instead bounced on daily support. Today paused at 20SMA.

 We dislike RGLD probably as much as NEM.   Messy chart, no clean edge.

 SIL is good to watch as silver miners ETF.    Held daily support -- and big bounce but watch for it to at least pause at the 50SMA.

Held daily support and didn't make it to our deeper 24.5 number -- very loved sector.  Through the 50SMA today and looks like it wants more.   We're seeing a lot more momentum and love in silver than in gold.  

Our favorite stock in the precious metal sector -- bounced on daily support and now heading to the 50SMA. 

SSRI also held support and didn't make it to the 200 SMA -- for the most part there were too many buyers like us who were waiting for support triggers and when that happens often the stock reverses just short of the level you're stalking.  It also is evidence of how liked the sector still is among traders.

Bounced on daily support but now should at least pause at 50SMA.  Too extended for us to get involved but great price-action off the bottom and one we'll definitely watch in the near future. 

What's going through our head

Update:  after the close our usual scans actually came up with a decent list of alerts (as opposed to when we wrote this post earlier today).   As always, if they set-up tomorrow, we will be involved.  But we will keep things tight and will be in pure-daytrade/ hit and run mode as we wouldn't be surprised to see alerts hit, get initial spikes up, and then see an intraday reversal.    As our readers know well -- No matter what our opinions we will always defer to our alerts and our set-ups. 


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There's lots of stuff that's been going on in our head these last few days and we've touched upon a few of the subjects on Stocktwits and in our Newsletter but here's a quick summary.


First of all, and the biggest red flag of all, we basically have no good alerts left.  We have a few we're stalking but usually our lists are much more full.   The HCPG-alert indicator has proved its worth to us over the years and we rely on it heavily.   When we have no alerts, we feel no edge.  

On to more specific subject matter:

The USD is against major support.  Support of course can always be broken, and this one looks like it might, but usually what happens when you hit support as established as this one is at least a feeble bounce, be it dead cat or not.

 We posted this one a few days ago and nothing has changed -- against massive resistance while USD against massive support.  In our experience that is not a recipe for good risk-reward long.

There are many more examples of sectors hitting major resistance (including SPX itself) but let's end it a look at the Trannies which also are heading into major resistance from a massive move from the bottom. 

As short-term traders however we are always open to possibilities, as unlikely as we think they will be -- and the one we have to keep at least in mind is the USD breaking down through support without any bounce sending the market, and especially commodities,  ripping through resistance.   We think this is unlikely and if it does occur we have no problem underperforming for said time period.    We've survived and prospered in this business for over 14 yrs by not trying to catch every tick, but by entering positions in which we saw good risk-reward.    Our feeling is that when we have to think so much about everything instead of it being automatic, it means it's best to chill. 

We had no triggers today from our newsletter (a rare event) and spent the day in scalp mode around ES_F, NQ_F and SI_F which is what we usually do when we have no stock alerts to focus on. 

 On an additional note:  we have a new affection for silver due to how clean and technical the moves have been lately.  We noted late last night that SI_F was against the 50SMA and had travelled a long way -- it promptly reversed from that point on but still above the trend-line.   A move over the 50SMA most likely would gather some momentum.

Precious Metal Spots

Out of all the commodites we trade we probably are the most careful when we trade precious metals.   We pick spots we love and if they hit, great, we take the trade.  If they don't, we don't get involved and focus on other sectors.

Here are some support long trades we're interested in -- on average they're around 7% away.  Maybe they'll get hit, maybe they won't, but we will not get involved early (i.e. before they trigger).  Buying the FIRST test of major support in oversold panic dives down is one of our favorite strategies.

Edited -- added two gold trades that are ready right now.   Silver we'll still wait on (even though we imagine it will bounce with gold). 

We will definitely get involved, for a trade, on GLD 124 long.   Quite a bit away, but again, for us the edge is there and if we don't get our trigger, we won't be involved.


Note how trend-line, daily support and 200 SMA all converge near the same area -- exactly what you want for a support trade.

Update:  a few of the gold miners look like they want to bounce.

AEM holding on 200 SMA -- decent risk reward here long. 

GDX oversold into 50 SMA,  like it right here right now for a trade. 

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First test of SLV 24.5  (SI_F 25) should be good for a trade.    

CDE 21 we like.

EXK at 5

HL at 7.5

PAAS at 29

SLW at 28.4 area

SSRI at 21

The more stocks in the same sector that hit support simultaneously the higher the chances the support will hold.   Many of these are around 7% away -- if we can get a number of them to hit support on same day, while in oversold status (we don't like basing above on daily) then we will get involved aggressively.

This post is supported by scrap gold

Bulls and Bears: Market Talk

We're wary of breakouts but at the same time we're still interested in buying support:  by saying that it means that we're assuming market will go down more but it won't experience a straight out rout.   We're still seeing some rotation, mostly into the stodgy more conservative sectors (take a look at Dow Jones versus Russell for example of this rotation from high beta to low beta).

Let's start with the bull case:

Nothing wrong with SPY technically here as it seems to be digesting the huge move and still above all major moving averages and firmly within a bull trend.   

Whether you trade it or not as a trader you can't deny the importance of GE as it has a finger in many different types of business.  Stock is booming. 

Semis have given back a bit of exuberance but still firmly in the bull territory.    

The financials also are off their highs but still looking pretty healthy technically.

The Dow looks great -- symbolic here of safety over momentum as many stocks in the index are holding strong (for example CAT CVX DD DIS GE HD IMB KFT MMM PG UTX WMT XOM).

Now let's take a look at the bear case.

FCX is one of our favorite tells for the last few years as commodities have led this market.  Unless this relationship has changed this is a huge red flag for overall market.

FCX broke through the 50SMA and looks like it's heading to retest the 100 level and to be stuck in range for a while.

China has been underperforming for months and still can't find a bid.   

The Russell shows more the true nature of what happened last week (at least on stocks that most traders like to trade) as it got spanked hard.  We think that the 50SMA is going to flatten out here and we'll be stuck in a range without making new highs intermediate term. 

Trannies are also another great tell that we always watch -- same thing here as the index barely got a bounce on the 50SMA.   Look for it to flatten out and possibly break as a new lower range is carved out for the intermediate term. 

KOL also flattening out on the 50SMA and we expect coal stocks to be dead money for a while. 

GDX hit major support and managed a small bounce. We're out of our gold bounce names now and will be watching this sector for deeper support levels (still quite a bit away).

And last but not least:  AAPL earnings really could not have been any better.  Has there ever been a company this big with this type of growth?   And what did traders do?  Sell it, and then sell it some more.

AAPL most likely will be dead money for a while even though we would be surprised if the stock turns out and completely rolls (quite possible it tests the 300 level though).  We'd be buyers of the 280-285 level which would be a 15% hair cut from here.  Asking for a bit too much?  Most likely, but that's where we see the best edge.  

Too mixed a scene for a new bear market, thus far anyway, but also too many cracks in the foundation for this to be a short-term (i.e. one week) pullback. We believe there will be a rotation into more boring, stodgy stocks (we're scanning through medical appliance stocks for longs!) while high-beta momentum tech and commodities chop around trying to find a new range. 

So how are we trading this?  A few longs, a few shorts, and some decent commodity support levels coming up.  Everything pretty short term and taking it one day at a time with no big bets either way.  We'll go through the sectors every weekend to come up with clues on near-term (the only timeframe we care about) direction.