Wednesday, September 16, 2009

Market Talk


Again an up day with many opportunities (best one being RL 70 from our newsletter last night for almost a 5 point move) but on the whole a chopper session. We like this gap fill area as the medium-term destination for the SPY and think that SPY 110 will represent a short-term top for the market.

Tuesday, September 15, 2009

Today's triggers


WLT 63 good for 1% before reversal. Note that with the exception of RIG the commodity alerts worked but all eventually reversed. Commodities need a rest and any pull-back now would be a positive.

Not a coincidence that the best mover from our list today was a non-commodity stock. SOHU 66 very nice move for almost 2 points.

RIG 83 reversal for a loss

Good for 1% trade on MEE before reversal.

Great set-up on AKS at our 22.5 spot for a 2% win.


Again, solid action today on the triggers with small losses on RIG reversal and wins on AKS MEE SOHU and WLT. However, note that reversals were the norm in the commodity stocks and this could signal a short-term top in these names.

Update: reversal up for our commodity names; choppy action (USO looks like V). The more extended the commodities, the more choppy the price-action. Expect more going forward.

Monday, September 14, 2009

Today's triggers

BTU 37.25 alert worked for almost 2 points.

CNX 43 worked.


ESV didn't do much at 41

RIMM worked well on our 80 alert spot.


A ridiculously easy bull market in which one can buy any dip, any time. How long will it last?

Sunday, September 13, 2009

Buy on the dip


As most of our readers know we are primarily break-out traders. However when it comes to certain type of stocks we prefer to buy the dip rather than the rip. Note on the following chart of the gold miners -- after the initial break-out support was bought but also when investors got excited and the metal became extended in price the opening gap was sold.

We see this happening also on an intraday basis and are buying gold on dips to ascending EMAs.

Right now the best action is in gold stocks (not in terms of the stocks going up every day but rather obeying technical rules and bouncing where they are supposed to on a daily and intraday basis). Until this changes, whenever that may be, gold stocks will be our focus.

Wednesday, September 09, 2009

Gold support


We got some nice support zones for day-trades today on some of the gold stocks but are looking at more important support zones such as GDX 42 for swing-trades.

Monday, September 07, 2009

China and Gold

The following article explains fundamentally what we're seeing technically -- every dip in gold is being bought and the volume of the recent break-out is excellent. A long time ago we wrote "Chart Patterns are nothing but Footprints of the Greenbacks" meaning that all we do as technical traders is try to follow the tracks of instituational money; hoping to ride on its coat-tails, and ride the wave of momentum up and down. If China is buying gold on dips, it's safe to say that it's not a bad idea for the individual traders to do the same -- as long as it fits within valid technical parameters. Any pull-back to the break-out areas (or even pull-backs on minor support areas on the 60 MIN charts) would make us long.


http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100000821/china-bernanke-and-the-price-of-gold/

Ambrose Evans-Pritchard

Ambrose Evans-Pritchard has covered world politics and economics for 25 years, based in Europe, the US, and Latin America. He joined the Telegraph in 1991, serving as Washington correspondent and later Europe correspondent in Brussels. He is now International Business Editor in London.

China, Bernanke, and the price of gold

China has issued what amounts to the “Beijing Put” on gold. You can make a lot of money, but you really can’t lose.

I happened to see quite a bit of Cheng Siwei at the Ambrosetti Workshop, a gathering of politicians and global strategists at Lake Como, including a dinner at Villa d’Este last night at which he listened very attentively as a number of American guests tore President Obama’s economic and health policy to shreds.

Mr Cheng was until recently Vice-Chairman of the Communist Party’s Standing Committee, and is now a sort of economic ambassador for China around the world — a charming man, by the way, who left Hong Kong for mainland China in 1950 at the age of 16, as young idealist eager to serve the revolution. Sixty years later, he calls himself simply “a survivior”.

What he said about US monetary policy and gold – this bit on the record – would appear to validate the long-held belief of gold bugs that China has fundamentally lost confidence in the US dollar and is going to shift to a partial gold standard through reserve accumulation.

He played down other metals such as copper, saying that they could not double as a proxy currency or store of wealth.

“Gold is definitely an alternative, but when we buy, the price goes up. We have to do it carefully so as not stimulate the market,” he said.

In other words, China is buying the dips, and will continue to do so as a systematic policy. His comment captures exactly what observation of gold price action suggests is happening. Every time it looks as if the bullion market is going to buckle, some big force steps in from the unknown.

Investors long-suspected that it was China. We later discovered that Beijing had in fact doubled its gold reserves to 1054 tonnes. Fait accompli first. Announcement long after.

Standing back, you can see that the steady rise in gold over the last eight years to $994 an ounce last week – outperforming US equities fourfold, even with reinvested dividends – has roughly tracked the emergence of China as a superpower in foreign reserve holdings (now $2 trillion).

As I have written in today’s paper, Mr Cheng (and Beijing) takes a dim view of Ben Bernanke’s monetary experiments at the Federal Reserve.

“If they keep printing money to buy bonds it will lead to inflation, and after a year or two the dollar will fall hard. Most of our foreign reserves are in US bonds and this is very difficult to change, so we will diversify incremental reserves into euros, yen, and other currencies,” he said.

This line of argument is by now well-known. Less understood is how much trouble the Fed’s QE policies are causing in China itself, where they have vicariously set off a speculative boom on the Shanghai exchange and in property. Mr Cheng said mid-level house prices are now ten times incomes.

“If we raise interest rates, we will be flooded with hot money. We have to wait for them. If they raise, we raise.”

“Credit in China is too loose. We have a bubble in the housing market and in stocks so we have to be very careful, because this could fall down.”

Of course, China cold end this problem by letting the yuan rise to its proper value, but China too is trapped. Wafer-thin profit margins on exports mean that vast chunks of Chinese industry would go bust if the yuan rose enough to close the trade surplus. China’s exports were down 23pc in July from a year before even at the current exchange rate, and exports make up 40pc of GDP. “We have lost 20m jobs in this crisis,” he said.

China’s mercantilist export strategy has led the country into a cul-de-sac. China must continue to run its trade surplus. It must accumulate hundreds of billions more in reserves. Ergo, it must buy a great deal more gold.

Where is the gold going to come from?

Friday, September 04, 2009

Triggers for Friday: target trades


For today's newsletter we had written, "Not a clean spot but we'll buy CF on strength for a trade to at least 85.5" and CF set-up base and break at 84 and 85 for a good run.



From last night's newsletter: "AGU target trade to 50 on any Ag-Chem strength" Very nice target trade to resistance.

Thursday, September 03, 2009

Triggers from yesterday's newsletter


PAAS 21.5
KGC 21

GG 41

AEM 63


ABX 39


All our precious metal triggers grinded higher during the day-- as far as break-outs go these last two days in the precious metal sector have been golden.

Profits on Gold

We posted our entry in AEM GDX yesterday and thought it would be considerate to do the same for the exit -- we added to both names this morning (and a few others that were posted in last night's newsletter including ABX GG KGC PAAS) and now have taken our exit.

Wednesday, September 02, 2009

Free Newsletter

We discuss some of our core strategies in our newsletter tonight -- if you want a copy send us an email and we'd be happy to send it to you.


info AT highchartpatterns DOT COM

All eyes on Gold


Great high-volume move on Gold stocks today (thus far anyway -- we're writing this at 12 PM EST). We're long GDX and AEM and will swing them both if they close well.

Support Buys




Two support buys from our newsletter for Tuesday and Wednesday -- Circles represent the buy spots posted in our newsletter

Monday, August 24, 2009

Benign Trading Environment

Easy set-up on our AMP 30 alert from this weekend.

Base and break on CF 83 - one point under our spot ( most common place for base and breaks)

COG went from our spot near the open to R1 before reversing.

CTSH 35 failure
Very nice set up on EAC 38 from last night's alert

MS 30 went near the open.


VLO 19 finally broke-out



Friday, August 21, 2009

Triggers











Some good opportunities from last night's list -- here is everything that triggered from yesterday's newsletter (arrow was buy spot). We apologize for the lack of posting -- it's late summer and we're taking it easy. Expect more regular posting come September.


Tuesday, August 04, 2009

Today's triggers--excerpt from tonight's report



Volatile move in ICE today -- here is our trade in it: The stock gapped down along with the market but then started a fast run for resistance at 98 -- at that point we were wanting to get in but were hesitating because of the gap-down (in market and in the stock) and the lack of any base. The stock broke resistance (a) and we waited for an entry to the EMA. We bought a half position (b) near 96.5 on the pull-back and bounce on the EMA (even though EMA was not ascending, thus the half position) and watched. The stock rallied to R1 but couldn't take out 97.5 and quickly reversed down back through the EMA thus stopping us out at 96.

A good example of why you don't want to be in the stock once the EMA is broken. We can live with the 50 cent loss we took, that's just part of the game, but we would have been livid with ourselves if we had a multiple-point loss on this trade. Losses are a natural part of the business, it's only when traders go in denial over what they see in price-action and refuse to take the iniital small loss that you get a real hit/blow-out.


JOYG very nice base and break at 39.7-39.8 with an add at 40.


RGLD 42.5 worked.

WFC set up well at the daily spot of 26 even though entry could have been anywhere over 25.8 as the stock was rising over an ascending EMA:


Giddy market continues up -- stay long until the music stops.

Update: small market reversal after writing this post and another trigger FWLT (24) which unfortunately hit our spot after being mentioned by an analyst on CNBC.

Market acting more tired but refusing to pull-back in any significant manner.

Monday, July 27, 2009

Meat and Potatoes



We had listed MR 30 on our newsletter for a while now and today it finally broke out. The volume was good and the set-up was excellent. Let's go through it with some more detail:

At point A the stock approaches the 30 resistance spot but the angle of ascent is too vertical and the stock reverses. The stock then bases and digests the move before approaching resistance again -- at this second attempt (with its excellent relative strength and volume) it was a buy (point B) with a stop under the basing level near 29.8. At point C it was a good idea to take some partial profits on the quick pop up. The stock then reversed back to the break-out point but did not break the EMA. Note how it then proceeded to coast along the ascending EMA until it finally popped again (point D) in which further profits should have been taken. Note how the ascending EMA rides up with the stock and the stop on the remaining shares trails up with the stock.

This is a perfect example of a break-out trade using our system in the current market. We'll be posting more trades like this in the future for readers curious on how we trade.

Update: the stock reversed back to the EMA and broke it -- that was the signal to exit remaining shares (unless swinging in which case you would have a stop under 30).



Thursday, July 23, 2009

Market Talk


This is the most bullish action we've seen in a long time in terms of break-out trading. We've had over 12 alerts work for over 1% (and many in the 3-4% range) from last night's newsletter including:

APD 70, FCL 33, DD 29, INFY 41, MON 82, ACL 124, AGU 42, ANR 33, etc.


With the break-out of SPY today (assuming we close well) SPY could easily hit 100 sometime next week. We've had many positive days in a row (12 for Nasdaq) and any pull-back would be a good buying spot.




Wednesday, July 22, 2009

SPY talk


As we wrote in our newsletter the run up from 88 to 96 is too vertical for us to have conviction in a SPY breakout over 96.11 but it we can base above the 50 SMA for a while this will be an excellent long pattern. If the bulls press their luck and try to break-out in the next few days the break-out will either be weaker or fail. Bull or bear -- we need a pull-back or at least horizontal movement to digest the gains.

The buying frenzy continues




The bulls aren't giving an inch to the bears and as long as this continues we'll be buying the break-outs.

Here are two that have already broken out from last night's newsletter -- both also set-up very well intraday.