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Jeb Handwerger
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Gold Stock Trades Editor Jeb Handwerger is a highly sought-after stock analyst syndicated internationally and known throughout the financial industry for his accurate and timely analysis of the equities markets, particularly the metals and mining sector. Subscribe to his FREE Newsletter right... More
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  • Silver Leading The Precious Metals, Gold Silver Ratio Could Go To Historic Average

    Point and figure charts are one of the oldest and purest charting methods in the field of technical analysis.  Point and figure charts are not commonly studied and practiced by technicians today as in the past.  However, I use it as a simple indicator of areas of supply and demand and to indicate new trends.  Warren Buffett said, “There seems to be some perverse human characteristic that likes to make easy things difficult.”  Especially in the field of technical analysis, analysts seem to love making complex formulas when in reality it is completely unnecessary.

    Point and figure charting is a simple method of plotting price alone.  It helps the chartist understand support, resistance and specific congestion areas.  Congestion areas are areas of price where there was a previous battle of supply and demand.  Often times when the price reaches this area it is difficult to break through. However, when the breakout does occur a major move begins.   These charts are excellent at identifying specific price and relative strength breakouts.

    Silver has just made a triple top breakout which signifies a possible major trend higher.  Triple top buy signals are very powerful and hint at a move higher.  Unlike bar charts projections are based on a horizontal count rather than vertical.  This silver triple top breakout which may occur shortly could initiate a rise to $27.  This target is also confirmed by the bar chart analysis which I showed on Sunday’s update. On the point and figure relative strength chart a breakout has already occurred.

    Usually relative strength breakouts precede price breakouts and confirm the move higher.

    Never in history has the gold to silver ratio been so high and a reversion to the mean could mean a significant move in silver.

     



    Disclosure: Long Silver and Silver Mining Stocks
    Sep 06 11:51 PM | Link | Comment!
  • Silver Price Breakout Suggest Demand As A Safe Haven Asset
     Silver had very powerful break out today as investors are seeking assets that are safe and will retain value during a debt crisis.  Silver is  seeing demand at these price levels as it is historically cheap relative to gold.  If the ratio came down to the levels it was in 2006 it would be close to $27 an ounce.  Silver is soaring because investors are realizing this is a hard asset, it is money and it is historically cheap compared to gold.

    Gold has reached overbought conditions from my July 28th buy signal.  Right now gold is a bit overbought while silver is at an interesting buy point, having found support for the fourth time at its long term 200 day moving average.  Today’s breakout of the symmetrical triangle, a very bullish chart pattern, is a sign that silver has built up a lot of internal strength and could break out into new three year highs. Remember, silver is significantly below all time highs while gold has already broken into new highs.

    While I am bullish on gold, I believe investors could see a higher percentage move in silver.  I have also alerted my readers to a specific  mining company which has recently found a major discovery in Mexico.  Pure silver discoveries are very rare.  Silver supply is mostly produced as a byproduct which makes supply very inelastic.  A new pure silver discovery in a silver bull market could receive a nice premium.

    I believe silver will make a major move on this break out. Investors are looking for a safe haven, protection and value in silver.  Gold has already made a significant move and is quite overbought, while silver has not participated to the same extent.  The gold silver ratio should move to historical norms which could mean a major move for silver.

    If you do a study of the point and figure chart of the relative strength of silver versus the S&P500 since 2001, its strong uptrend is apparent. Each time silver falls back into support, it breaks out and makes significant rallies.

    The break above the red bearish resistance line and a double top breakout coupled with the daily chart symmetrical wedge pattern demonstrates that silver has reached a critical juncture and could make a nice move.



    Disclosure: I am long gold and silver mining stocks
    Aug 25 3:12 PM | Link | Comment!
  • Update on S&P 500 and Gold
     This is an excerpt of what was sent to premium subscribers before the Fed Meeting. 

     

    This was sent out to premium subscribers this past Sunday.

    The S&P 500 had an exciting and volatile week. It started the week gapping up and ended the week filling the gap as I predicted. On Monday, I told premium subscribers that the market closes gaps and does not like “vacuum” areas. On Friday that gap was closed due to

    the negative jobs report. The 200 day and the top of Monday’s gap acted as support and at the end of the day reversed higher.

    The S&P 500 is overbought and there are some key levels we need to look at this week. If SPY breaks $113.25 on high volume, it would lead me to reverse my bearish bias. If it breaks down below the 200 day and breaks the bottom of Monday’s gap, which is $110.75, it will provide another short opportunity. I believe the odds are in favor of the latter, a breakdown, as there are signs of decreasing volume on this rally and overbought conditions as well.

    My goal in this newsletter is to protect reader’s portfolios and provide highly rewarding trades while limiting downside risk. There are occasional periods, such as now, of very negative market signals like high volume sell offs, death crosses, the breakdown of leading stocks and a break of higher lows. This is the first time I have encountered these signals since 2008. I recommended getting out of the U.S. equity market then. I managed to protect my assets as well as the assets of my followers and I am, again, recommending that now. I cannot claim prophecy, but I have studied history and I do see the warning signs that all traders must be aware of. This tactic, though

    imperfect, protected me from the 2008 bear market when many people were wiped out. No method is foolproof, but it is crucial to have a trading plan and a clear set of rules.

    Over time, you will see that discipline and persistence lead to exceptional performance. You can always buy back in when the conditions are more favorable, but when there is risk and negative signs you need to watch out. As time passes, it is clear that it is worth the risk of being “whipsawed” out of the market and being compelled to buy back in at higher prices rather than taking a substantial loss.

    Last week our stop was triggered on the SPY short. I will update this week when key levels are broken to the upside or downside. Stay tuned.

    Gold Reaching Resistance at 50 day Moving Average

    My article from July 27th, which was published on major financial websites, stated my opinion at a time when many analysts soured on gold.  You can check out my archive on Kitco.com or my blog at goldstocktrades.com for further review.  I mentioned that gold has come to long term trend support, a 50% fibonacci retracement coupled with an oversold condition.  Instead of selling, which many analysts were recommending, I upheld that it was at an important buy point.  

    Since that day, GLD has rallied sharply up to its 50 day moving average which is now acting as resistance.  Clearing this may take some time.  Be prepared for a temporary pullback.  Gradually, over the next couple of weeks I do expect it to clear the 50 day moving average and the key resistance point which is $119.20.  Momentum is on the bulls’ side now as the MACD shows an important crossover from an oversold position.  RSI has moved above 50 which is a sign of strength.  I would like more volume to come in as the Fed will need to make some easing adjustments in the next week. These developments should be good for gold and silver.  

    To subscribe to my free newsletter for timely updates visit my website at http://goldstocktrades.com.




    Disclosure: LOng Gold and Silver Mining Stocks
    Aug 11 12:34 PM | Link | Comment!
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