Pro Stock Pickers'  Instablog

Pro Stock Pickers
Send Message
We focus on trading strategies that have historically given traders a significant edge when it comes to investing in the stock market. We have worked under and have been trained by some of the top investors of the past 25 years including WILLIAM O’NEIL(bestselling author and founder of investors... More
My company:
Global Chart Analysis
My blog:
Better Stock Entries
  • Why Jim Cramer Is Wrong On Goldcorp (GG, GLD) 0 comments
    Jun 1, 2011 3:32 PM | about stocks: GG, GLD

    When Jim Cramer stated that he has been recommending 10-20% of your portfolio should be in gold he also mentioned that the stock GG should not be down on a day like today(June 1).  We say of course it should be down.  In our mission to help investors and traders sort through all of the meaningless data and opinions that they listen to everyday and enter and exit into positions profitably, we felt this was a good opportunity to discuss where 90% of portfolio managers and individuals in the market get it wrong.


    GG is down on a day like today for a couple of very simple reasons and they are all based on understanding  the tools one should use to trade with over the short term, technicals.  Let's take a look at the chart of GG above.

    One can see GG had a big run followed by a heavy volume selloff through critcal support at the 50 day moving average level.  This was followed by a lower volume bounce off the next obvious area of potential support at the 100 day moving average level.   This bounce lasted 2 weeks and ended this run up 5 days in a row.

    Experienced traders know that stocks don't typically go up more than 5 days in a row without taking a breather and even if they do the longer they run, the more likely they are to get caught up at technical resistance levels.  We also saw one of our short term  trademark reversal patterns on May 31 where a stock hits and obvious resistance area, reverses off the new highs only to close at or below the open for the day creating a large reversal body on the chart. This is normally a red flag and we can point to countless examples where this has happened.  Once an area such as the 50 day moving average is breached and a bounce occurs it is very common for that old support to turn into a point of reference for further profit taking and selling pressure as well as a place where shorts add to their positions.  Odds favor this happening a majority of the time and this is what is going on here today.

    Remember, trading using fundamentals or opinions over the short term can lead to severe damage to your portfolios.  If you must use fundamentals or a story as a backdrop for your investing this is fine but please use the technicals (technical analysis) to tell you WHEN you should be buying and WHEN you should be selling.  This will supercharge your portfolios performance and let you understand why stocks behave the way they do on days like today.










    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Stocks: GG, GLD
Back To Pro Stock Pickers' Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers


  • NVDA is still running and up 36% from our Oct 13 entry point. Could hit $18 area but will most likely take a breather there
    Dec 7, 2010
  • Liking our DIN setup from this morning. Will look to lock in a quick 2 points on 1/2 positions and move our stops to breakeven to let it run
    Dec 7, 2010
More »

Latest Comments

Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.