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Tactical Technician
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I like TA, and I especially like it when I'm right.
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  • Have Precious Metal Stocks Found A (Temporary) Bottom?

    I rarely day trade. I am not very good at it, truth be known, and the other reason is that I don't particularly enjoy watching stocks on a minute-by-minute timeframe. I would rather buy smaller swing positions and -- with any luck -- let the stocks do the work for me.

    Today, was an interesting one: Some people will call it "manipulation," (especially if they were short in search of the next big drop in the markets). Some may call it "manipulation" even if they weren't short.

    From 2:00 EST to 3:14 the SPY ETF went from 207.24 to 211.27. Timing is everything, apparently. One hundred and twenty million shares in that span. That's a lot of money!

    So, I continue to hold three inconsequential pharma stocks (because I like their charts), and while it would have been nice to see some activity on them following SPY's upward thrust, it is also somewhat comforting to know I have three stocks whose outcome isn't hinged on that of the markets' (even though I deem upward activity on the stock market as a good sign when I am long, regardless of my holdings).

    In my last write-up, well over a year ago, I clearly made a case that I was not, at all, bullish on gold nor their stocks. It took far too long to prove my case (and I was never short, let it be known), but eventually, gold got approximately to the half-way point of the bearish number I had laid out in my chart (my target was a minimim 1124.70 and gold's reversal was 1130.40, pretty close, I'd say).

    What is my point?

    I am not very good at calling reversals, but, maybe the markets have seen enough bloodshed with precious metal stocks for the time being. Don't take this to the bank, because my short-term calls aren't worth the time it takes to type this.

    Here is a chart of the Gold Bugs:

    (click to enlarge)

    HUI has been hovering in and around the 158.11 mark for the past seven trading days. Today (thanks in no part, whatsoever, to the Fed) we may finally have seen a key reversal. I cannot guarantee this (you will have to read someone who actually thinks gold stocks are a good investment before you go any further). It is up to you to decide.

    Then, I looked at SLW (which basically trades like an ETF) and it was pretty much the same thing (though not quite as optimistic as the Gold Bugs Index)

    (click to enlarge)

    Personally, I still think gold and silver stocks are a dumpster fire, but a) I am not above admitting I am wrong and b) I think this is as good a point as any to look for a reversal.

    ** You should also keep the bottom numbers in both HUI and SLW in mind on these two charts (just in case things go awry).**

    Tags: SLW
    Mar 18 10:02 PM | Link | Comment!
  • Gold Breaks Down From Rising Wedge

    How much longer can we expect gold's struggles to continue?

    I personally don't think the bottom is in.

    More on that, later.

    (click to enlarge)

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Dec 30 4:58 PM | Link | Comment!
  • Bottom Fishers And Gold: Patience Is A Virtue

    If the trend is our friend, I continually wonder why so many people try to buck it where precious metals and mining stocks are concerned.

    I admit, it would be great to write a post declaring the ultimate bottom is in for precious metals, and be right. Unfortunately, I would have to share my victory with hundreds (if not thousands) of other writers who -- on any particular day -- say the exact same thing. Of course, many of those writers have been saying that for more than two years, so we could eliminate them for blind-sided repetition.

    Gold is not the easiest game in town where technical forecasting is concerned, if only because outside factors play such an important role in its direction. Still, when there is so much technical evidence pointing towards more downside, I don't quite understand why so many people continue trying to time its bottom. I really think, if there was some way to measure it, we would see record numbers of people who have been "bottom fishing" gold and silver all the way down to their present levels.

    Why? Because so many are led to believe precious metals cannot fall any further. This happens at every important juncture on a severe decline (which is not to be mistaken with a pull back).

    We have all seen and read some very influential technical analysts over the past couple of years (whether it is someone trained in the art of MACD crossovers; Elliott Wave Theory; trend line or horizontal support; head and shoulders; and whatever other system so many of us use). The bottom line is none of it has worked, at least not where a true bottom comes in to play. We still haven't found our true bottom (unless someone has come up with something today worth taking a good look at).

    I remain convinced of the numbers in the following chart:

    (click to enlarge)

    In other words, the chart is telling me that $1124.70 is the minimum downside for gold, as it presently stands.

    The chart also tells me if the number above is breached for any significant length of time, $815.30 is where gold will ultimately reach.

    This is my analysis, and I could be wrong. I am not recommending you short gold, but at the same time, you should prepare yourselves for a worst-case scenario as to its direction, which is decidedly down.

    (click to enlarge)

    I can hear the arguments already: Look at the support, not only horizontally, but also on those two trend lines.

    Okay, but have we not been seeing enough trend lines and enough horizontal support broken, already?

    Of course we have. If that weren't true, we wouldn't be where we are now, would we?

    Let's take a look at the trend line breakdowns:

    (click to enlarge)

    How many trend line breakdowns does a person need to see before realizing playing them has only been successful on a small percentage of occasions?

    (click to enlarge)

    This is not an exercise in telling you not to buy gold, but I really don't care about the Fed, Bitcoins, QE 2, JP Morgan, or the Comex.

    Patience might be your greatest virtue if you want to invest in precious metals.

    Tags: GLD, GDX
    Dec 20 8:02 PM | Link | Comment!
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