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Michael Noonan Edge Trader Plus Michael Noonan is the driving force behind Edge Trader Plus. He has been in the futures business for 30 years, functioning primarily in an individual capacity. He was the research analyst for the largest investment banker in the South, at one time, and he... More
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  • Gold And Silver - All Eyes On China And Gold When Silver Could Be The Tipping Point.

    Saturday 22 February 2014

    incense - [noun] an aromatic substance acquired from certain
    resinous trees with
    aromatic biotic materials which release fragrant
    smoke when burned. The odor
    produced from smoke is not the
    incense, but the substance that is burned.

    Fundamentals for gold and silver have become the incense of reality
    for Westerners. The primary focus is on how many tonnes of gold
    China has been importing for the past many years, the depletion of
    available stocks from the central bankers straw men, aka the LMBA
    and COMEX, the number of coins sold by various governments to the
    public, [a relative drop in the bucket, but its reporting has a
    sensation factor], etc, etc.

    We address this via charts as the best source for market pricing information, particularly citing an example in silver. As a note to
    anyone not overly familiar with charts, or even turned off by them
    for lack of understanding or appreciation, we can tell you that the
    markets are full of logic, and we use charts as a reference to explain
    how any market will develop in a logical way, [never random for
    those who mistakenly believe markets are such], and how that logic
    can be put to profitable use.

    All of the collective fundamental factors are important, and they are
    the underpinning for the future performance of the PMs, [Precious
    Metals]. They are the substance, but the smoke they are producing
    is clouding the sense part of the incense. Westerners see all the
    smoke and expect a hand-to-eye coordinated effect in the markets,
    in the form of higher prices, and therein lies the rub.

    For Westerners, and truest of Americans, gold is all about its price.
    Price, price, price. "What is the price of gold, today?" "Where is
    today's price relative to the highs of a few years ago?" Then there
    is the ultimate question, "When are gold and silver going to take
    off?"

    Gold, in particular, does not have the same sense of importance for
    Westerners as it does for Easterners, mainly China, India, Turkey,
    parts of the Middle East. The elites, born from the Rothschild
    dynasty, through their central banks have manipulated not only the
    price of gold, but also the minds of the masses as they [do not]
    relate to gold.

    Once the moneychangers, [we use various names, but they all reflect back to the always clandestine Rothschild-created group that has
    been in control of the Western world money supply, and by extension, Western governments], once these moneychangers
    bankrupted and gained control of the United States, they directed the
    American proxy-puppetmeister, Franklin Delano Roosevelt, to shut
    down the banking system and reopen it under total control of the
    elites.

    What came next? The deceitful scheme of confiscating gold from
    Americans, addressed in previous Commentaries, [See NWO
    "Problem-Reaction" Ploy
    , paragraphs 1 - 4, and 13 - 15, as a recent
    example]. Consequently, the central bankers removed gold from the
    public both physically and psychologically. Most Americans alive
    today have never even held or touched a gold coin, so it has no value as a money-related substance. "Mission Accomplished" for the elites
    in ridding its only competition to its paper fiat Ponzi scheme.

    For Easterners, gold has always been a part of their lives, and they
    respect PMs as a store of value when all else fails. The price of gold
    for Easterners? It does not matter. Owning it is all that counts, and
    they keep buying and holding gold irrespective of price. Families
    are known to keep it for generations.

    The point to be made is Western focus is on the smoke produced
    by the incense, and that, in turn, affects the common sense in
    recognizing the importance of owning, holding, and the ongoing
    acquisition of PMs, not because of its price, but for its historical
    relevance as the most effective antidote to fiat currencies, every
    one of which has totally failed.

    The foreign-owned Federal Reserve central bank issues fiat Federal
    Reserve Notes, [FRN], which the Fed deceitfully calls "dollars. FRN
    are commercial debt instruments, in law. If you know nothing else
    about money, know this: debt can never be money, yet Americans,
    indeed the world, has been tricked into the belief that FRN are
    money. A belief about reality does not mean the belief is true.

    It is difficult to stay on point when there has been so much deception
    by the elites over every aspect of life in the Western world. Making
    one point, the importance of gold for example, has so much
    deceptive background about which few Americans are aware, some
    of what if said does not make sense unless and until one becomes
    aware of the deception that has been ongoing, not just recently, but
    since the time when America gained, [what almost all do not know
    was temporary] independence.

    If more people realized the importance of owning physical gold and
    silver, relative to holding worthless fiat paper, they would be better off, but that is not going to happen. Even within the PM community,
    the focus is on how much one paid for their gold and or silver,
    relative to what the price is today.

    The price is where it is today because it has been purposefully
    suppressed by Western central bankers to keep the "dollar" alive as
    the world's reserve currency. Destroy that, and gold and silver do,
    which is why PM are so despised by central banks, competing
    against their paper enslavement scheme, and the Western banking
    system collapses. The central bankers will not allow that to happen
    until they have destroyed every fiat currency, first, and along with
    that destruction, the "value" of whatever people hold in paper form:
    cash, stocks, bonds, pensions, etc. It is in process of happening and
    has been for decades. Right now, events are leading up to the final
    phase of the dollar to undergo severe devaluation.

    People are focusing on the price of PMs, treating gold and silver as
    vehicles for increasing in price relative to their cost of purchase. It is
    the reason for buying and holding gold and silver that matters. As a
    consequence, attention is paid to what people think should happen to the price of gold and silver, and not on the reality of what the
    artificially suppressed market is showing.

    For that reality, we turn to the charts because the very legitimate
    fundamentals that will ultimately drive the price of gold and silver
    are not a barometer for the timing of any future price increases.
    Plain and simple, gold and silver will not increase in price until the
    socialist/fascist central planners and their puppet governments have
    confiscated as much wealth as possible from the masses, leaving
    many destitute.

    Know this: It does not matter what you pay/paid for owning physical
    gold and silver. Price is temporary; physical is permanent.

    We caught an early portion of the rally in silver and gold but exited
    prior to the larger gains of the past week, or so. It has been
    frustrating to be on the sidelines, but it never pays to "chase" a
    market. The results from Trade Recommendations for February have
    been great, so far, and none this month's recommendations were
    derived from trying to catch a rally already underway, as in gold and
    silver.

    No matter what phase a market is in, there will always be set-up
    opportunities that offer limited risk and a higher probability for a
    successful outcome, and that will also happen for gold and silver.
    As ongoing buyers of the physical, we are not too concerned about
    missing a rally or two in a down trending paper market. It is critical
    to know that one should always make decisions about the reality of
    a current market and not what one may think will happen in any
    given market.

    The weekly gold chart is a simple one. A red flag is in effect based on the increased volume and the very small weekly range that resulted. The message from the market for this specific situation is that the
    increased effort on the part of buyers was met, even overcome, by
    sellers who prevented buyers from extending the range more to the
    upside. The daily shows more detail.

    GC W 22 Feb 14

    Charts are replete with information about past activity and how it can possibly influence present activity. The rectangular box on the left
    shows where price declined quickly from the 1360 level down to the
    1320 area. [Resistance should always be considered as an area and
    not just a specific price.] The current rally in gold stopped, so far, at
    the 1330 area.

    There are two important considerations to keep in mind. The upper
    channel line is a supply line that indicates when a market is in an
    overbought situation. What many fail to appreciate is that
    overbought can become more overbought, so it is not a reason, by
    itself, for making a trade decision.

    The other aspect is the sharp increase in volume, which happened
    to occur at the overbought supply line at the same time. Whenever
    there is a sharp increase in volume, pay attention. It is the earmark
    of "smart money" stepping up activity. Smart money buys low, sells
    high. That is axiomatic.

    Up until last Tuesday, the high volume day, gold made 12 successive
    higher lows. The increase in volume came at the high. Would you
    surmise smart money was buying or selling at that high day? The
    logic, to which we referenced earlier for those not too familiar with
    charts as we use them, would say smart money was selling.

    Consider the facts taken directly from the chart. Price was in an area
    where it declined previously, last October, early November 2013.
    Price was also at an overbought condition, converging with these
    other two factual observations, as volume had a sharp increase. A
    logical conclusion can be drawn from those facts, [vs opinions which
    can be different from one person to another].

    Will a correction develop soon, next week, based upon this
    information? We do not know, nor is it important to know what may
    happen, in advance. We have formulated an idea on what the
    market may do, but we have to wait and see if the market confirms
    the idea.

    If it does confirm a correction is imminent, the next step is to
    prepare for an opportunity to possibly be a buyer.
    This approach to
    the market eliminates guesswork or having to make a prediction.
    Time will tell, starting next week. If the market rallies more,
    instead, we wait again for another opportunity that will develop.
    Markets do not disappoint.

    GC D 22 feb 14

    There is a growing sense that silver, so often overshadowed by gold,
    may be the key for when the PM begin to rally in earnest. For all the
    severe shortage of physical silver and mining issues for more supply, etc, the chart does not reflect any sense of urgency that silver is
    about to launch a major rally.

    The issue of bearish spacing still exists, and the current rally is at the 50% area from the last swing high to low. Whenever a market does
    not rally past a half-way point, it is a general indication of overall
    weakness, emphasis on general.

    Silver shows the same sharp volume increase and very small weekly
    range, relative to the effort expended. It is the daily that shows how
    charts show the way in which a market provides all the information
    one needs to make an informed trading decision.

    SI W 22 Feb 14

    People focus their attention on current market activity, even to the
    extent of using intra day charts as a reference for decision-making.
    There is too much "noise" from an intra day chart to be consistent.
    They are not the most reliable points of reference. It is always better to start with the higher time frames and work down.

    The weekly chart already indicated a red flag alert from the high
    volume and small range bar. We will start with that bar, "B" on the
    chart, but we see that specific day as a point of culmination, based
    upon past market activity. Just as with gold, silver had a failed rally
    at "A," see arrow.

    We can see the market declined from that high, but what makes that high of greater importance is seeing how the market closed on 30
    October. There was a wide range rally and strong close near the
    high. Logically, one would expect upside follow through, next day.
    What happened instead? Price gapped down, opening under the low
    of that rally bar, the exact opposite of expectations.

    Whenever the market does something opposite to obvious
    expectation, that is an important message from the market itself!
    Pay close attention when that happens. The market failed to confirm
    the expectation. This gives greater credence to that area being
    resistance into the future. When we noted that "B" related directly
    to "A," you would not have likely made that pertinent observation.

    Further, "A" relates back to "C," which we just realized was not
    marked on the chart. "C" is the last failed rally in the middle of
    September, where there was a very wide range bar, followed by
    a small bar, stopping the rally, and price sold off sharply, next
    trading day.

    When you see how "C" acted, it puts "A" into a context that is less
    surprising. It is the combination of "C," "A," and the volume spike
    that strongly suggests "B" may also turn into a decline. By itself, "B"
    is not as strong a case for a potential reaction as when a "story" is
    developed from previous developed market activity.

    While all of the focus is primarily on gold, silver is not in as relatively as strong a position as gold, and it may be a truer roadmap for when the eventual bull market emerges, at some as yet unknown point in
    the future. Whenever that rally starts, it is almost certain that the
    first signs will come from the charts, as described.

    Stay tuned.

    SI D 22 Feb 14

    Feb 22 3:53 PM | Link | Comment!
  • TEVA - Finding Quality Trades With Institutional Backing

    Friday 21 February 2014

    Three days ago, Tuesday, we posted a Market Commentary with a
    chart of TEVA, an Israeli pharmaceutical company. It was around 1
    a.m., several hours prior to the stock market open. This was the
    second paragraph:

    For disclosure, we do not trade stocks, so this is just an
    exercise. Were a position to be
    taken, there is merit in a buy-
    stop order at 44.68, with a protective sell stop at 42.25.

    ...We post this now, in case 44.68 does trigger, so the
    recommendation would not appear to have been in hindsight.

    More to come, soon.

    This is the chart, as posted. The recommended buy stop was just
    above the box area, at the end of the chart. TEVA had two noted
    positives going for it: 1) A strong rally on very strong volume in mid-
    January. Here is a clear example of institutional buying in a stock.
    2) TEVA was building another TR, [Trading Range], base, which if the breakout were to be to the upside, the base supported a move much
    higher, or at least somewhat higher.

    TEVA D 18 Feb 13

    An article was written, last November, Markets Talk Few Listen, in
    which we presented the very same concept as a valid approach for
    improving one's ability to make better trade selections. It explains
    why early January was the time and price to buy TEVA. The chart
    above shows a new trade that offers potential with a clearly defined
    risk.

    It turns out TEVA was one of the largest stock holdings in a Soros
    Fund, at least as of last Quarter. That may or may not still hold true,
    which is immaterial because the noted spike in volume was the
    market's way of letting us know that institutions were buyers. It
    does not matter which institution[s]. When they buy, they buy for
    the longer term.

    TEVA is measured against the pharmaceutical ETF, XPH, to
    determine its strength within that sector. TEVA was ready to have an upside breakout at the same time as the ETF.

    XPH D 21 Feb 14

    TEVA is slightly under the similar chart structure of XPH. This would
    prompt a closer look at other pharmaceutical stocks that may be
    relatively stronger than TEVA, maybe even the ETF itself. It just
    happens that TEVA was the hand we were dealt, at the time, and
    mention is made to show how there is flexibility in how one wants
    to determine the quality of potential stock selections.

    The increased volume, last bar on the chart, would raise some
    concern over the next day trade activity. The volume is similar to the January breakout volume, but the range of the bar is slightly smaller
    than the January range. Just something over which to be aware.

    Because the Fed-driven stock market is at an advanced stage, one
    has to be quicker to respond to price activity, as opposed to say
    were this kind of breakout occurring during the early stages of a
    bull market, and one could exercise more patience.

    Another way to be flexible is in the risk management of this trade.
    The stop can be raised up to the breakeven level, eliminating risk
    exposure entirely. On any further advance, profits can be taken on
    half the position to ensure a profitable trade. The point is, do not
    just buy and hold without taking an active role in managing each
    stock selection.

    TEVA D 21 Feb 14

    Here is an updated TEVA hourly chart. Price gapped higher on
    Tuesday morning, which would have triggered a 44.68 buy stop.
    The recommended buy could have been filled in the 45.40 area,
    with an initial stop-loss at 42.25, risking $3, initially.

    TEVA 60m 21 Feb 14

    Tags: TEVA, XPH, Stocks, ETFs
    Feb 21 1:17 AM | Link | Comment!
  • Taking Stock Of Gold Stocks - ANV, NGD, AUY, FCX, NEM, AEX, GDX

    Sunday 16 February 2014

    [Note: This started as a comparative look at some gold stocks, and
    it turned into a great exercise in finding trades, if you take the time
    and go through the steps we outline in each chart. You can begin to
    see differences in the quality of trade selection, based purely on
    information the market offers each and every day. Enjoy!]

    We often see comments to the effect of interest in gold miner stocks
    as a play on gold. Ten days ago, we did an analysis of silver-related
    stocks, Taking Stock of Silver Stocks, looking at SLW, PAAS, CDE,
    AG, SSRI, and HL. While many view mining companies as a proxy
    for gold, they are not necessarily so. There are many influences that
    can affect the performance of a mining stock that are unrelated to
    the performance of the underlying physical: management, cost of
    mining, depletion, labor issues, added debt, etc.

    What we know about charts is that they do not lie and most
    accurately depict conditions and character for each time frame and
    for any given stock or futures activity. You can actually see how
    markets develop into trading opportunities, as well as when to avoid
    committing money. Charts capture the essence of timing so lacking
    in fundamentals.

    What is important to understand is that you do not need to be a
    "technical analyst" to understand how to read a chart. Markets are
    full of logic. One needs to exercise some patience and follow the
    logic, as explained, and you will have a greater sense of what to
    expect in any given situation and at any given point in time. When
    things are not always clear, that, too, is a message from the market
    to leave well enough alone, and look for other, clearer opportunities.

    Is that not a worthwhile objective to manage risk and increase
    positive results?

    You always want to look for a "story" where the developing market
    activity is providing information on how, [long or short], and when
    to enter, and at what price. There are a few stories in some of the
    charts that may help you better understand.

    As a point of clarification, we do not trade in any of these stocks. This is a hindsight analysis, if you will, using the same techniques we
    apply in our Recommendations section. What each chart analysis
    captures are the principles we employ and the rules used in
    execution, based on developing market activity, or repeating
    patterns.

    The kinds of patterns we identify appear over and over in the
    markets. It then becomes a "simple" matter of searching for the
    same pattern behavior moving forward. It is called having an "edge,"
    the expectation of a favorable outcome based upon past history. As
    in life, in the markets, history [patterns] repeats, not always exactly,
    but the pattens rhyme very closely.

    The current weekly and daily gold charts will be posted first, to use
    as a reference relative to where the following gold stocks are as of
    last week. They are from our gold article of a few days ago, Bankers
    Can [Will] Steal Your Cash
    . The charts are presented in no
    particular order, but the order in which they developed were
    interesting in progression.

    Weekly for reference:

    GC W 15 Feb 14

    Daily for reference:

    GC D 15 Feb 14

    We always start with weekly charts to identify the primary trend and
    then be able to put the daily chart into a relative context. Higher
    time frames are more controlling over lower time frames.

    The sharp volume spikes were obvious, but we did not know what to make of them throughout a developing TR. [Trading Range]

    AND W 16 Feb 14

    An apparent potential breakout was developing at the beginning of
    January. The chart comments explain the entry. You can see the
    correction in late January held the initial breakout area very well,
    and that augured for higher prices to come, and price did move
    higher.

    Last Friday was another breakout day to buy on the opening. We did
    not draw lines to show the TR since the early January breakout, but
    once you add them, you will see how the two breakouts were
    similar, leaving a TR. Patterns repeat.

    ANV D 16 Feb 14

    Breaking a TL, [Trend Line], is not that significant of an event. Of
    greater importance are previous swing highs/lows and high volume,
    wide range bars. The TL has been broken, but NGD has some
    overhead resistance with which it must overcome. Compared to
    ANV, NGD is a relatively stronger chart.

    Whenever you have a choice of which stock to buy, always buy the
    stronger performer. It has proven that from its relative strength, it
    will likely perform better than others.

    NGD W 16 Feb 14

    There is a breakout on the daily chart, from Friday, but when you
    look at the weekly chart and see potential overhead resistance, the
    upside may be limited.

    You can also see how NGD labored in its initial January breakout,
    relative to ANV.

    NGD D 16 Feb 14

    What stands out on the weekly AUY is the gap lower when price
    broke a previous support area from May '12. A horizontal line is
    drawn from the low prior to the gap day. It will act as future
    resistance.

    The next two rally attempts failed to close the gap area. This left a
    space which is what is referred to as bearish spacing. It occurs when the next rally after a swing low fails to reach the swing low price.
    What this tells you is that sellers were confident enough in expecting
    lower prices that they did not need to see how the last swing low
    would hold on a retest.

    AUY has these issues and may not be the strongest buy candidate.
    The daily chart may show something different.

    AUY W 16 Feb 14

    The explanations for each chart is a way of explaining a "story"
    behind each chart and its developing market activity. We just
    qualified how the weekly AUY could have issues. The daily chart
    presented a situation that provided a low risk entry with greater
    potential profit in the trade shown below.

    Here is the "story." When you see correction from the January high
    to the early February low, it forms a downsloping pennant. If it looks
    like price could breakout to the upside, there is a great trading
    opportunity.

    When you look at the February low, you see how it stopped at 1) the
    January opening gap, and 2) the supportive TR that followed the gap.
    The decline in February, stopping at an obvious support could lead to a rally. The bar after the February low rallied on increased volume,
    which means increased buying. If price can rally higher next day, you can place a buy stop above the top pennant line and buy what should be a breakout.

    Let us assume you placed a buy stop at 9.30 or 9.40. Price closed
    strongly that day, and it continued to over $10, as of Friday.
    Forgetting the potential for AUY to continue higher, what counts is
    how you can use past market activity as a guide that helps present
    a greater probability of market direction as events develop into a
    defined pattern, as just described.

    The initial protective sell stop would have been around 8.70. It could
    now be moved to 9.70, providing a risk free trade. There was no
    guesswork or need to "predict" anything. The market advertised the
    situation as it developed, and you will see situations like this
    occurring frequently.

    AUY D 16 Feb 14

    FCX is in a TR, and compared to a few other companies below, you
    can better understand why this would not be a good candidate for a
    buy. Why not? You want to be buying those stocks that have already
    proven strength by moving higher. FCX failed in two attempts
    against proven supply, noted by the December '12 high volume, wide range bar lower.

    S/D means Supply overcame Demand, and that price level will be
    defended by those who sold in order to protect their profits. The two failed rallies in October and December '12 are a testament to that
    pattern. Note the very small range of the last weekly bar in
    December. The reason why it is so small is because sellers were
    much stronger than the buyers, preventing buyers from staging any kind of rally. It is a point of resistance.

    FCX W 16 Feb 14

    The rectangle shows the small range bar from the weekly chart. You
    can see how volume was weak, a lack of demand, and sellers
    stepped up and took control. We said of the weekly bar that it was
    resistance. Look at the mid-January retest of that failed swing high.
    Not only did price stop at that level, new aggressive selling entered
    the market, noted by in sharp increase in volume, adding to that
    price level as future resistance.

    When you understand that past support, once broken, become future resistance, you can see why FCX stopped at 34, Friday. Volume
    declined, again, indicating a lack of demand. That could change by Monday, but for now, until increased demand shows up, FCX is notthe best buy candidate.

    Worth pointing out is the fact that there are people who are buying
    these lesser performing stocks. Why? They are not reading the
    charts, for one, and they do not understand the concept of relative strength, as you now do, and hopefully, you are beginning to make
    better buy decisions.

    We did mention there is a high degree of logic to be found in market activity, as shown in
    the charts.

    FCX D 16 Feb 14

    The KISS principle at work.

    NEM W 16 Feb 14

    After reviewing the previous charts, do you see any reason to buy NEM?

    You will note that we are using only the stock symbols and not the names. Sometimes,stocks have greater name recognition. We do
    not care. We are only interested in the stock's price recognition,
    relative to others within the same category.

    NEM D 16 Feb 14

    One should exercise a little more caution in new situations with little
    price history, and AEX is included precisely for that reason. Brief as
    its price history is, there is already a red flag bar at the rally high.
    Volume increased, but price closed at the low of the range, letting
    you know sellers were stronger than buyers.

    See how the market is "giving" you specific information? Knowing
    that, would you want to be a buyer of AEX?

    AEX W 16 Feb 14

    The "story" comes from the weekly, just covered. With a poor close,
    one can expect a sell off to occur, or at least the probability of a sell
    off is much greater than a rally. You want to find those situations
    which tell you that the "probability" of a directional market move
    is greater in one direction than the other. this is what will give you
    an edge in decision making.

    5GDX W 16 Feb 14

    For as negative as the weekly chart appears, there was actually a
    low risk, greater reward probability situation that developed when
    GDX stayed in a TR for the last half of January into early February.
    Take a look and see if you can spot a few reasons why this was a
    reasonable short-term buy candidate. You will get some answers in the next paragraph, but you want to learn to look for your own
    "story" developing.

    TRs lead to breakouts. In the middle of January, there was a gap up
    in price, just under 23. For the next six TDs, price moved sideways
    and held the gap up, indicating support. From the end of January
    though the first part of February, the bottoms of the day ranges
    stayed above the support line.

    Note how volume declined just prior to the upside breakout. The
    declining volume told you that there was no selling pressure at the
    February low. It was followed by a relatively strong rally and high-
    end close bar, just under resistance at 24. A buy stop just above 24
    made sense, just as a buy stop on the AUY daily chart was a strategic move. The risk was a stop just under 23!

    Price gapped higher next day. A buy stop automatically put you in
    the trade, and price rallied, as the probability of recent developing
    market activity revealed.

    Each situation is unique in how the future will unfold, something you
    cannot know in advance. By trading relative strength stocks and
    using recognized pattern situations that have a "story" behind them,
    the probability of you trading/investing successfully have increased in your favor dramatically.

    Now you are trading with an edge. There is no reason to ever do
    otherwise.

    GDX D 16 Feb 14

    Feb 16 9:18 PM | Link | Comment!
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