Seeking Alpha

Robert Edwards'  Instablog

Robert Edwards
Send Message
Contrarian daytrading technician who specializes in locating high probability short term trades while predicting price movement directions with over 85% accuracy. Most of my trading involves either extremely short term micro scalping of stocks or commodities (using 1 minute bar charts), or swing... More
View Robert Edwards' Instablogs on:
  • Gold Is Down But Not Out!

    With today's plunge in June Gold futures, below stops at $1178, it is looking pretty bleak for gold and most of the miners today. I say most miners but not all, because Newmont (NYSE:NEM), just reported some great earnings and the stock is rallying strongly today, click here. Well, I was sad to see support again broken in gold, but happy to be able to again buy at bargain basement prices.

    Gold Is At Levels Where It Has Previously Bottomed!

    Ned Schmidt is recommending the buying of gold now, click here. The article concludes that the price of gold vs. the price of stocks, is at an extreme. Either gold is too cheap and will need to begin a strong rally soon, or stocks are extremely overvalued and need to crash lower shortly, or both! They have stretched the rubber band so far, it is likely to soon snap! When it does, do not be surprised to see stocks top out, and see gold bottom. Gold metal topped out in September 2011 and then started a major bear market. Gold stocks topped out a few months prior to the metal, so the bear market in stocks will hit the four year mark this summer. Out of like 8 bear markets in gold stocks in the past 50 years, there is only one other time we went this long before bottoming. It is highly likely that even if we do not rally much for a few months longer, we have probably already seen the lowest price level in the gold mining stock ETFs of GDX (Majors) and GDXJ (Juniors). Newmont is now trading above $25, a long way from the bottom hit in December 2014 of $17.58. Surely Newmont has already bottomed. Another of my favorites IamGold (NYSE:IAG), it has also seen the worst already when it hit bottom at $1.42 in early November 2014. IAG should continue to be a steal under $2, and eventually should retake $5, $10, and much higher price levels.

    The same could even be true for gold, that it too probably saw the low when it hit $1133 back in early November 2014. If I am wrong, then we could get a final capitulation low into the $1090s and maybe as low as $1068 to $1075. However, don't count on it. If you should see any trading occur below $1133 or under $1100, count yourself extremely lucky and be buying as you should be very happy for doing so. I can't say we have hit bottom as no real sign of a bottom has been yet established on the charts. However, I know when a market is ripe for a bottom and gold is extremely ripe for a bottom. If gold was a banana the color would be a very dark black! I base that on how ripe gold is to see a bottom.

    (Note: Speaking of black gold, it is looking more and more like Crude Oil has bottomed. I was right about calling the bottom when it occurred in real time, and I feel fairly certain that within the next weeks or months, I will get a similar buy signal in gold).

    Disclaimer:

    The thoughts and opinions in this article, along with all Stocktalk posts made by Robert Edwards, are my own. I am merely giving my interpretation of market moves as I see them. I am sharing what I am doing in my own trading. Sometimes I am correct, while other times I am wrong. They are not trading recommendations, but just another opinion that one may consider as one does their own due diligence.

    Tags: GLD, GDX, GDXJ
    Apr 24 2:04 PM | Link | 5 Comments
  • What Does Friday's Action In The Emini Dow Futures Foretell For The Coming Week?

    On Friday, April 17, 2015, the Dow Jones fell 374 points before bouncing over 100 points off the low to close down 271 points (see the above daily chart of the June Emini Dow Jones Futures). I am a technician who likes looking for similar price action and patterns in the recent past. I call them "doppelgangers" as it is like finding your twin. What happened the last time such a pattern was struck, could give a hint for the future. More on that in a minute.

    For over 2 weeks, the stock market and thus the June Emini Dow Jones futures, had been in a nice uptrend. But then came Friday when in a single day, we fell to price levels not seen in 2 weeks. This action formed a triple top. The first top was at 18188 on March 2nd. The next top was at 18126 on March 23rd. On Thursday we made the third top at 18093. The last couple times we failed to make a new high. In March we dipped to a low of around 17550, but then in early April dipped to just under 17500. I expect to see a marginal new low soon a bit further below 17500 as a downward channel is being formed.

    Now, the last time we topped out (just 3 1/2 weeks ago), it was followed by a hard smackdown day, (March 25th). That is the doppelganger to the candlestick formed on Friday, April 17th. The next trading day the Dow made the low below 17500. I expect that Monday of this coming week, we could see a similar carry through to the downside. However, if we should fall closer to the 17500 area, it should find some temporary support and should bounce.

    There is an alternate scenario, a Monday rally. Back on March 6th, a few days after the first top was formed, we got a hard smackdown day making a new low going back a couple weeks again. However, that time there was a rally of over 50% off the lows the following day. But then the next day we saw another hard smackdown day.

    Thus, if Monday should be a nice snapback rally day, don't be surprised if Tuesday, April 21st we see another hard selloff with a bottom coming on Wednesday. The fact that we ended up closing over 100 points off the low on Friday, increases the chances that Monday is an up day. But even if Monday is higher, we should continue lower for Tuesday and into Wednesday where a short-term low can be expected.

    In Summary, I am recommending selling into any strength seen early in the week, as we should either go lower by the end of trading on Monday, or go lower on Tuesday and Wednesday if Monday is an up day. Will be fun to see if I am right in my price action guess.

    Disclaimer:

    The thoughts and opinions in this article, along with all Stocktalk posts made by Robert Edwards, are my own. I am merely giving my interpretation of market moves as I see them. I am sharing what I am doing in my own trading. Sometimes I am correct, while other times I am wrong. They are not trading recommendations, but just another opinion that one may consider as one does their own due diligence.

    Apr 20 12:07 AM | Link | 2 Comments
  • Crude Oil Is On Fire; Natural Gas Bounced Off Its Lows; Gold Is Going Nowhere

    June Gold Futures

    Michael Noonan wrote an article Friday, describing how gold is just going nowhere fast, click here. When he talks of TR it is an abbreviation for "trading range". June Gold can't get below $1180 to the downside, nor above the $1220 to $1225 resistance level to the upside. Until things change, one can only play the ranges, going long gold and gold mining stocks when gold is trading below $1200, while shorting gold and gold mining stocks against resistance in the $1210 to $1225 area, and again at $1240 to $1250 if we ever get up there.

    Although I was recently able to buy some Iamgold (NYSE:IAG) stock below $2.00, and still like buying all dips below $2.00, IAG has struggled to move above $2.20 and also remains in a tight trading range. One might be best served to look elsewhere for trades until gold and the miners catch some fire.

    June Natural Gas

    June Natural Gas futures bottomed on Monday, at a new yearly low of $2.521 and then bounced just as expected. If you have read my recent articles, you will know that I had been calling for a bottom in May Natural Gas futures at $2.50. Although the May contract ran stops under $2.50, hitting a low of $2.475 last Monday, that same day it closed at $2.511. It spent the rest of the week rallying, climbing over 20 cents off the low. Rallying 8% off the bottom, it translates to about a 25% gain in the triple leveraged ETN (NYSEARCA:UGAZ). I recommended buying in the mid $1.90s, $1.80s, $1.70s etc. The low in UGAZ on Monday was $1.85 while Thursday's high was $2.32.

    June Nat Gas dropped initially after the bearish inventory report was announced on Thursday this week, but traders bought that dip and natural gas closed strongly higher. When June Natural Gas got back to unchanged, I got in and caught a 7 cent pop. I got out as I expected some retracement on Friday and that is what we got. When a market initially sells off on bad news but then reverses strongly higher, that is telling you that most of the bad news is already priced in. The March cold weather season has passed and it is awhile before we get the July air conditioning upsurge usage of natural gas by utilities. One would expect for April and May to be a time where natural gas prices fall. However, seasonally, natural gas prices like to bottom in April and we are probably very close to a major bottom in natural gas. I don't like playing the short side when we have already fallen to such historical low prices.

    I still like buying UGAZ on small dips, as a scale in buyer, especially should it fall this week back to $2.00 or lower. I have been recommending the First Trust ISE Revere Natural Gas ETF (NYSEARCA:FCG) for some time. I liked it at $11.00 and even better when it traded down to $10 and a bit lower. Here is a daily chart of FCG:

    (click to enlarge)

    On a very short-term basis, FCG is getting overbought and could correct back closer to $11. However, it is showing signs that is has bottomed. In late December 2014 and later in mid February 2015, FCG could not overcome resistance at $12. The last three days FCG has had a close above $12, which I find quite significant. I expect to see prices eventually move to $15 and higher over the next few months.

    June Crude Oil

    June Crude Oil bounced off its lows in early February, but was turned back when it hit the $57.11 to $57.18 resistance area. Three times in February, June Crude Oil tried, but failed to move to higher levels. Then in the middle of March, after making a marginal new low (just to run stops), June Crude Oil rallied first to the $54 area, then to $55.50, before finally stopping at $58.82 on Thursday this week. Since the beginning of this year, the only way to play the crude oil market is from the long side. In my articles I have been steadfastly bullish crude oil and recommended buying all dips. That has worked out quite well and I see no reason for things to change. Above $60, Crude Oil will begin hitting some significant resistance levels and it is doubtful we can sustain a move higher than $65 in the short term. Above $60 could bring some production back online that has been taken off line and could act to throttle back further gains. Still, all dips should remain a buy, especially if June Crude Oil should fall back to the $50 to $52.50 level. Don't believe all the hype about crude oil falling into the $20s or teens. No move below $40 is justified longer term or even short term, so all dips below $50 should remain a screaming buy! Happy trading!

    Disclaimer:

    The thoughts and opinions in this article, along with all Stocktalk posts made by Robert Edwards, are my own. I am merely giving my interpretation of market moves as I see them. I am sharing what I am doing in my own trading. Sometimes I am correct, while other times I am wrong. They are not trading recommendations, but just another opinion that one may consider as one does their own due diligence.

    Apr 19 11:32 PM | Link | Comment!
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


Posts by Themes
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.