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Robert Edwards
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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
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  • Short Term Price Projections For Gold (GLD) And Crude Oil (UWTI)

    December Gold

    The above daily chart of December Gold futures shows stability above $1080, despite seeing only a couple up closes in the past 16 trading days, and a current drop of 3 days in a row. Until we get a rally to "undo" the current severely oversold condition, further drops should be limited. There is better than a 50/50 chance that we will hold support in the $1065 to $1072 level for now, and should get a rally soon of $80 or more. If we should break lower, it should be a bear trap, and I do not see a drop below $1050 for now. Until we see a move back above $1100, scalping from the long side should be quite profitable if playing the gold futures or GLD.

    I won't post charts of the gold miners or GDX or GDXJ, at they are too depressing, but I do believe that buying IAMGOLD (NYSE:IAG) and Kinross Gold Corp (NYSE:KGC) should do fine if one patiently holds for the next gold rally. The triple leveraged ETFS (NUGT and JNUG) are absolutely toxic and cannot be safely purchased until gold establishes a bottom which it has not yet done.

    September Crude Oil

    Finally September Crude Oil Futures prices have stabilized at the $47 per barrel level. After two up days off the lows, today we saw some profit-taking. However, on near-term dips and possible retest of the lows, expect the bottom to hold. For those not long, buying UWTI when crude oil is trading between $47.60 to $48.50 should work out well. Here is a daily chart of the triple leveraged ETN (NYSEARCA:UWTI):

    (click to enlarge)

    The MACD is giving a buy signal in UWTI, as shown in the above chart. With a rally back towards $54 in crude oil, UWTI should return to prices above $2.20. Despite all the negativity in the media it will not be easy to keep crude oil below $50, let alone $40 or anything lower. Unlike worthless paper gold which has become less prized than a pet rock, crude oil has real intrinsic value due to the fact it remains an indispensable primary energy source, so it should not drop any lower in price than is absolutely necessary. It has taken perfect alignment of the stars to get crude oil back under $50 and we should not remain trading in the $40s for long. Relief for beleaguered bulls should be shortcoming.

    To follow along as we buy IAG as well as GLD, GDX, KGC or other mining stocks or Gold futures, or trade crude oil (UWTI and DWTI), natural gas (UGAZ and DGAZ) and other commodities, join us in our private Short Bull Trading Room on WeChat. Just download the free app on your phone or tablet, and then add "bobed1". You can then send me a message so I can invite you into the room. Still plenty of room.

    You can also subscribe to my free weekly newsletter. Send an email to shortbull2020@yahoo.com if interested in subscribing. Again, it is free!

    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, UWTI
    Jul 31 3:33 AM | Link | 2 Comments
  • Down Over 18% In Two Days, Freeport-McMoRan, Inc.(FCX) Is Getting Washed Out

    Why FCX?

    Freeport-McMoRan Inc. (NYSE:FCX) has fallen 18.5% in the last two days, ending Friday at $12.29. It is starting to look very cheap. I am not saying you should rush in to buy the stock when it opens on Monday, but if you could pick up shares closer to the $10 level, you should be able to make a very profitable quick trade in the stock.

    I have a bit of nostalgic fondness for this stock as it used to be one of my favorite day-trading vehicles. Also I rode the stock down from the $20s, to a low of $7.87, back in 2008, and back up to the $20s and beyond. My patience was rewarded.

    Those buying at current rock bottom prices should on a long-term basis, also be rewarded when the prices of copper, gold and crude oil improve. However, my current interest in the company is only for a quick scalp, a mere trade. I am looking for a very oversold bounce to occur, once the price stabilizes.

    FCX reported earnings on Thursday and the stock has been killed for two days, as reported here. Earlier this year, Morgan Stanley was actually encouraged about the company's prospects and upgraded the stock in April. The bottoming of crude oil helped, along with stability in gold and copper prices. However, now all three markets have weakened and FCX stock has plunged. Here is a five year weekly chart:

    (click to enlarge)

    You will notice how the FCX stock price traded between $25 and $40 from late 2011 to late 2014. However, because FCX decided to diversify into the oil and gas arena instead of sticking with their copper & gold mining interests, they suffered with the drop in crude oil prices. The last major high occurred at $37.67 back in July 2014. FCX finished out 2014 at $22.76. In less than a month, FCX would fall to a low of $16.23. Then in February, a high of $21.63 was reached. Then came a March 2015 bottom at $16.81. During April and May, thanks to a rally in crude oil, FCX was able to finally get back to $22.74, about where FCX started the year. It appeared that FCX had found a new trading range between $16 and $23. But closing below support on Friday, July 20, 2015 at $15.88, was a bad omen. This past week the stock has been obliterated, hitting a low on Friday of just $12.17.

    To understand where FCX might again find support, we can look to see how FCX traded during the last hard smackdown back in 2008: Here is a weekly FCX chart going back to that time period:

    (click to enlarge)

    From a May 2008 high of $50.30, FCX fell during the financial crisis to a low of $6.31 (adjusting for dividends). You will notice how initially $10 held support and the stock traded between $10 and $13 for 4 weeks. I expect to see FCX do something similar should it again fall to $10. Then in November 2008, FCX plunged the next week to a low of $6.95, only to hit $10.30 the next week. Finally the major low was hit the following week at $6.31, the first week of December 2008. Just a week later we saw $10.14, and after 4 more weeks FCX hit $12.50. It is not shown on the chart, but by June 2009, just 6 months after bottoming, FCX hit $24.68. By January 2010, FCX hit above $36, and that started the trading range of $25 to $40 that FCX would remain in until recently.

    As we trade below $12, I now expect to see FCX struggle to find support somewhere between $10 and $11. When FCX fell from $37.67 to $16.23, that is a drop of 57%. From the recent high of $22.74, a drop of 57% would project a new low of $9.80. Thus the $10 area should be a good target price to buy FCX.

    Once FCX does bottom, expect it to trade in a range for 3 to 4 weeks. However, the ultimate low could be a plunge to $8, $7, or maybe $6, but I would expect to see a quick rally back to $10 within a week or so, with every plunge. Since $16 was recent support, it will likely become future resistance, and that is the long-term price level one should target, if crude oil, copper and gold should finally stabilize and rally out of their present holes.

    Summary:

    Scale trading in on FCX as it approaches $10 should work out well, as the company is extremely oversold and could bounce.

    On an operational basis the company does still earn a profit, but is forced to take big write offs based on lower valuations of its assets. In recovery, the appreciation of these assets should help bolster prices, just as they now are a drag. If copper, gold and crude oil prices remain at current rock bottom prices, FCX will have to take further write-offs which could plunge the stock below $10. However, somewhere around $6 to $8, there should be some real value discovered. The stock has a book value of over $13, and a forward PE of just under 7. The company plans to spin off the oil company interests which should improve the balance sheet and remove the drag of low crude oil prices. In any case, FCX has positive cash flow and can weather the storms for several more years. Just as FCX rallied from $16 earlier this year, I expect it will begin a rally around $10 in the short term with maybe some quick spikes lower.

    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: FCX
    Jul 26 3:51 AM | Link | Comment!
  • IAMGOLD (IAG) Is A Fire Sale You May Not Want To Miss

    America's Largest Hedge Fund Owns IAG

    For an interesting (quite negative) article on IAMGOLD (NYSE:IAG), click here. America's largest hedge fund thinks IAG is worth owning even if many pundits do not. Pundits like to pick stocks with pretty charts. IAG's chart is ugly! Hedge funds like to buy things they can make money on. I think the hedge fund should have better information than a commentator as they should have done their due diligence before buying.

    But not everyone is negative on IAG. Here is another Motley Fool article where IAG is listed as one of three best stocks to own, click here. Despite the current weakness, I still like IAG, especially at these bargain basement prices.

    Russ Winter Is Worth Reading

    Came across a writer on Seeking Alpha who is a strong enthusiast for IAG. His latest article, click here, is a must read! This article is definitely one that you do not want to miss. When you get done reading this article, you can check out some of Russ Winter's previous articles as many are excellent!

    How To Catch A Falling Knife

    My son likes to trade troubled companies like Nokia and Petrobras, among others. He did quite well with these stocks because he bought extremely low prices in a company out of favor. And though he was not good at figuring out where the bottom was, he held on for outsized gains. Well, IAG is an excellent falling knife buying candidate, in my opinion. My only caveat is that the company have a good chance of surviving for the next 5 years. With the sale of assets that generated cash greater than the current stock valuation, I feel IAG will be around for awhile. So now we can take a look at the weekly chart:

    (click to enlarge)

    In the above weekly chart of IAG, you will notice how in June 2013, IAG bottomed at $3.70. Had one bought at this bottom, they could have rode the stock up to $7.08 shortly after. However, suppose they were stupid and never got out, and we made a new low in December 2013 at $3.15. IAG would soon thereafter rally to $4.37, and give a long-term holder a second chance to get out at a profit. The next new all-time low in IAG was at $3.00 in May 2014. After bottoming, IAG made a high of $4.22 just 3 weeks later. Thus, buying at the $3.70 low, an investor had three chances to get out at a profit. Yes, making new lows two more times, did not keep a bottom-fisher in IAG to profit.

    Starting at the $3.70 low, one got 3 chances to take profits. But what if one started at the $3.15 low for IAG. Did that person get 3 chances too? Well, the $3.15 low was followed by a rally to $4.37, then the May 2014 low of $3, got us up to $4.22. That makes 2 times. Then there was the low in November 2014 at $1.42. After that bottom, we rallied to $3.39 just 11 weeks later. That makes 3 chances for the $3.15 buyer to get out with a profit.

    Well, now we can check out the person who bought at the $3 bottom. That person could have sold on a rally to $4.22, then after $1.42 hit, that $3 buyer could have sold on the $3.39 rally. Then the third bottom is occurred just this week, at $1.15, when a trader who bought on margin was forced to dump 1 million shares and drove the price to a new low. If the $1.15 price is the ultimate low or not, we should again rally a third time, and we should rally high enough to let the $3 buyer get out with a profit for the third time. Thus, I am setting a profit target at $3 or higher, for anyone who decides to buy IAG right now in the $1.20s and lower.

    To follow along as we buy IAG as well as GLD, GDX, KGC or other mining stocks or Gold futures, or trade crude oil (UWTI and DWTI), natural gas (UGAZ and DGAZ) and other commodities, join us in our private Short Bull Trading Room on WeChat. Just download the free app on your phone or tablet, and then add "bobed1". You can then send me a message so I can invite you into the room. Still plenty of room.

    You can also subscribe to my free weekly newsletter. Send an email to shortbull2020@yahoo.com if interested in subscribing. Again, it is free!

    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: IAG
    Jul 24 11:22 AM | Link | 3 Comments
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