Tuesday, November 13, 2007
Monday, November 5, 2007
Saturday, November 3, 2007
Sunday, October 28, 2007
Thursday, October 18, 2007
Wednesday, October 17, 2007
1) we now get a ending diaganol which would result in a very sharp and full retracement of the impulse pattern. This could take time to play out, but the good news is it would present a great opportunity to position.
2) We get a modest abc correction starting right now and the wave continues to propagate toward some hideous point and figure target over 230.
3) the ending diaganol pattern is not ending but leading. This goes to my post yesterday. It's wild to imagine such a thing, but a leading diaganol is the start of a major wave. If that were the case then this bull would officially be in runaway mode.
I might add, if this is an ending diaganol then it is going to really frustrate both bulls and bears. The patterns typically do not just end as soon as a "e" count is reached. Expect a drifting up pattern as xau stretches to a extreme.
note, blogger image upload is down, I will post the chart later.
Tuesday, October 16, 2007
Sunday, October 14, 2007
Here are xau charts for intermediate and long term. As you can see our bullish RST setup has confirmed to the upside and a trending move is underway. Momentum traders will want close stops in here since some kind of retracement is possible at any time. However, the trend is up and some targets as high as xau 240 are possible on this run. The more important chart is the long term chart. The implications of this chart breakout are simply huge. It seems to me that a multi decade line of resistance will take some time to become support even after the first stab through. Trading around this pivot line is likely to be difficult to say the least.
Friday, September 7, 2007
Here is the xau bullish count on the RST. It looks plausible. About all we can do here is wait for some bullish consilidation of these gains. In my opinion the gains are too much too fast for a breakout to occur on this daily run. So we will watch and be ready to act. If this count is correct then price will not return to the lows. Rather some modest fibonacci retracment will do.
Thursday, September 6, 2007
Well, the impulse down ended in spectacular fashion and a pattern has emerged. The pattern is one of expanding volatility, otherwise know as the Reverse Symmetrical Triangle (RST). What is fascinating about this pattern is how it has followed a traditional zig zag pattern which occured after last years peak. These patterns are pretty hard to trade. The best rule I can provide is to make sure you reverse at the extremes or go flat. Eventually the pattern completes and a stable trend emerges. That is the ultimate surity the pattern provides. As markets are guaranteed to return to the mean so is the RST pattern guaranteed to return to lower volatility. Im sure you all would like me to declare the direction this pattern will terminate in. I guess I really don't know. It seems likely to me that the direction will be up since its a bull market. The next big question is have the final lows printed. I would expect at least 5 waves in the RST pattern. You can see it all depends on how you count. If I had to guess right now i would say the landscape is set for a high in the 160 area, followed by another trip to the lows. It may or may not reach the lower rail this time. My guess is it wont and a bull market will emerge.
Tuesday, August 28, 2007
My view is that the HUI chart is currently progressing in a impulsive down wave. All the action at the end of each stick down is essentially a bear flag. If you are a good trader you can take advantage of those flags volatility. I really don't know where this phase will terminate. It could be close in time. I have drawn some boxes showing a interesting factoid about the current correction and that of the previous cycle. You will note that price action has stayed in the upper half of the trading range for most of this cycle. The implication is that the action is distribution. It seems likely to this trader that there will be occasions to accumulate this sector in the lower box drawn on my chart. The more important question I have is whether there will be overlap with the previous trading range. Overlap suggests higher order wave action, which will get me to consider alternative wave counts.
Saturday, August 25, 2007
Tuesday, August 21, 2007
Thursday, August 16, 2007
1) xau/gold ratio: It has dipped below .19 and some call that a buy. Maybe it is, maybe it's not. Clearly the chart failed the recent breakout and in classic fashion has started the capitulation run. That cannot be denied. I think I can say for sure now that when this run bottoms it will be THE bottom. At least we know what the market is up to now. Also note that the chart is now officially under trend from the 2001 low. I suspected that might happen and mentioned it in a old post about the ratio. My view is that this episode is analagous to the 2001 bottoming process. This should be our first higher low in the generational bull market. In other words it is the second wave bottom, to be followed by the third wave impulse where all the action will be.
2) VIX: Todays daily vix chart sports a classic gravestone topping candle. These typically appear at maximum fear points where the markets reverse. I am pretty confident a rally is coming off this fear drop today. However, I have a nagging feeling that we haven't really seen the 4 year cycle low let alone the decennial pattern nadir. In terms of timing I expect those in october. So we will just have to see how things develope with the VIX chart in the next two weeks. I will point out that when viewing the VIX chart you should look at daily, weekly, and monthly charts. A monthly outside reversal is a very good indication of a market breadth bottom. We do not have that right now, but it could appear by the end of this month. I do not believe it will however.
3) Wave set and gold stock bottom: Without getting into alot of wave counting, I will just say that I do not believe a full wave set exists yet in this capitulation move such that I can call a bottom. Today was a pretty strong capitulation, but it seems to me it was more of phase I of a cliff dive. I expect a snapback rally now along with the general market that fails in a couple weeks.
4) Get ready! Most important is that now is the time to prepare. The gold sector is near the beginning of the end of this correction. You should now decide how you will deploy your capital and be ready to pull the trigger when the rest of the world declares gold dead. I can't tell you to the day when a low will be, but I know a guy who can.
Friday, August 3, 2007
Tuesday, July 31, 2007
Saturday, July 21, 2007
Here are three charts all with similar patterns. So you have to ask yourself are these charts rolling over and overbought after such a strong few weeks in the gold market, or are they just getting started. Folks, differing opinions are what makes it a market. For sure something is going to happen. I have my opinion, but thats all it is. When it comes to trades like these I tend to try and find a contrarian twist in the chart paint job. For example; If you see a macd bearish cross, but its against a rising cycle, then consider the possibility that the chart is simply oversold in a uptrend. All timeframes must be considered simulataneously and momentum indicators used when appropriate.
Sunday, July 15, 2007
Two strong weeks in the XAU have produced a breakout on the ratio chart. As I suggested in the previous analysis the Gold and Silver charts have both suffered technical damage such that it could have been construed a serious breakdown was in progress. The action in the ratio chart suggests this is not the case. This footprint has been present in this gold bull market from the start. The metal charts must look dangerous for the shares to put in a cyclical bottom. The real question now is are we about to enter a significant bull market impulsive wave, or is this move just another move to resistance that will ultimately fail. Of course I don’t have that answer, but I think the ratio chart has shown us that the 0.28 area is very tough resistance and provides a good guide for timed sales.
I do find the ADX indicator status very interesting at this juncture. The indicator was primarily designed to reveal trend strength, and it is clear that this ratio chart has had a very week trend for some time now. You will also note there was not a real capitulation move in the ratio value. That of course makes sense with this very flat ADX line. In my opinion this is a clue that pressures are building up and setting the stage for a large rise in trend strength. This time period seems analogous to the 2000 period prior to the launch of the bull market. I am not suggesting with certainty that the next move is another major wave set up. There very well could be a clearing event related to the USD short position prior to a significant rise in gold. The USD chart has broken the falling wedge to the downside. This classical throw-over often precedes reversals. In any case we are officially on a buy signal in gold shares now. Just watch the chart carefully and don’t get too greedy.
Saturday, July 14, 2007
I've got two charts for you today. As many of you know I am a proponent of wave and cycle theory and as such I would like to present a observation. A key element of wave theory is alternation. I have been watching a fractal simlarity develop for several weeks now. As you can see in both charts the 2002 fractal is similar in many respects. I havent taken the time to research the ski setup, but It wouldn't surprise me to find that it was on a intermediate "not bull market" buy signal as we are now. In both cases the correction had pretty much run its course and the bulls were back in charge. The problem was there was a bit too much enthusiasm and a rising triangle wall of worry needed to keep it in check. I think the situations are similar. Technically, however, the current triangle rate is higher and that suggests stronger underlying strength. I will point out we cannot be sure what the triangle rate is until the breakout is confirmed. I do think that major lows must not break though for the triangle to be valid. Therefore I will say the recent cluster of lows in the 640 gold area and 320 hui area are likely to hold. That doesnt mean a full retrace can't occur. For now the charts are bullish on a intermediate cycle and likely to continue to rise to the top of the range. Thats not to say the daily charts arent overbought and susceptible to a pullback.
These charts suggest to me that there will be a final drop prior to a breakout to new highs. If its anything like 2002 that drop is going to feel like the end to the bull market. It will of course be your best long entry.
Wednesday, July 11, 2007
Sunday, July 8, 2007
Here's a quick update on CDE tonight. Cde followers will note the recent breakout over the 3.80 pivot. Just how important is this move. Counter trend moves can often be deceiving and get you on board at just the wrong time. So is this one counter trend in a on going bear market for CDE or is it the real deal. Well I'll just let you check out this chart. Something new is definitely up as the ratio clearly suggests. Of course we have a new set of fundamentals with the recent merger plan that is to make CDE the largest silver producer in the world. I won't get into the details of the fundamentals and the value of CDE vs say SSRI. There are some obvious benefits that SSRI holders have had over CDE holders for the last 3 years. However, in a pursuit of undervalued stocks, this one may have finally hit its low. It remains to be seen if they can drive dollars to the bottom line and increase shareholder value however.
Saturday, July 7, 2007
The count I have on the HUI is shown in tonights chart. This is basically the same as Rosen's count and is a pattern I suggested on the ski board several months ago. It is a textbook pattern found in Prechters elliot wave book. The alternative pattern would have involved a five wave "C" pattern that broke to lower lows. This pattern appears to involve a ending triangle to finish the consolidation and is typical of stronger bull markets. You may notice that this bull market still have no overlap with previous wave sets. Eventually that cease to be true as the sector overheats and makes a significant or secondary high. I still cannot rule out that the next move will be up into a secondary high that completes a larger count. We'll just have to see how it plays out. Rosen has suggested this patter is wave 2 in the main third wave thrust of this HUI bull market. If he is right then all hell is about to break loose in this sector. It could be. Anything is possible. If follow the posts here and the ski signals you should already be long, or may be taking some profits now. It's pretty clear the impulsive move off the 320 low is just about to ram into big resistance at 360. Fridays action was significant enough to be considered breakout action. However, key resistance is still above, despite the massive volumes on some issues. So for me I'm just going to play it like any other breakout play and sell a little on strength and buy it back on down days. The key will be to stay long mostly until a higher order sell signal comes up. Most of you know we have a somewhat long run pattern going now. That will likely end by Tuesday, after which some buys can be made on the retrace. If you use Fib levels then use a 38.2% retrace from the 320 low to whatever the high is. That would be my view for the most its likely to retrace given the bullish structure of this pattern.
There are many individual stocks that are showing first breakouts after long downtrends. I have posted about some of them. Also, follow Mootdisputes comments and links and you can see a very good ranking system.
Thursday, July 5, 2007
Thursday, June 28, 2007
"It is important that sentiment return to a negative level for a lasting bottom to be in place. It has been my view that the gold chart continues to stay strong at this stage, but develops a sneaky divergence near the end of the correction that creates a fear of breakdown in the gold bugs hearts. It's this bogus chart footprint that leads to the final bottom in the ratio chart. The typical arguments tend to lay in the wave count interpretations and misinterpretations. It is my view that the wrong count will become likely in the view of analysts at precisely the time when we need a capitulation in the ratio chart. "
There can be no doubt that the silver chart has technically broken a significant trendline. The implications are a significant breakdown to the next trendline which is pretty far down. Gold is in a similar situation. Now checkout the link to Michael Kilbach's article. He has shown a comparison of the silver charts of today and 2005. Yes, they both were broke before the great run. This blog is called paint the charts for a reason. Namely, that traditional TA is only one of many tools to be used. Now look at Tim Ord's analysis. This is a very astute piece of work. I don't know what else you would need to be be convinced there is value in this sector right now. all thats left is to position properly. Readers of this blog are mostly traders that know how to do that. So I will leave you with a final thought. When sentiment is bearish (at bottoms) movements are generally not that great for daytraders. Volatility is low and the real action is setting up. Only in the impulsive waves that follow are there significant profits to deal with. So it's my view that this is a cyclical swing trade setup. Therefore the rewards are going to go to those that are not over trading their positions. There will be times to take profits, and thats ok. However, buy the dips is pretty much mandatory in a cyclical bull.
Tuesday, June 26, 2007
gg: it can still come down to 20ish, but the fundamentals have caught up with price so i like it, plus its a major part of userx so ski's signal applies here.
gfi : could still come under 15, but when it confirms a bottom it will rocket fast. might be a good option play, or not.
rgld: i really like this chart for a swing trade. it might have a 30% move in time.
Im trying to keep it simple for this trade and not go way out on the limb with risky penny stuff that may not go up on this wave. however, a few juniors do have my attention.
gss: tough call, but its at support right now and i see five waves down.
cde: everybody hates it now, so it must be close to a bottom. problem is the overhead supply is enormous
nsu: im seeing accumulation patterns, if it breaks out over 2.40 might run to 3.00, problem is its just as likely to crash to a new low so i will probably just go with short term trades off hourly charts on it.
i looked over all the charts of stuff i have listed on the blog tonight and i have to say for the most part they look terrible. so this bottom buying is likely to have some pain involved. my advice is to average in and keep it simple. if you throw a ton of money at 20 stocks you will probably be sorry.
Oh, dont forget pmpix, its leveraged and i think i like that chart better than gdx.
Friday, June 1, 2007
Wednesday, May 16, 2007
Wednesday, April 25, 2007
Thursday, April 19, 2007
Heres my warning post. Troubles brewing in Asia and the dollar looks very close to some kind of tradeable bottom. A bull trap can come at any time, and a high may be in place. Alternatively we may have a final run to pog 730. The risks should be obvious.
S. M. Himes
Tuesday, April 17, 2007
If you're a trader you are well aware that the current situation in the PM market is dicey. This is a point where we need to use some very simple tools and not get over complicated with cycles and counts. I wont begin to suggest I know if this is a valid breakout. All I know is price is rising and near significant resistance. Not knowing if there is sufficient power in the cycle to push through, all I can do is exercise trading discipline to navigate the waters. Thats pretty much what tonights chart is for. The chart is bullish until proven otherwise. To me it is clear that this hourly chart must stay in tact for long trades to remain open. I have no problem leaving money on the long side when its positioned from the swing lows. However, we are currently near swing highs so the risk has increased substantially. If resistance turns to support then we will be well positioned by using our tools and discipline.
Sunday, April 15, 2007
1) A change of hands from sellers to buyers on at least a intermediate term timeframe.
2) A clear set of higher lows preferrably rising into a resistance band.
3) A compression of intermediate term bollinger bands.
4) Confirming technical indicators, aroon, macd, adx, williams%R. At least 3 should confirm.
Wednesday, April 11, 2007
Here's some closeup ramblings for tommorow. This is a sneaky chart. Sneaky is what the bulls do best. I don't want to spoil the party, but the more I consider the chart the more bullish it looks. I guess we'll soon see. You make the call.
Tuesday, April 10, 2007
Thursday, April 5, 2007
Monday, March 26, 2007
Here's a chart to ponder for a bit. Consider the pennant and primary trendline as seen on a linear scale version of the HUI index. In my opinion the internals are not setup for a sustained move to new highs. The question in my mind is presented on the chart. Which way will the pennant break. Of course nobody can say, but we can contemplate what happens thereafter.
Sunday, March 25, 2007
Tuesday, March 20, 2007
GSS, AEM, EGO, HL
HMY, PAAS, KGC, SSRI
MDG, FCX, AUY, IAG, NEM
Friday, March 16, 2007
Thursday, March 15, 2007
The last major HUI correction occured in 2004 when the monthly macd topped out. If we compare the current cycle to that of 2004 we can see that the correction either is very early in its cycle or there is a major bullish impulse coiling. The Andrews pitchfork diagram shown depicts the likely bullish and bearish price progressions and the "lines in the sand" for such trends. I am the first to admit charts are not crystal balls and anything is possible. So lets consider the possibilities.
1) The current trendline (now at 310) holds, and price enters a parabolic blowoff stage. The monthly macd bottoms and hooks up hard at yet another higher low. In retrospect a wave five impulse will be evident from the then completed chart. 2) At some point of exhaustion (perhaps on a monthly macd histogram kiss) price fails to attain a higher high and the primary trendline fails allowing prices to fall into the mid band of the pitchfork. Since this is the mean of the trend (provided a parabolic blowoff didn't precede the break) it seems likely that prices will gyrate around the dashed line as the bull phase gets back in sync. 3) A bearish phase occurs after the support break outlined above in which price actually enters a bear market and trends in the lower half of the pitchfork. I can only see this if the USD begins a 1 year plus bull market. The bearish phase would represent a capitulation of sorts to negate the SKI-style death run of May 2006. This could be a drawn out process that would be a painful death by a thousand cuts, at least until the final capitulation. In technical terms it would involve a bearish crossing of the monthly macd. This sort of action would also suggest that our 50 month sma bull market envelope analyses would come into question.
Perhaps Occam's Razor would provide the best solution here. To me the simplest solution is that price tends to follow the mean of the trend, and the trend is your friend. That may not be much help for those holding longs from hui 300+ if the lower channel is visited in the next several months. Personally, I rarely hold trades long enough for this picture to disturb me. So we'll just go with the flow, buy when good values appear, and sell when the froth comes back.
Wednesday, March 14, 2007
Todays chart of the HUI shows that price is very close to a major turn. Its basically boxed in. The batwings pattern shown (some call it a head and shoulders) might just be a great "painthecharts" rendering. Of course we don't have the luxury of knowing the outcome yet, but we do have a nice hammer candle on the daily to sleep with tonight. I have to say I'm not sure the current price to MA gap is narrow enough to support a sustained impulse leg in the HUI. The charts of the major components of this index seem to support that notion. I guess I'm not going to get too excited yet, but its nice to have a positive day.
Tuesday, March 13, 2007
Monday, March 12, 2007
follow these links for the others on my mind.
GBN CGR GSS AZK OZN NAK
Sunday, March 11, 2007
Saturday, March 10, 2007
click here for chart closeup
1) Price is and has remained close to the primary bull market log uptrend line for some time now. Price volatilities seem to be decreasing.
2) The 50 month simple moving average seems to be a key technical for the rising tide of the HUI bull market. Notice the rate of change is pretty much parallel to a regression channel for the HUI price itself in the last few years.
3) A comparison to the 2004 support break reveals that the 2004 "price to ma gap" was much larger on a percentage basis than exists with the current monthly candles opening price. This must be a feature of a logarithmic progression in a bull market.
estimated 2004 = (241 - 112) / 241 X 100% = 53.5%
estimated 2006 = (362 - 240) / 362 X 100% = 33.7%
4) The 402 high marked a failure to progress all the way to a trend line top of the parallel to the current log bull market support line.
5) There are negative divergences showing up in the RSI and the ADX. There is also a peculiar footprint on the monthly stochastics in which the time at overbought is significantly shorter than the period leading up to the 2004 support break.
6) A monthly macd warning was given at the end of 2006. In 2004 this signal preceded the major support break.
These are just observations. My first take is that they are a bit bearish. However, there are some bullish things happening too. The big question everbody is asking is whether that primary trendline will break. I've considered that question so much that I finally decided I don't like the question anymore. No chart is capable of predicting the future with any certainty. So why not just change the question.
The way I see it this bull market has some warning signs in the internals, but it also has a clearly defined rising tide. The 2004 picture was one of extreme optimism in a new bull market. Note the gap comparison, not to mention the peak in the hui/gold ratio, which still hasn't been exceeded. The current picture is that of more of a adolescent bull market. Fundamentals have caught up to the 2004 price levels (note the 50 month ma has risen to the breakdown point in 2004) and we are working off some of the excessive valuation from the first "public" impulse in the sector. I call it public because of the events such as the new gld and slv etf's and promotion on cnbc and the like.
Ok, so what is the new question to ask? I think I want to consider the meaning of either scenerio. First what does it mean if support holds at the bull market trendline in question. Second, what does it mean if support breaks? If support were to hold then we would have to consider the upside limitations of the diaganol present from the previous high that failed to reach the upper trendline. If the support breaks then we consider the validity of the dashed line channel as our new bull market channel. Consider a couple TA rules on this.
a) A market tends to progress as long as the three fan rule holds. This was recently popularized on a public forum. Its a general rule of thumb that the break of the third fibonacci fan results in a reversal. The HUI application here is that the chart I submitted today has two in tact lines unbroken one of which is not even drawn yet. My point is that a break of support here is not a break of the bull market.
b) In a bull market previous broken resistance acts as current support. Another way to say this is that overlaps are warning signs of a new Elliott progression. The application to our chart is that price can actually break the primary support trend line without overlapping the previous support price.
So whats a trader to do? Well remember the point of this blog is to identify the landscape and then apply that understanding to position in individual stocks that can give us the most beta. IMO the controlling trendline here is the 50 month simple moving average. It's as simple as that. The closer you can position to that line the better off you will be. My gut tells me HUI is going to trade in the dashed channel. I beleive HUI is now topheavy due to overvaluation of GG and the lackluster performance of NEM. Maybe that will change suddenly at some nadir. Other stocks in the HUI may take up the slack. I think I'll leave it at that for tonight. On another note I plan to post component charts of the HUI and XAU in the next 2-5 days.
Friday, March 9, 2007
P.S. When hyperlinking to charts and/or other links on this site I suggest you right click on the link and select open in new window or new tab better yet to provide easier navigation. On a final note for this post please check out the amazon book links. I will only promote this in a post once. I am only promoting books that I personally consider to have great value for our trading profession.
Wednesday, March 7, 2007
A second technique is Elliott wave analysis. Elliott is no panacea. It is a labeling scheme that can be used to present structure after it has occured. Elliott is not a predictor in the true sense of the technique. Many E-wavers attempt to predict based on what they assume is the valid count. A better approach is to consider all possible counts and make trading decisions based on crossing of key pivots which corroborate the valid count. Shortly I will present my ideas of the two possible counts involved with the PM sector at this juncture. The current picture is widely debated and that provides opportunity to those with the courage to take a stand and be on the right side of the trade. It is not the goal of this trader to pick the bottom. Jeff Kern is the best at that. Rather it is my goal to correctly survey the landscape and provide positioning advice for myself and my friends so that we will be on that right side of the trade and leverage as confirmation occurs.
Please Checkout the Chart Links Below the Posts.