Thursday, June 28, 2007

Signs of the Times

There are two very nice analyses out there I want to link to tonight. They do a fantastic job of pointing out why the current landscape in the gold/silver sector is just right for a bottom. The links are show below. First, I want to remind everybody of a statement I made in the Xau/Gld ratio post several weeks ago. I quote

"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.

S.M. Himes

Tuesday, June 26, 2007

Buy yet?

This time of year is typically a time to be a buyer of gold/silver stocks. Of course after witnessing todays carnage many of you may be thinking it best to wait and see how bad this gets. Some key lines have been broken and that suggests caution. In terms of the ski patterns we are flying without stops by buying now. One thing I have consistently found to be true in this sector is that buying fear and selling greed almost always works, and buying a falling market without a stop is certainly fearful. Anyway, I've compiled a short list of trading vehicles that I am contemplating for the next cycle.

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

Watch the comments

Here's a quick note today to thank poster mootdispute for his lengthy analysis posted in the comments section of this blog. Be sure to check out his links for stock rankings and other goodies. I've been out of town for awhile and unable to do much posting. So hopefully his posts have filled in the blank a bit. Anybody who follows this sector knows we have had a two day explosion in the gold stocks. Some are still wondering if they should get on now or wait. I'm just the same as any other market follower. All i can do is follow signals like the rest of you. My view is that this move so far is a momentum move and there is no evidence of anything other than that. so it will move until the momo is gone and then we will find out whats under the hood. I will put more time into the blog to get some charts updated. On first glance we have seen many breakdowns and technical support breaks that suggested another leg down. It is just like the gold sector to blow you away with moves like this just when you think the bottom is going to drop out. I have been watching that silver chart in particular at the great head and shoulders paint job. after the last few days its becoming clear its not really a head and shoulders. I'll be posting more soon so stay in touch.

S.M. Himes

Gold Seasonality

Gold Seasonality
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