TECH TALK TUESDAY

WHAT DOES A TRIP-WIRE LOOK LIKE ?

        It’s as clear as a bright sunny dawn, that multiple financial failures are what is draining all the cash the FED is putting out as repo’s.   That’s probably not the sun you see coming over the horizon but the closest nuclear meltdown of a bank or derivatives bomb.  Maybe its Deutsche Bank’s meltdown from the money it advanced Bayer to buy Monsanto.

        So unless you are a Friend of the FED, how do you tell the players. They don’t sell player programs to the public nor do they post the game times or timeouts.

        Back in 2013, someone, probably with the $ and blessing of the ESF (Emergency Stabilization Fund)(sometimes employing JPM as agent) hammered Gold and related products down in the TAX Day 2013 Massacre, so far in fact that there is still a gap unfilled from six+ years ago.  The gap shows up a lot better on smaller interval and Gold Stock charts.

        Many, many stocks show gaps, as yet unfilled waiting to be an island bottom, to include GLD, SLV and RGLD.

        So now we play this waiting game, as Gold bottoms out again, and the Fed floods the globe with “play” liquidity, supporting positions that have already popped but cannot be revealed to the public lest they “lose confidence”.

  Due to the untold trillions the Fed has already pumped in during the last two months the bank charts looks as if there are in no short term danger.  Long term, what pops is anyone’s guess, so much has been pumped up so far.

                Lets focus on what we can use to tip us off when things start breaking down.  Using some Indexes of Banks stocks not in the public eye.

        First is a Community Bank Index on Nasdaq, QABA, then FTXO, theNAZ Bank Index, comparable to BKX, and also $BKX, then XLF, the Financials.

For right now, the Financials, the broadest net out there, cover what we need to see.

So for the moment the world is safe. For now.

While the linked article is long and complex, the bottom line is, that it is so ironic that JPM caused the kerfuffle that spiked over night rates for funds to almost 10%.https://www.zerohedge.com/health/its-incredible-scale-what-jpmorgan-doing-mind-boggling

    Basically  JPM paid down its loans, with 130 Billion Dollars of reserves, and poured the rest of the funds into bonds, causing the deficit of lend-able reserves that then caused the spike in over night money, and gave the FED a great excuse to “NOT QE” half a trillion a week into the over night funds market, on a continuing basis.  Hmmmm ?  Was it planned or coordinated.  IMO, probably not.  Did JPM know the FED would backstop or bail them out?  Based on past experiences here, I’d say they bet on that big time!!

        Like I say, “Its your money, you decide!!”     My call here is the FED will keep on bailing anyone and everyone, foreign or domestic, until they can’t. Where does that leave you?  I am always on the watch for incorruptible mediums, not subject to watering down, meddling, or inflating.  There are a number of these mediums available, but generally not pushed by the mainstream paradigm.  A historical quote says “Seek and ye shall find.”, I think it is right.  DG

TECH TALK TUESDAY/FRIDAY

OCT 17, 2019

        Oh its Tuesday, (Friday) yes another bank just crapped out. Sixty (60) Billion this time?  No its bigger, ninety (90) Billion this time.

What we got here is a serial implosion down the daisy chain. Whoops there goes another 100 Billion rat-hole!!! Hey, isn’t it only one a week? OK, some weeks its only 60 Billion!! Maybe its only ¾ of a Trillion annually, hey, its NOT QE, right? Well, maybe its a derivative, that went the wrong way. Or a Whale Trade against the oil price, which drained a Hedge Fund. Does the “Ping Pong Ball, Mouse Trap” detonation scenario bring anything to mind? Look it up on YouTube. Maybe the song “HIGH HOPES” done by Sinatra expresses it best.

It was an insurance company in 2008. In UK, it was Northern Rock Savings. With the FASB accounting board OK’g valuation at mark to fantasy, is this is any surprise that the banks and other institutions are using 300 to 1, or more leverage? With serial meltdowns up and down the daisy chain, it seems to me, that even if the FED moves to fill every hole it can find Some hole, somewhere, sometime will go unobserved, like the lurking subsurface fire after a lightning storm, that emerges in a conflagration that grows exponentially until it exceeds the capacity of the firefighters to bring it under control.

What can the “monetary authorities” do to alleviate a crisis, leading to unstoppable sequence of events.  Short of an alien invasion on the scale of “Independence Day”, I don’t think there is anything that can be done that will neutralize a financial failure orders of magnitude larger than witnessed in 2007-2010. In September, the over night rate spiked from 1% over night, to 8% over night and it took a FED injection of 100 Billion to calm it down by the end of the month to the 2% level. Bottom line? Banks are not trusting each other to lend to, over night. Same symptom as 2008. Will the sequence be the same ? Likely not. Will it follow similar lines? It might. But the tune will be the same.

        This is what it may look like if the serial meltdown of the financial daisy chain gets out of hand:

Another Canary in the Coal Mine

And yet again, Overnite Markets lock up

This Speaks for Itself                                             

  Guess what is happening here ?  All going to MORE cash due to the fact that CASH markets are locking up on a regular basis

WHAT DOES A “SET-UP” LOOK LIKE?

 TECH TALK TUESDAY

OCT 8, 2019

        Red in this chart is the 50 day simple moving average. Blue on this chart is a 20 day simple moving average.  I call this a Double Crescent Formation.  This is an example of a “price” set up, with the two moving averages in upturning crescents.  On-Balance-Volume in this set up is not optimal.  Optimum for OBV would be if it was turning up in the same measure as the Blue line, the 20 day simple moving average.  A note here is that JE often moves counter cyclically but with weak cycles, so at times it may not react as in an optimum “set-up”, but I liked the Double Crescent Formation to illustrate.

        This is not a recommendation, but an illustration, to help you recognize this kind of set up when you run across it.  We will discuss other types of set-ups and where to look for them in future posts.  Good Luck,  DG

TECH TALK TUESDAY

      For most of us the reason for price movements, can be pretty masked most of the time.  This latest weakness in Gold, has a clear reference to China, as shown in this LINK , based on China’s vacation week, its National Days which ended today.  The charts in the linked article give graphic representation of this phenomena going back to 2013.  I think the data exist further back but this is quite graphic and worth a look in my opinion.

      Got to be one of the prettiest Bull Candles I’ve seen, rebounding as if they had read my forecast for the end of Gold weakness.  CCI is an element I use here, helping Bird-dog or Point turning junctions.

4

      Now, keeping the same vehicle, lets look at the 200 Day Moving Average, and refer to On-Balance-Volume.

      Here the 200 Day Moving Average is the mean, constructed for the last 10 trading months, so its stable.  Notably, at the peak of this leg, in early September GDX was 30% above the 200 Day Moving Average, almost completely over-extended until the decline in October. Today the GDX is 10% above its 200 Day Moving Average, in what I think is a completely sustainable position.  For most uses, the 200 Day Moving Average provides a stable mean to compare daily prices with as to determine trend.  This is a Bull Trend now.

      On-Balance-Volume (gray line behind price) provides a check on the validity of a price move, going in directional correlation to the price.  Deviations and divergences from that correlation make me skeptical of the integrity of the price movement.  MACD is in a low position, below zero, perhaps bottoming. Turning up in a bull move would signal good strength, the kind you want under a Good Buy.

      Relative to previous Recco’s and recaps, all are in good standing, not surprising, the strongest and weakest have swapped positions as this Precious Metals market get itself together to resume its up trend.

TECH TALK TUESDAY

TECH TALK TUESDAY

September 24, 2019

How to use some measures 

RELATIVE STRENGTH INDEX

     Pretty much this index is either mis-used or over-used.

        Commonly when RSI is in the upper or lower level it is called, either Over-Bought

or Over-Sold, which are both very inexact and can be terribly misleading.

        Labelling a stock either Over-Bought or Over-Sold, can position and investor to do the wrong thing.

   The term I like to use, is Over-Extended, either to the Up-side or the Down-side.  In each case RSI is in a place where reversals can begin to be effective.

        Below RSI 30 or over RSI 70, is where reversals often come about, but when they come about is not as clear cut without another confirming measure or two.  Just being in those zones is no guarantee of reversal yet.

        We all know we can count on stocks fluctuating, the question

      clearly is how to use that knowledge to your advantage and profit.

        The problem is that a stock’s RSI can loiter in a given zone for some time without setting up a trade.  Weakness or strength in the stocks advance can signal it dropping out of whatever zone its in.  Sometimes after leaving a zone, the RSI can go right back into that zone.

        Saying it is Over-Bought, may give you the idea that a decline is imminent, same as Over-Sold as a term may make you think that stock is ready to run to the upside, but no such thing has to happen in either case until the timing indicators confirm or deny it happening.  Except for a crescendo in the volume and then watching it diminish, there is no extra clue in those charts to give you any hint of what is to come next, or when.  So, do not be given a pre-set idea of what to do when you hear those terms.  It follows that we will discuss confirming measures of using RSI.

        For sake of discussion, RSI in its simplest form, is the current price, divided by the stocks previous price any number of days ago, specified in our calculation.

It is an internal calculation of the stock’s internal strength, either stronger or weaker.

        So now, neither chart gives you any indication of a support or resistance, for either of these stocks, so without further confirmation, this is a guessing game.

        So, when we take up further using other measures to confirm or deny the validity of an Over-Extended move, we will try to find out which way this is going, and if we are luck, how far it might go.

DG

FRIDAY FINAL

September 21, 2019

PICK THE TWO (2) DECISIVE EVENTS

FOR THIS WEEKS PRICE ACTION

  • BLACK SWAN ATTACKED SAUDI OIL PLANT;
    • OVERNITE INTEREST BETWEEN BANKS SOARS TO 10%;
    • JUSTIN TRUDEAU APPEARS IN “BROWN-FACE”;
    • RUSSIA PREDICTS OIL PRICES FALL TO $25 NEXT YEAR;
    • US NAVY CONFIRMS “UFO” s ARE IN FACT, REAL;
    • FED LENDS $100 BILLION TO BANKS THIS WEEK TO COVER LOSSES.
    • BRENT CRUDE OIL SPIKES TO $70 A BBL, SETTLES AT $60
    • SAUDI ARABIA SAYS ALL DAMAGE TO OIL PLANT REPAIRED

        Which two (2) events, in your mind, had the greatest effect on price action in the markets this week?

        To my mind, not anything on this list had any more than a 24-hiccup effect on any of the markets out there. Nothing.  These two charts show graphically.

        Now if all this is true, why is the Inflation Index lying to us in the open?

Because the inflation index, knows The truth as to what happens on its turf.

        Except for items # 2 and #3, there is little we can do to verify any of this.

Even the best due diligence investigation we can do, cannot produce any real evidence of any of this, except by what we are told by “Official Sources”. 

        Thus, like John Snow of “Game of Thrones” fame, we “know nothing.”

I don’t need to boggle you with packs of charts.  Evident, is that someone knew something.  We know it was known to “them” in the month of August.  Who “they” were cannot be verified, but chances are its the “usual suspects”?

        Rather than the laundry list of our most recent bad actors, lets look at WHAT happened that we can verify, and “cui bono?”, Latin for “who benefits?”

        In the chart of XVG, we see prices languish during August, only to sprint in September to a level yet below their heights in July.  XVG is the “average share” of stock in Value Line’s Index, so the changes would appear in most every stock out there.  OK, that is a fun fact, so what?  It means to me, that “they” or someone, knew by end of August that a rally was imminent.  Now with oil prices declining to $25 a bbl, by the end of next year, it would mean that many oil producers and Saudi Arabia, in reality, would be bankrupt.  Now if a huge player, a “whale” as they are named, bet that, it could make or lose a lot of money.  The “whale” bet lost, as evidenced by the FED having to pump $100 Billion into the market for overnight bank lending.  Banks would not or could not lend that $100 Billion to keep the “whale” afloat, so the Fed had to step in or watch the whole lending system lock up as it did in 2008. 

        So what?  Well the current situation, due to all the money pumping that occurred from 2008 to now, means that we are now exponentially far above the place from where the economy and markets fell in 2008 – 2011, and with far less support.  Given a scientific wild guess on the subject, I would we are one hundred (100) or more times pumped up than where we were in 2008.   A simple reading of Zombie companies (those who would be insolvent without constant borrowing),

I think would support that supposition.  So what?  Well what happens when the lending stops?  Something breaks in the financial system with a loud snap as it did this week, and the Fed has to step up and throw bundles of funny money at it, to try to stem the bleeding in the wound.  Why is that a problem?  Because, friends, someone is not a believer or beleaguered to the extent they must act in a contrary fashion to protect themselves and cause the financial system to start bleeding from a new wound.  This is a self-replicating cycle, and each wound becomes larger than the previous, and creates consequences many times that of the wound.  You see where this ends?  I do!  The safest thing to do is to buy things of known value, mostly likely with physical value and assets, that cannot be expropriated by others, man, nor beast, nor government.  I leave the selection to you, and invite you to subscribe to the DGS Letter to learn more.  Good Luck!!

TECH TALK TUESDAY

BULL CANDLES and MACD

Check back on our discussion of MACD in Tech Talk!!

        So XLE is comprised of about 30 stocks, and the above curve measures the speed with which the number of stocks OVER their 50-day moving average increase or decrease, based on the MACD formula (Above).

        Below is based on the price of crude oil, interpreted in Bull Candles.

 On or about September 3, a Bull Candle appears, (unmarked), just poking its head above the trading range at 6.20, then falling back to 6.10 support level.

What no one got is Chart Above + Chart Below = Saudi Oil Plant attacked by BLACK SWAN!! – Now, was it a FALSE FLAG ATTACK?

With 19 precision hits was it the Houthi Rebels, you think?

Was it the way to get the oil price up where it is needed for producers?

        So, when MACD Signals and Bull Candles result, Big Things can happen!

Here we have a downtrend, looking as if it is punctured by two big Bull candles already penetrating the 50-day moving average to the upside.  Unlike Rogers, this cannot be a Three (3) White Soldiers formation as the 2nd bull candle did not open within the body of the first bull candle.  Later it could become a two-candle continuation pattern, as long as the gap between the first two candles is still open. 

To me this seems quite promising.  Next Gen is a uranium finder, developer and miner, so it has the risk profile unlike that of petroleum companies.  As well this uptrend could flop, but when something is set in motion with this much energy underneath it.  If this continues, the 200-day moving average is within reach let’s say in a week or two, of being breached to the upside, again, a bullish development.  Now maybe in the next post or next week, we can see what the On-Balance-Volume is doing to validate or deny the current moves.

TECH TALK TUESDAY

Let’s look at Moving Averages

Moving Averages, 20 day, Blue and 50 day, Red, as shown here:

        Basically, as long as both the 20 and the 50 are in Sync, the trend continues at least in the Intermediate term.  If I showed a Long-Term Moving Average such as a 200 day, then there would be what we’d estimate to be a base level of support.  Given the 20 and 50 rising, the 200 would not come into play if the close is far above them.  In the case of CCW.V, the 200 dma is at .40, so will become resistance when its approached.  In the case of GGD.TO, the 200 dma is at .34, and so is support far below where it is now.  We have One stock far above support and one stock approaching resistance (the flip side of support).

In the case of CCW.V, with enough energy under it, it will breach resistance and it will become support once it does.

        So, Moving Averages often show direction, and possibly trend.  Should CCW.V breach its resistance at .40 and stay above it, you could easily say it reversed trend and is now headed up.  There is one stock, GGD.TO that is in an uptrend, and one stock that may turn itself into an uptrend.  I use Moving Averages as an advance indicator, to find stocks I want to watch.  If we add back a supporting measure like On-Balance-Volume, they we have more evidence of how the trend might go. 

        Maybe for the next time we will touch on the 200 Day Moving Average, and maybe later or as well, On-Balance-Volume. 

Meanwhile Good Luck.  DG

FRIDAY FINAL Aug 30, 2019

WHATS UP WITH THE USUAL SUSPECTS WE FOLLOW ?

        After sorting thru all the Parallel Line charts, Relative Strength, and some other criteria, a number of candidates presented themselves.

        That being said, you can see if not feel that we are going thru a correction in the Precious Metals, and yet Silver is feeling frisky, so if your going to buy something,  you will want something with energy underneath it and in the bottom half of its range.  Two of those are presented here for  your view.  OLA.To, and LUG.To, both in Latin America.  OLA is involved in 2 leaching projects in Panama and Mexico, while LUG is working the Fruta del Norte, with vast concessions in Ecuador, and has started mining its first entry there.  Metal pours are anticipated this year.  Here is what they look like.  More charts next week, let say on TUESDAY, with explanations of Moving Averages.

        As you can see, both of these have touched their 20 Day Moving averages.

 Generally the faster the advance, the more intense the correction, all things equal, however they are not equal here, both are touching their Lower Limit in the Parallel Bars charts, so it is equally likely NOT to see an anymore correction in either of these.   The Buy Limits, Sell Limits and Targets are covered in the current Half Price (limited time) subscription as well as the Silver Stocks, probably a half dozen stocks in all.  As always Satisfaction Guaranteed, or your Money Back.

        Have a great weekend, be safe out there, and Good Luck.  Happy Labor Day and see  you on TUESDAY.

DG

TECH TALK TUESDAY

August 27, 2019

      TRENDS are a “fitting” topic.   Remember the parallel bars in gym class?

Easy for some, difficult for others, always one arm slipping before the other and down we go.  Trends are like that.  Something changes up or down and the Trend changes. 

Here goes:

        Cannot deny that this is a TREND, in the defined as an INTACT TREND.

        The fact that two different time frames identify it the same, as an

INTACT TREND, so below is the same chart on a Weekly basis instead of the first one, which is a daily chart.

        So seriously folks, is there really a dime worth (not silver) of difference between these two-time frames?  In my world, I think not!!

        The only thing you could discriminate upon examination of these charts, is where you decided to pull the trigger, like on this one:

Depending your risk appetite, and itchy trigger finger, sometimes you get the jump on the trend, say with PGM, buying it as it broke out of the trading range, which topped out at C$0.60.  More burnt fingers, but bigger profits, is the rule of balancing risks against rewards

 So now you have another tool, “Parallels”

TECH TALK TUESDAY

August 27, 2019

        To review, here are the tools we had from before today:

        TOOL #1 in your Profit Kit is B.U.T.,BUY UP TO”.

          TOOL #2 in your P-Kit A.C.M.E. “AFTER MARKET CLOSE EXIT”.

        TOOL # 3, should be P.E.T.: “Probable Estimated Target” – now you can decide if you want to take a profit, or stay in, odds of getting stopped out increase as you increase your A.C.M.E., with price moveups.

          TOOL #4 will be M.A.C.D., “Moving Average Convergence / Divergence.” –  You measure the acceleration in your movements.

        TOOL # 5, PARALLELS – your way of watching the lesser trends inside the main trend and their direction.  You can do it on Stock Charts on in DGS Letter, or with a set of parallel rulers on a basic price chart.

So here we have TOOL # 4 and #5

MACD & PARALLELLS.  Tools 1-3 relate conditioning your buying and selling to use advantageous means, and one more on the way later as well.

        MACD and PARALLELLS give you the guidance, hints and clues, as to when to act and what to do.