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.
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.
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!!
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.
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.
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.
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.
Either addresses the current CUT 2
CHASE question.
Blind faith can be good or bad, but tempered with some
evidence, might be a good thing. Let’s
look at several categories of evidence concerning the position and trend of
Gold and Gold Stocks.
PRICE & Long-Term Trending.
Above the GDX is
shown in a 2+ year chart.
Underneath it starting in June is its 30 week
Moving Average.
It is bracketed in Blue by an upper and
lower limit which define the upper and lower limits of this advance, plus a
centerline as a tripwire to determine direction of price
Thus, this criterion is
positive
Next are OSCILLATORs
Directional Oscillators are next, to help us determine
direction.
The solid line, Aroon Oscillator, is helpful
in determining trend direction, and in this case, climbing down, is indicating
a correction down to support is going on now.
3. Confirmation Measures help us gauge
whether two values are in sync. Like the
DJ Industrial and the DJ Trans stay in sync, helps us accept their moves. Same for Gold, the Metal and Gold Miners, the
Stocks.
In
this case, the Mutual Fund OUNZ which can deliver REAL GOLD, and the more
conservative Gold Miner Index XAU, are shown together one can see that they are
in sync with each other. What that does
NOT mean, is that they cannot go down, as they CAN also go down together. It shows this move is valid.
What this analysis leaves me with is the
possibility of a sharp drop to fill the gap created on Jun 20, with an
Intra-day spike down to the 24.03 level to fill that gap and then a reversal
day to the upside, either that day or the next.
That
leaves me with HOLDING the stocks I bought in May and June and taking profits
in issued without solid relative strength.
In any case, the drop will be temporary. Using other measurements, I suspect the
gap-filling moves will result in a bounce of the base, and a reversal to the
upside between September 1 and October 1. Until then I continue to Recommend individual
stocks for buying on the dips.
As
an add-back to my Recco’s, I remove the AVOID from CCO.To and add it
back to Reccos, (CCJ also) as well as adding Dennison Mines, DML.To,
(DNN), as it seems some Uranium issues have come back to life.
WHEN the GDX or HUI JUMPS the 31-32 gap,
(The Straits of Hell) there will be an amazing show of strength
given the Government corruption of the Monetary System. Whether it JUMPS the GAP or merely wades
thru it are not as important as WHEN it
breaks above the GDX 32 / HUI 300, which has not been seen since July 2013.
ONCE A month, our DGS Letter,
gives simple and plainly worded summations of the current Analysis with NO
Technical Terms, just BUY – SELL – or – HOLD. Unique STOPS and TARGETS with each Recco, and
Update as necessary.
Recommendations,
Buy or Sell as they happen for Subscribers, out today if you wish to catch
yourself up on our RECCO’s
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 will be M.A.C.D., “Moving
Average Convergence / Divergence.”
The BLUE BARS are the Histogram
that represent the numerical value of the MACD. That same value is the black
line. Same for the BLUE BARS. The interaction between the BLACK and RED (9
day Moving Average of the BLACK line), make MACD function like an Acceleration
Meter. The steepness of its upcurve or down
curve shows you how intense the G-Force is and whether its Increasing or
Decreasing.
The MACD is figured on the
difference between the 12-day Exponential Moving Average and the 26-day
Exponential Moving Average.
Exponential
Averages move faster than Simple moving average, so things can change in a
hurry.
Watching the changes in
acceleration is often a first hint before price starts moving, for or
against you.
With three (3) specific values in
MACD, you can watch them for interaction to give you clues and hints about what
may come next. Now that you know what it
is, watch it for a while, and we will cover how to use it effectively as part
of your Profit-Kit.
Since I deal in Technical Analysis, trying to divine things about stock, the subject of where a stock is going is often raised. It is a question to which I always answer: “I don’t know.”, and which I follow on with: “There are a number of ways that you can form a Scientific Wild Guestimate, which often works out, and is accepted among most stock market technicians.” Let me illustrate one here:
This BALANCE scheme is based on the
equality of a SINE wave above and below Zero, at times called ZERO BALANCE.
Does it work? Yes, and No, so its a good method for trying to approximate how far some stock might run. A weak stock will punk out and a strong stock will overrun it, which is why I use B.U.T. And A.C.M.E., to try and gauge when to get out. Want to apply it to a stock or do more? Drop me a note, make it happen!
Information
contained herein is for educational and informational purposes only. Investors are responsible to execute their own due
diligence investigations to protect their capital. Publisher or associates may have positions in
these stocks as well. Copyright Denaliguide, DGS Publications, 2018-2019
Denaliguide Summit 