Weekly Digger - July 24-31,2005

[ThorAss]

I see I didn't c;early define what I meant by a "break". My idea of a break may not be the average persons. Most people now would cal it a break on a move or possibly a close above the July 206 high. Wheras this would constitute a break, depending on how we get there, we may have what I would call a break on a lower level even if we don't take out the recent 191 low point first.

Another thing, we are temporarily trapped between the 38% and 62% retracement levels of the move from 191.6 to 202 on the Hooey.

[traderfromhell]

So far the XAU has received support at the 50% retrace of the range from the lows to the move to 113. The HUI has received support and has made a double bottom (163-165) well above the 50% of the range hi to lo. Silver's 6.80 is still intact as is Gold's 410. This could be as Petch suggested a while back to be a flat correction which is very bullish long term in an ongoing bull market in the miners. The wild card might be a collapse in the broad market. Interesting to say the least. It might not be a bad idea to invest a small portion of your money allocated to the miners here say 25-33% and let it ride and await a signal for the balance of your funds.

[rott]

For the larger time frame view IMO it's really very simple. Until Greenspan changes direction we are in wait mode.

 

http://finance.yahoo.com/q/bc?t=5y&s=%5EIR...=m&q=c&c=%5Ehui

 

 

Certainly some that have their own reason for growing, great deposits, new low cost mine...stuff like AUY, DEZ and OZN bucked the trend but generally the higher short term rates put an end to the party 12/03

[traderfromhell]

Notice how much time this market is taking to decline/consolidate versus the speed at which we went up. Since we have consolidated at the higher end of the range I consider it bullish unlike the move up in the mid '90s.

[ThorAss]

Notice how much time this market is taking to decline/consolidate versus the speed at which we went up. Since we have consolidated at the higher end of the range I consider it bullish unlike the move up in the mid '90s.

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I don't believe what you're describing is a sign of bullishness so much as a description of market dynamics. Bullish or not that is how markets tend to work.

[ThorAss]

For the larger time frame view IMO it's really very simple. Until Greenspan changes direction we are in wait mode.

 

http://finance.yahoo.com/q/bc?t=5y&s=%5EIR...=m&q=c&c=%5Ehui

 

 

Certainly some that have their own reason for growing, great deposits, new low cost mine...stuff like AUY, DEZ and OZN bucked the trend but generally the higher short term rates put an end to the party 12/03

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Red Rat,

 

I agree whole-heartedly with you on the obvious inverse correlation to US Treasuries. The fate of Hooey is tied to the fate of gold and the main alternative to gold is US trashuries (long bongs). Although I don't use this info to trade I do watch and graph it. See DrAu's House of Fun.

[ThorAss]

I've been hopping back and forth like a spring-loaded roo between the when and the what of PMS trading ever since I began to believe my hopes for a buy and hold type of approach this season were unfounded. Yesterday's missives were all about the when. When to buy and when to sell. Today's about what to buy and what to sell. I'm avoiding the whole vexed issue of shorting miners. I may or may not short miners but I wouldn't talk about it anymore and especially not here. For the purposes of my timing and models I'm purely talking about long or cash. Mind you if any bright lights would like to discuss some good liquid alternatives for "ungold" type investments which will outperform cash during the frequent and long flat periods, I'm all ears and horns. A bond fund perchance???

But I digress. The WHAT! Well for me it's stocks, not funds, not ETFs, not warrants and not options. That's me! I stick with miners, explorers and producers, gold, silver and PGMs with preferably not a great deal of contamination from other resources such as copper. Not that there's anything wrong with copper, it's just I'm a precious guy. I haven't been too concerned about country risk 'cause I figure it's baked in to the stocks and charts. I consider only stocks traded on US exchanges because that's what I can trade with my broker from over here in Valhalla. I don't trade the PM funds because my model calls for intra-day trading (never more than 1 move in a day) plus I think I can outperform them. My commissions are reasonable so I'm not afraid to play a few stocks. 5-15 is a good sized basket IMHO. I'm not afraid to buy one day and sell the next if my timing gets whopsawed and the commissions are just an expense of the model.

I like range (not the stock RANGE but the difference between highs and lows) and I like volume. With low range you will underperform on the ups and outperform on the downs. Since you will not be IN the stock during the downs you will always underperform with low range stocks. The important of Volume and Price Volume are obvious. Without liquidity you will plus the price up to enter and down to exit. Since the model is inflexible on timing, a highly liquid stock is preferable. You can't wait for them to come to you. You will often be selling into a falling market and buying in a rising. You need someone on the other end of your trade.

I set some limits on price as well. I have toyed with cheaper stocks but I have now set my lower cut-off at $.9 and upper at $100. Not that many PMS stocks sell for more than $100 anyway. I have a sliding scale for volume and a cut off for Price*Volume. No stock that doesn't average 200,000 shares a day will be included no matter how good it looks, however and most will be doing much higher volume.

Once my initial selection is done I may throw out a few I don't want for reasons of contamination or whatever... such as AAUK, CCJ and FAL. I may add in a few "Newies" which may not pass my strictest of criteria but are performing well such as AUY and DEZ.

I start with a stable of about 114 stocks to choose from but by this point am down to about 30. Next I look at a comparison of each of the 30 to the Hooey by way of ratio charts going bacj to the Hooey low in Nov 2000. Stocks that tend to match or beat the Hooey during the up phases pass and those which don't fail. In my most recent assessment this dropped me to 19 stocks. Next I compare the stocks to each other and the hooey by way of performance charts and I concentrate on the most recent upcycle for the hooey which I have as a 40 day 1/2 cycle from midMay. The stocks that made it this far but fell at the last hurdle were:

 

IAG

IVN

NTO

TGB

 

These stocks need to be watched carefully but not traded by my methods.

 

I then have divided up the 15 stocks left standing into 3 groups of 5. I will try to get all from group I then fill out what I need from II then if need be III.

 

The best group is:

AUY

BGO

DEZ

EGO

HMY

 

The second group is:

CDE

GG

GLG

GSS

SWC

 

The third group is:

GOLD

MDG

PAAS

RGLD

SSRI

 

Not all great stocks are here. You don't see OZN or TRE or MNG or a host of others. They have all fallen away for 1 reaon or another.

Well there it is. I hope you have enjoyed my little seminar. I don't own any of these at the moment but that brings me back to timing.

I own just one stock and it is a company specific issue (ie gamble) and not on the timing track.

Good luck and good trading or fading!

[ThorAss]

Why I sold at Hooey 204 as lifted from that other PMS forum.

 

I wrote yesterday that I don't use candles for my SELL timing but that was not entirely correct. What I don't use is single day or 2 day candles. I do use some multiday patterns such as shown above.

[Guest]

Nice stuff, thanks for sharing everyone. My contributions are but baby minnows among a sea of sportfish.

[Ander]

Bought [email protected]

 

Will continue dollar cost averaging into it until it goes significantly higher.

[Ander]

Looks like a small inverse H&S on WTZ. Now right at the neckline.

[Ander]

WTZ broke the neckline, going to 9.55-9.60

[Guest]

http://www.sortweb.com/cwsimages/Miscfiles...denSolution.pdf

this is interesting stuff from forbes. worth the read

thor, thanks for your thoughtful entries here. i have noticed, speaking of a subject much to thors distrust/dislike, that saturns cycle (30 years ) tends to correspond to golds movements. gold topped in 1/80 and bottomed in 01. a 301/2 year inverse. i am very very aware of the 8 yr. cycle but dont base my gold trading decisions on it.

in here, i am assuming that the major trend is up and we have been in a correction since 04. right here everything in the pms is neutral. above 96 and we test the highs. i am looking for this correction to chew up more time and possably get to 85s on xau. my boat is fairly loaded. no margin and no debt. w/ interest rates so low, and no real viable alternatives* ideas welcome and appreciated. i can wait. 3.82 on a year cd is still losing $$$ to inflation. to my mind, the metals have done nothing for 30years, yes there was sound and fury signifying nothing. every other investment vehicle has appreciated, and appreciated substantially. so, i expect, eventually the pms day will come and it is not only on my radar, but also i have put a good %of my disposable cash in the sector. the dolar is toast, this correction looks over to me. 5-3-5, abc in elliot terms w/ c being over. i can wait

this am i shorted the qs, on the hourly and daily it has multiple divergences. @39.91 i placed my bet. w/ a short stop. sentiment is off the charts. the bulls are wetting their pants. on a longer term chart weekly, it is overbought. the bradley was yesterday, so what the ..... dharma

[yellowfish]

NG - just put in double bottom. ....

 

Now trying to catch-up with the other miners?

 

Old Habits - You were right! I should held those Sept GG calls as they went back up today - This crap is making me wacko

[traderfromhell]

http://www.sortweb.com/cwsimages/Miscfiles...denSolution.pdf

this is interesting stuff from forbes.  worth the read

thor, thanks for your thoughtful entries here.  i have noticed, speaking of a subject much to thors distrust/dislike, that saturns cycle (30 years ) tends to correspond to golds movements. gold topped in 1/80 and bottomed in 01.  a 301/2 year inverse. i am very very aware of the 8 yr. cycle but dont base my gold trading decisions on it.

in here, i am assuming that the major trend is up and we have been in a correction since 04.  right here everything in the pms is neutral. above 96 and we test the highs. i am looking for this correction to chew up more time and possably get to 85s on xau.  my boat is fairly loaded.  no margin and no debt. w/ interest rates so low, and no real viable alternatives* ideas welcome and appreciated. i can wait. 3.82 on a year cd is still losing $$$ to inflation.  to my mind, the metals have done nothing for 30years, yes there was sound and fury signifying nothing. every other investment vehicle has appreciated, and appreciated substantially. so, i expect, eventually the pms day will come and it is not only on my radar, but also i have put a good %of my disposable cash in the sector. the dolar is toast, this correction looks over to me. 5-3-5, abc in elliot terms w/ c being over.  i can wait

this am i shorted the qs, on the hourly and daily it has multiple divergences. @39.91  i placed my bet. w/ a short stop. sentiment is off the charts. the bulls are wetting their pants. on a longer term chart weekly, it is overbought.  the bradley was yesterday, so what the ..... dharma

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Agree dharma a low risk short entry. Same for myself. Via USPIX. Double inverse the Nas.