Monday, May 6, 2013

Is the Rally Ending?: NYSE Margin Debt Nears Record

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How to Trade Gold, Silver & Precious Metal Miners

How to trade Gold and other precious metals related investments is not that complex. But you must be willing to wait for price to provide low risk entry points before getting involved. Precious metals are like any other investment in respect to trading and investing in them. There are times when you should be long, times to be in cash and times to be short (benefit from falling prices).
Since 2011 when gold and silver started another major bull market correction the best position has been to move to cash or sell/write options against your positions to protect your investment until the next trend resumes.
If you take a look at the chart below of gold you will notice that in 2008 we had a similar breakdown in price which purged the market of investors who where long gold. And if you compare the last two breakdowns they look very much the same. If price holds true then much higher prices are likely to unfold at the end of 2013.
The key here is for the price to move and hold above the major resistance line. If it can do that then we are looking at a possible breakout to $2600 – $3500 gold. With that being said gold and silver may just be starting a bear market. Depending what the price of gold does when my resistance level is touched, my outlook may change from bullish to bearish.
Also with last weeks economic numbers getting better in the USA I do have concerns that gold may be starting a bear market but we will not know for several more months yet.

How to Trade Gold Daily Technical Chart:

Major technical damage has been done to the chart of gold. This can be seen as bullish or bearish price action but until price and volume pattern unfolds which puts the odds on the bullish or bearish side I remain neutral.

How to Trade Silver Daily Technical Chart:

Silver is in the same position as gold. The question is if this is a shakeout or breakdown…

How to Trade Gold Mining Stocks Monthly Chart:

Gold mining stocks broke down a couple months ago and continue to sell off. If precious metals continue to move lower then mining stocks will continue their journey down. The chart below made in February and it has in most part played out as expected. While I do not try to pick bottoms (catch falling knives) I do like to watch for them so I am prepared for a new position when the time and chart become bullish.

How to Trade Gold, Silver and Mining Stocks Conclusion:

In short, precious metals continue to be in a down trend. While they look to be trying to bottom it is important to remember that the largest moves take place in the last 10% of a trend. So we may be close to a bottom but there could be sharply lower prices yet.
The time will come when another major buy or short signal forms and when it does we will be getting involved. The exciting part is that it could be just around the corner.Please share this article

Technician Stan Weinstein: Still A Bullish Outlook For Stocks

by James J Puplava CFP
Financial Sense

Jim is pleased to welcome back technician Stan Weinstein, editor and publisher of the “Global Trend Alert,” a financial advisory service for institutional investors. Stan sees the possibility of a short-term correction, but believes the current rally has more legs, given that the S&P closed above 1600 on Friday. Stan is still clearly bullish in his outlook, and also notes the rapid sector rotations. If we get a correction, he believes it will be a controlled correction. Stan is neutral on bonds, and negative on gold, at least for the next few months. Also in this segment, Chris Puplava gives his macro outlook for the second half of this year, Erik Townsend looks at commodities, and Rob Bernard has the Fixed Income Report.
Click Here to Listen to the Audio

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Abercrombie & Fitch Co. (NYSE: ANF)

Abercrombie & Fitch Co., through its subsidiaries, operates as a specialty retailer of casual apparel for men, women, and kids. It operates through three segments: U.S. Stores, International Stores, and Direct-to-Consumer. The company sells various products, including casual sportswear apparel comprising knit and woven shirts, graphic T-shirts, fleece, jeans and woven pants, shorts, sweaters, and outerwear; personal care products; and accessories for men, women, and kids under the Abercrombie & Fitch, abercrombie kids, and Hollister brand names. It also offers bras, underwear, personal care products, sleepwear, and at-home products for girls under the Gilly Hicks brand. As of February 2, 2013, the company operated 912 stores in the United States and 139 stores internationally. Abercrombie & Fitch Co. sells its products through its stores and direct-to-consumer sales. The company was founded in 1892 and is headquartered in New Albany, Ohio.
To review Abercrombie's stock, please take a look at the 1-year chart of ANF (Abercrombie & Fitch Co.) below with my added notations:
1-year chart of ANF (Abercrombie & Fitch Co.) About a month ago I wrote an article about ANF forming a head and shoulders pattern, but since then the stock seems to have moved into a common pattern known as a rectangle. Rectangle patterns form when a stock gets stuck bouncing between a horizontal support and resistance. A minimum of (2) successful tests of the support and (2) successful tests of the resistance will give you the pattern. ANF's rectangle pattern has formed a $50 resistance (red) and a $45 support (blue).
The Tale of the Tape: ANF has formed a rectangle pattern. The possible long positions on the stock would be either on a pullback to $45, or on a breakout above $50. The ideal short opportunity would be on a break below $45.

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High Supply and Weak Demand Impacting Crude

Crude oil inventories skyrocketed in an announcement today and it sent crude crashing by as much as $3 at the lows of the session.  This was the largest weekly increase since September and it puts inventories at an all-time high.  The announcement was further evidence that a combination of higher supply and weaker demand is having an impact.  This is also the general theme across the commodity space, demand is weak and pricing is beginning to reflect this.  We’re all so fixated on the FED’s impact that we might not be focusing on the right (demand destruction) issue.

Whenever you receive surprising announcements like this which favor the trend of the current Cycle, you generally will end up with larger moves in the price.  My Cycle count has Crude on Week 24 and a Daily Cycle that was more than ready to roll over to form a Left Translated Cycle.  The evidence or confirmation of a LT Daily Cycle has yet to present itself, but I feel that the reaction to this news (while the Dollar was dropping) was exactly how I expected Crude to react at this stage of its Cycle.
So we will need to see if there is downside follow through tomorrow.  Another fall tomorrow would confirm the 10dma is lost and a pattern of lower highs will remain in play.  That pattern projects one deeper low to come, which obviously in my opinion will be the eventual ICL.  If we’re to form a deeper ICL, then we should look for a rapid decline down towards the $82-84 level.

Investor Cycle Trading Strategy – CRUDE OIL

Crude has reversed lower as I’ve been expecting, now its matter of seeing follow through to the downside as this Daily Cycle should form Left Translated and decline over the next few weeks.  If last week’s highs are re-tested and taken out, then it’s likely that the Investor Cycle count is incorrect; I don’t believe new Cycle highs should be made now.
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Fed Induced Stock Market Mania

by Dan Norcini
Trader Dan Norcini

After watching the effects of the mediocre payrolls number yesterday (Friday) which culminated in a push over 1600 in the S&P 500 and a print in the Dow over 15,000, I thought it might be useful to note a few things about this most recent example of a hysteria.
I am on record here as stating that the entire stock market rally is nothing but a Federal Reserve induced bubble brought about by artificially low interest rates starving investors for yield elsewhere. The Fed, along with the Bank of Japan and the ECB I might add, are determined to corral investors and herd them, unthinking like cattle, into equities; the goal being to create an atmosphere of general euphoria towards the economy boosting consumer confidence in the hopes of inducing them to take on more debt and spend.
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US Weekly Economic Calendar

time (et) report period Actual CONSENSUS
2 pm Senior loan officer survey 1Q   -- --
TUESDAY, may 7
10 am Job openings March   -- 3.9 mln
3 pm Consumer credit March   -- $18 bln
  None scheduled        
8:30 am Weekly jobless claims 5/4
337,000 324,000 
10 am Wholesale inventories March   -- -0.3%
2 pm Federal budget April   -- $59 billion
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Gold Prices Rise Alongside Cost of Mining

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