Wednesday, September 10, 2014

I Am Re-Iterating Last Week’s “Buy” Signal In Mining Stocks

by Dave Kranzler, Investment Research Dynamics:
Last week I posted analysis explaining why I thought the market was giving us “buy” signal from the trading action in the mining shares. As everyone should know, stock forecasting is more like “horseshoes and hand-grenades” than a precision science. Based on the action from Thursday and Friday, I am re-iterating my strong buy call.
During the last week I saw three strong contrarian signals that the manipulated sell-off in the precious metals was bottoming.
1) The Marketvane gold and silver investor sentiment readings hit levels not seen since June 2013. The silver sentiment reading hit it’s all-time low seen June 2013. The gold sentiment reading did not hit an all-time low, but it went below 50, a level which usual coincides with market bottoms.
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The Dow 30 Industrial Average is at a point of huge resolve. On the one hand we hear the bulls declaring that there is going to be a sustained rise over the next year or so, then on the other hand the bears are calling for a massive drop. What's it going to do? Just look at the monthly chart of the Dow is log scaled and you can see that the 15 year old resistance line across the tops and the 5 year old uptrend have June the index pushed up marginally through the resistance line and then last month the index dropped marginally though the uptrend and is now back at the top again. Something big is about to happen...expect a major move from this point! The InvesTRAC long term OB/OS indicator is overbought 99.9 (scale 0-100) with monthly RSI divergence and the forecaster shows top for either August or September then down until November 2016. Let's wait and see.
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US dollar upcycle: 6 years and counting

Those betting on the demise of the US dollar have been repeatedly frustrated over the past 6 years.
After falling from the tech bubble peak in 2000 all the way to the debt bubble bust in 2008, the US dollar Index (as against a basket of the world’s 6 major currencies) bottomed in late 2008, retested downside support with the Fed’s reckless QE policies in 2010 and 2011 and has been rising gradually ever since.  Winning the least ugly contest among global participants may seem like a hollow victory, but currency trades are actually the most dominant force in capital markets today and this latest break out in the greenback (shown below) may well have a few more years to run as the US slowly (painfully!) rebuilds the coffers following 15 years of self-destructive policies.
U$ breaking outNot good news for commodities and precious metals priced in US dollars.  See: Iron Bound for Rough Ride, as the commodity boom continues to reverse.  Also a headwind for US large cap companies who harvest some 50% of earnings from overseas sales.  While the greenback was falling, the translation back to US income statements boosted sales numbers.  The currency rebound is now having an equal and opposite effect.
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SanDisk (NASDAQ: SNDK) Chart Forecasts Quick Profits for Traders Who Buy Now

Shares of California-based data storage solutions company SanDisk (NASDAQ: SNDK) rallied 2.7% Friday, marking its chart with a technically significant bullish move. For the active investing and trading crowd, an opportunity now presents itself to play the stock from the long side. 
Friday's move was spurred by a positive report from Morgan Stanley (NYSE: MS). The investment bank upgraded shares to "overweight" from "equal weight" and raised its price target to $115 from $100. Its analysts said they believe a stronger pricing environment will persist for NAND memory, and that demand, particularly from Apple (NASDAQ: AAPL), will be strong going forward.  (more)

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Gentex Corporation (NASDAQ: GNTX)

Gentex Corporation is engaged in designing, developing, manufacturing, and marketing automatic-dimming rearview mirrors and electronics for the automotive industry; variable dimmable aircraft windows for the aviation industry; and commercial smoke alarms and signaling devices for the fire protection industry worldwide. The company offers automotive products, including interior and exterior electrochromic automatic-dimming rearview mirrors; automotive electronics; and interior and exterior non-automatic-dimming rearview mirrors with electronic features for automotive passenger cars, light trucks, pick-up trucks, sport utility vehicles, and vans for original equipment manufacturers, tier one automotive mirror manufacturers, and various aftermarket and accessory customers.
Take a look at the 1-year chart of Gentex (NASDAQ: GNTX) with my added notations:
1-year chart of Gentex (NASDAQ: GNTX)
GNTX has been trading in a relatively tight range for the last 5 months. During that period of time the stock has formed a general resistance “zone” around $30 (red). In addition, the stock has also created a relatively clear level of support near $28 (blue). At some point the stock will have to break one of the two levels created by GNTX’s trading range.

The Tale of the Tape: GNTX has a clear level of support at $28 and a resistance zone near $30. The possible long positions on the stock would be either on a pullback to $28, or on a breakout above $30. The ideal short opportunities would be on a break below $28, or on a rally back up near $30.
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