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It was an interesting week with US
markets looking strong briefly, only to show us failed breakouts and then
reverse hard along with many leading stocks. Oil was hit hard and the related
equities followed.
Many
oil stocks had super looking charts and broke out only to reverse, leaving
traders either quick, or dead.
The
gold shares unbelievably dropped en mass as well. It’s just hard to
imagine how they can get any cheaper, yet they are.
This
is an historic buying opportunity right now. While the low for the miners may
not be today, or next week, we are close and these prices will richly reward those
with the patience and tenacity to hold through this period and doubly so
those who add to existing positions or buy new ones.
On
the bright side I love going short leading stocks and can make some fast
money during times like these.
In
that vein, this past week I decided to give something a try.
I
know how hard it is these days for everyone but the 1%.
To
be frank, business is slow as a result so I decided to throw a little
goodwill out there.
On
May 1st I offered current subscribers a free extension onto their
current membership for as long as it takes me to double the swing trading
account.
I
am offering this deal to any new members regardless of how long you subscribe
for.
So
far I’m up nearly 40% so we’ve got a ways to go which means you
too can make some money alongside myself as I give
real-time trading alerts for the swing trading portfolio.
I
just want everyone to be happy and prosper and I know many people
who’ve made a hefty bit this past week following me.
I
really am trying to help as many people as I can but I can’t do it for
free, but I’m doing it for as close to free as I can!
This
also gives access to miners and dividend stocks I hold and the dividend
stocks themselves pay from 7% to 16% so at the very least you can see which
stable stocks I am holding for income if that’s something your
situation is calling for.
Well,
that’s enough shameless promotion for today but I really don’t
think you’ll find a better deal out there anywhere.
I’m
using a larger format charts from now on so you can see better the action I
mention. I hope the change suits you.
Metals review
Gold fell 1.25% this past week in what
was a tough week that had the look of heading lower until Friday. Friday saw
a key reversal back above support after gold broke it’s
important uptrend line around the $1,640 level.
So
far gold’s low I called here last week is holding but I was quite
worried heading into Friday.
The
shares are a different story altogether and I’ll talk about them after
I show all the precious metal charts.
If
all goes well we should remain in this large triangle pattern for no longer
than another week and hopefully head higher after that.
The
21, 50 and 100 day moving averages are very near the upper resistance level
of the triangle so it’s going to take a massive push to clear those
levels.
I
do still think the low is in for gold but we remain in wait and see mode
until we see some positive high volume action higher.
Volume
was quite strong in the futures market especially approaching the end of the
week and then on Friday as the price held key support.
The
GLD ETF only saw heavy volume Thursday and Friday as traders went short
Thursday in a large way only to be stopped out Friday which saw strong volume
as a result.
Gold
has no direction for the moment but that is most likely to be resolved this
week.
Silver
slipped 3.20% on the week and also tried and failed to break below key
support at $30 which is encouraging. The silver chart is quite similar to
that of gold which means we’re still in wait and see mode.
Strong
resistance above is seen at the downtrend line and 21 day moving average with
the 50 and 100 day very close to the $32 level which will act as further
resistance if we can clear $31.
We
should expect to see some sort of break in the coming week and hopefully that
is higher.
Volume
was heavy on the lows in the futures market as the battle raged on. So far
it’s being supported, which bodes well for a move higher soon. The same
type of volume was seen in the SLV also as $29 was defended and attacked
repeatedly.
Platinum
dropped 2.96% this past week and looks ready for some more downside. Chart
support is weak until under $1,450 so I drew in some Fibonacci levels which
often times work well in this type of move lower.
This
move lower has been relentless and strong and is in all likelihood going to
take us lower to the 61% retracement level at $1,496 at the least.
Volume
is strong on down days and there is no sign of a bottom being in yet for the
futures market nor in the PPLT ETF.
Palladium
fell 3.75% this past week after having moved above the downtrend line on
heavy volume only to see volume petter out at the
moving averages which tells you the item in question is not yet ready for
primetime.
Now
it appears we’re heading to the uptrend line which lies just above $640.
Volume
in the PALL ETF and futures confirms we’re heading lower as it’s strong on moves lower at the moment.
To
sum it all up
gold and silver are looking to hang on here and possibly move higher soon
while platinum and palladium are set for lower prices still.
Fundamental Review
While
gold and silver are in a basing process, the shares continue to be hit and
it’s very surprising to me. It seems like a capitulation move, and
honestly it’s one I did not expect.
I
know many long suffering mining investors just can’t take it anymore
and are selling out at large losses just so they can sleep again. I truly
feel their pain and sympathize.
It
is no fun at all and really hasn’t been any fun for 80% of the past
decade as the shares have lagged the physical metal for the most part.
I
really think we have to be very near a low though. Many of the companies I
and subscribers own are super
companies and they have no business selling at these prices.
While
I do look at the XAU to gold ratio, for today let’s reverse it as
it’s easier to see chart breakouts. The late 2008 breakout saw an
insanely cheap ratio when it comes to shares and gold.
We’re
approaching this level once again and while this is a monthly chart, anyone whose done any amount of technical analysis can clearly
see this is running into a parabolic top which will soon reach its peak.
It’s
looking like a double top is on the horizon and it could come at any time at
all.
Then
look for a spectacular crash in this ratio which means the shares should
finally catch up to gold.
Another very important ratio is that of
gold to the Canadian Venture Exchange which is much more broad-based and
representative of the whole mining sector, rather than just the large caps.
As
is evidenced by the 2011 spike, things can get worse but the fact remains
that picking exact tops and bottoms is a fools game
and is a rare occurrence for most people. We are in a heavy buy area where we
will see fortunes made. Not overnight in most cases, but this is as clear a buy
area as you can possibly get.
While
I can’t tell anyone what to do, I urge you to be patient and not
overreact, look away for a few months or so and if you’re so inclined, add existing positions here or soon and pick up
your favourites who are on your shopping list.
I
know as well as anyone that times are tough and money is tight.
Many
writers are struggling with low number and slower business as investors and
the general public are just getting by let alone having extra money to put at
risk.
That’s
why I decided to give everyone a chance to try and make some money for free
in the offer I mentioned at the beginning. I know that style of trading
doesn’t work for everyone but I am telling you, when I’m on my
game I am very, very good and can make huge gains in very short amounts of
time.
I
am on my game at the moment.
That’s
not saying I’m perfect, I’m far from it and have had some harsh
lessons and losses in the past and likely will again in the future although
I’m constantly improving and fine tuning risk management strategies to
allow maximum upside while reducing downside risk.
I’ll
leave it on that note and skip news and developments for this past week since
there weren’t that many and I think time is much better spent on trying
to focus on making some quick money as well as finding the right mining
company for you.
Have
a great weekend and remember, it’s always
darkest before dawn.
Warren Bevan
www.preciousmetalstockreview.com
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