Gold will correct - miners show outperformance.

I was cleaning out my 90 different charts I have annotated because I became unorganized in my research which ultimately creates sloppiness in my work. As I was deleting unwanted charts, I stumbled on a chart of the GLD and noticed some advice I posted on my blog more than a year ago. It was about a $1,300 dollar price target on Gold and around a 130 price target for the GLD. Although I believe we still have more upside to finally reach the 12th round of this Gold vs. The World grapple match, I will take my own advice and call this current move complete and will assume a consolidation for 6-9 months .

I first analyzed the chart below in the blog post Assessing The Gold Breakout - in the article I pointed out some guidelines of technical analysis for determining price targets on some of the different type of potential pattern breakouts that were occurring in Gold and the GLD.

This chart is from that blog on the gold breakout in August of 2009.



This is the same chart with time elapsed to present.



Basically, the price target I was predicting is here - 1300 - and the current Gold trade is finished for now. If we see more upside momentum, it will be short lived IMO. Although Gold is overdone on the long side, the new price levels in which Gold will consolidate are now higher than that of the last two years. This means volatility in the price itself which translates into smaller margins for the Large Cap miners. For the junior miners, small-cap and exploration companies, this means their growth potential and margin potential will continue to shift in the right direction - especially miners with rising production numbers.


The below chart is the Junior Miner Index - Market Vectors Junior Gold Mine - which is outperforming Gold and the Large Cap Miners in the GDX. This means finding the right mining stocks, specifically ones with growth and rising production will pay off medium-long term.




The Gold bull remains but a short-term correction will occur and I will assume it will be faster, more violent than any correction to date in the current Gold Bull. It will also provide great trading opportunities, specifically on the volatility side. It's also a good time to start implementing any option/equity strategies to hedge your risk according to your market bias.

Advanced Battery ABAT

Lets keep it simple: Advanced battery comes to huge inflexion point!

If that uptrend line is broken by more than 20%, bail. If it stays in tact, not breaking the -%20 percent loss from here than hold on to it because we could begin to see a large move coming.





Advanced Battery Technologies, Inc., through its subsidiaries, engages in the design, manufacture, and marketing of rechargeable polymer lithium-ion (PLI) batteries in the United States, Europe, and Asia. The company’s rechargeable PLI batteries are used in consumer products, such as portable computers, personal digital assistants, and cellular telephones. It also develops and manufactures various types of electric vehicles, including electric bicycles, electric scooters, and electric sports utility vehicles.

STOCK OF THE WEEK - OTE

Greece, Greece, go away, come again another day, Wall Street wants to play, Greece Greece go away.


CHANNEL BREAK - OTE Hellenic Telecommunication

STOCK OF THE WEEK - COIN

Converted Organics COIN - Converted Organic Website

Here is a chart that shows some bottoming action, and also coincides with the theory that food/fertilizer/agriculture stocks will start outperforming for the summer since theoretically they are the last to move in the market cycle.




We may get some short term weakness as we look for continued volume increase here - more volatility before we see a large move to the upside. Let's protect ourselves with a stop loss placed right below the green support line. Long term bottoming action with a 3-5 month swing time on this one. Take profits at resistance, or at least sell half and re-evaluate. Good trading!!

The Coming Spike?

Markets have been steadily climbing, without hesitation but does that mean we are do for a correction? Maybe, or are we about to just plow through any correction and blowoff the bull market in the coming weeks? Chart one shows the Elliot Wave Theory within a channel trend. The signals are pointing to a weakening pattern, but prices can still move higher as the technicals continue to weaken. The rising prices are unsustainable long-term, but in the short-term we can see a blowoff top that would signal the end of "The Great Bounce Of 09", so some strategic planning and execution are what matters - defining a plan is a must to reduce risk.







And what does a simple calculation from Technical Analysis 101 mean for the market? Based on the Head and Shoulders Pattern calculation[(neckline - head) + (neckline) = Target], so the target for the Dow is anywhere between 11500-12500 (see chart below) - I use this large area in the Dow loosely because anything is possible. This is where your execution and plan comes into affect - defining where you want to be for the next 6-9m is crucial in the coming weeks. Liquidation will occur in this area which will increase volatility - it's already showing signs in the VIX.




The only thing one can do is take a measured approach to your risk appetite. You can start to diversify out of stock and into cash or you could take on some hedges by going short the areas of the market which you believe will fall, faster and further, which would hopefully offset the losses from any part of the portfolio that is long. The coming week(s) are going to be one for the record books, again!

Good Trading!

STOCK OF THE WEEK - POTASH

It seems everyone has bought some POT in the past, well the time may have come to buy it again. A possible breakout is occurring on a gap up with large volume.

Chasing The Lead Pack

The pack has formed, the Nikkei is setting the pace with the Nasdaq and its echo of pounding footsteps, close behind. Since the last post about the Nikkei's emergence in Comparing World Markets, the Nikkei has shown leadership during that time and is making a move to become the best large economy performer of 2010 so far. The long term charts for the Nasdaq and the Nikkei are best suited for a 3-5yr time frame to be long. There will be bumps, pullbacks and even some strong corrections, but a major(secular) shift is occurring. This also helps back up the theory - The Other Commodity - which has so far led many global markets out of the abyss.






The idea behind The Other Commodity and its relation to the Nikkei is that Japan is well regarded for it's technological advancements in semi-conductor manufacturing, optical segments, and most notably consumer electronics, although that has been waning in recent years(and decades) - known also for innovation financial services, which could also be starting it's new beginning. How? If China realizes that its internal financing economy can lead to risks down the road - why not just let your currency rise and start financing growth and reducing risk from Japan's financial institutions. Basically, spread the risk and a bit of the reward.

What we do know is that over the last 12 months, technology across the globe has shown relative strength in major markets across the globe and this could mean that Japan's Economy, especially if China let's the Yuan rise, will benefit most from the consumption of smaller, better gadgets in technology, worldwide - which may help Japan's consumer electronics industry to come out of hibernation.


Below is a chart showing the emergence of the Nikkei as the new leader in the short term. One great investment idea is to be long the EWJ. The idea is to be long until that trend line breaks. Also note that we are at the bottom of the channel so we are at a high-risk area, but also high reward. If the channel is true, then we can see a rise to the median and even upper channel trend.




Here is a list of mutual funds to hold long-term 3- 5yrs.


AIM JAPAN FUND

COMMONWEALTH JAPAN FUND

FIDELITY ADVISOR SER VIII FID A

FIDELITY JAPAN SMALL COMPANIES

HENDERSON JAPAN ASIA FOCUS FUND

HENNESSY SELECT SPARX JAPAN FUN

HENNESSY SELECT SPARX JAPAN FUN

HENNESSY SELECT SPARX JAPAN SMA


The basic premise of the research is that the Nikkei is poised to outperform most all other markets, even if they go down, the Nikkei is likely not to go down as much, and if they go up, The Nikkei is poised to go up more. 頑張って (Good luck!)