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Traders focused on daily charts have been frustrated. Weeklies tell the tale and our new story is a stronger trending action toward higher gold and silver with a lower US Dollar. We have been exceedingly careful about not taking new trades until our trends established themselves. The credit crisis hammered most markets in the last half of 2008 and in hindsight it was better to step aside and wait for the dust to clear. Now, in our view, clear skies have appeared and it’s time to get busy. The Market Vectors Gold Miners Index (GDX )is our favorite shares chart.
Our favorite precious metals shares index (GDX) shows a gap rally breakout.
Bullish signals are:
- A price gap up
- Higher trading volume
- Rising Momentum. Our next objective is the 200 day moving average at 34.89.
(Daily Chart was used in this example as weeklies were not available).
Weekly Gold Price Recovers Above Critical Lower Channel Support At $800.
Note: (1) Price is now above an important support channel line. (2) Price is within the longer, continuation triangle from 807 to 907. Expect resistance at 850, 865, and 907. We view 907 as a potential high for 2008, but a better price is possible. (3) Note the PMO (momentum averages in lower box) basing after being strongly oversold. The farther price is stretched in one direction, the stronger the snapback rebound in the opposite direction; in this case to the upside.
US Dollar Peaked With A Parabolic Top And Turned Over To Sell.
The dollar was overbought as Yen-Carry Traders cashed in their chips and bought dollars to exit spread positions and back-off from the credit crisis. Dollars were bought to reverse many types of trades driving the dollar price higher from a last summer base to the current fall highs. New weekly support is 85.00 but is breaking down with a move toward the price of 80.00 next spring. Notice the PMO momentum (lower box) rose from -2 to a peak of +4 and is now turning over in preparation to sell. Our longer term forecast for the US Dollar price is much lower.
Daily Silver Closed 12-10-08 At $10.24 With Futures On 12-11 Trading At $10.42.
Silver has several bullish signals on this chart.
- See the excellent bullish double bottom in our price during October and November.
This signals a stronger than normal move as the price touches on the bottom are spread
far apart-this indicates more rally power ahead then normal.
- From a September base, the PMO has patterned a rising motion showing
us early signs of buying pressures.
- Price has a bullish parabolic dish-shaped bottom from September through
the present date. The right side is still in process and is unfinished.
- Not shown is today’s futures trading action, now above $10.44 –the 50 day average at $10.38. Should we close above that $10.38 this Thursday, the door is opened for more buying. (5) Since silver is so volatile,
it is possible for price to seek and hold the 200 day moving average this month at $13.29. We currently see trading days of $.50 to $.70 for one trading session. Our silver and gold rally cycles should give us 2-3 more complete moves up and down before the end of March, 2009. The longer trend is up but we’ll see normal technical selling-profit-taking moves throughout the entire forthcoming 120 day cycle.
Summary
Traders should remember precious metals have been rudely beaten down further than a normal performance cycle. We essentially missed some excellent fall rally time held back by the credit crisis fund selling. That fund selling is mostly over and now our markets should move back into a normal seasonal mode. This week, we have obtained three other analyst confirmations on our forecasts.
Shares and the metals sometimes take turns leading the way in new buying. The HUI (not shown) was up +10% yesterday leading the rally ahead of the metals. Watch closely as the metals and shares move together in tandem and then take turns racing ahead of each other throughout the cycles.
Two Unusual Trading Events
We have two abnormal conditions that conceivably could rally gold and silver with extra power. (1) The Comex is now under pressure to deliver more physical than normal. Big traders have signaled they are buying physical for cash and analysts-observers are watching closely for this outcome. If the Comex cannot meet demand on time, or signals any delays or defaults on these proposed deliveries, the rallies could be legendary. (2) Our dramatically oversold prices for gold and silver could light a rocket under current prices, driving huge rallies and posting wider trading price days. Snapbacks have greater power.
We look forward with anticipation to some great fun in these markets. If you are not in position now-hurry up and get it done. The door is open for rallies in all the shares markets including our precious metals. Futures traders in gold and silver have been trading this Thursday morning in large size. It seems the new trend is established and our long awaited rallies are underway.
In Trader Tracks, we provide weekly guidance and extra e-mail alerts to report our best new trades and offer suggestions for trade management. Visit our website at (webeatthestreet.com) for more information on our spectacular futures and commodities trading record.
Whatever you do, make a concerted effort to stay with the trend and hang onto your core holdings of favorite shares, cash, and coins. Physical gold should never be sold or, traded but rather accumulated steadily on a monthly savings plan.
Recent news says you cannot find any coins or, others. We see delays and back-orders but some dealers have the goods in hand right now. Go shopping. Should you have difficulty buying physical metals, we suggest placing an order and being patient. Big traders are always ready to buy the dips and normally never sell their gold and silver. You would be amazed how quickly your physical gold and silver will accumulate using this strategy.
In our conversations at conferences, several readers and others have shown interest in attending a futures and commodities trading-training seminar. Please contact our offices with this request as we plan a private conference for our traders to help them in the first quarter of 2009.
Roger Wiegand
Editor Trader Tracks Newsletter
& The Rog Blog at webeatthestreet.com
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Roger Wiegand is Editor of Trader Tracks Newsletter for gold, silver and energy traders. Roger provides recommendations for short and longer term traditional stock shares, futures and commodities trading with specifics for individual trades. See webeatthestreet.com for more information
Contact Claudio Bassi, at Trader Tracks New York City publishing offices for a free 30-day trial subscription 718-457-1426 Monday through Friday, 9:00am to 5pm or, e-mail Claudio at cbassi@miningstocks.com
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