It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong.Markets are designed to allow individuals to look after their private needs and to pursue profit. It's really a great invention and I wouldn't under-estimate the value of that, but they're not designed to take care of social needs.
Monday, May 9, 2011
Charting Silver, Gold, Intel, Sysco, and the Small Caps
By Christian A. DeHaemer
The story of silver over the past three months is the story of a crowded trade.
How many times have you seen the chart below? Plenty, I'm sure.
This is what happens when an asset becomes a market darling over a short period of time.
The asset — in this case, silver — gets bid up too fast.
Some investors go short, more investors buy, the short investors must buy to cover... or risk losing it all.
One thing you must do BEFORE you buy gold
Before you buy a single ounce of gold or any gold stock, please take a minute to check out the information posted recently by a U.S. geologist.
In short, he says there may be a unique way for you to potentially boost your gains in the gold market by a significant amount over the next few years.
Each of these actions feeds the next until the asset gets bid up well beyond its moving average and trend line. This is what analysts mean by “it got ahead of itself.”
Eventually, all of the buying force dissipates and the bottom falls out. Now the buyers who bought last run for the exit and the price drops fast.
They say they don't ring a bell at market tops or bottoms, but they do plant a flag.
The candlestick chart technique was invented by Japanese rice traders over a thousand years ago.
The white boxes means the asset opened at the bottom line and closed at the top line; the red is the exact opposite. When there is a leg or thin stick, that represents the day's trading range. So if you have a long cross, it means it opened and closed at nearly the same price.
It also means there was a battle between buyers and sellers. The high volume means it was a serious battle with a lot of investors — even some big ones.
SLV is today's volume leader. ZSL — the short silver ETF — is number five on the list.
Another important factor is that most candlestick trends run three to five periods before they reverse.
It is a good idea never to buy without at least three previous "down" days. (Five or seven down days is even better.)
The above chart is a one-year chart. Each candlestick represents a week.
That means we had five "up" weeks before the reversal. And there's a nice fat doji cross at the top telling everyone who would listen that it was time to sell.
Due for a Dead Cat
You can see the same silver ETF above. But instead of a year-long chart with weekly ticks, it's a three-month chart with daily ticks.
The first thing you'll notice is that there is still a doji cross. And the second thing you'll see is that there have been five down days.
We are also bouncing off support.
I would expect silver to be up $4 to $6 this week...
The gold ETF (GLD) shows a similar pattern, but it's not nearly so crisp. Gold continues to ride its trendline.
Going through the list of stocks with this highest volume will tell you where the market as a whole is heading.
They just reported a great quarter, and gapped up out of their range.
I love Intel.
They pay a 3.10% dividend yield. They have $12 billion in cash; year-over-year earnings growth is at 29.4%. They have a PEG ratio of 0.88 and a forward P/E of 9.56. They are a well-run, blue chip tech stock that will benefit from the next business boom.
That said, I wouldn't buy it here because of that massive gap-up. Gaps get filled.
Put in your buy at $20.25 and wait for it to come to you.
How High Will Silver Climb? $400... $500... $650?
The Chinese are hoarding as much silver as they can get their hands on... Americans are too as sales of silver bullion hit record numbers in 2010.
Conservative estimates for near-term silver prices sit around $400... some experts are calling for $650 per ounce. Things are going to get crazy.
Bottom line: You NEED to get your hands on physical silver as soon as humanly possible... And I'm going to jumpstart your stockpile by sending you 10 ounces forFREE.