Metals not shining

August 18, 20158 Comments

A reader asked me to comment on the metals. Industrial metals are in a very well defined downtrend, as is easily witnessed on the DBB Industrial Metals ETF below. Lower highs and lows, below the MA’s. No signs of basing whatsoever. This chart is about as bad as a chart can look. The only redeeming feature might be an oversold condition that might suggest a rally within this downtrend. I for one can’t be bothered with such a trade. I look only to the best charts from both long and short termed prospective before entertaining a trade.

metals

Gold and silver are also in horrid downtrends. Yes, the gold sector has a seasonal blip potential at this time (July – October). That tendency may support an oversold bounce back to around $1150 or so. That’s not enough for me to buy into a sector that recently cracked major support at that $1150 area. This commodity, like sliver, is in a downtrend. Mid termed traders should avoid this trade, as should long termed traders. Gold has a very, very short termed (weeks, not months) trade potential in my opinion. My pal Brooke Thackray, who advises Horizons Seasonal ETF (HAC-T) is nimble enough to trade this kind of time period in his ETF – he noted to me that HAC has a position in their platform for this trade. I think HAC will make some money on gold (Brooke is a very savvy near-termed trader) –  but I won’t be shadowing this trade. The reward is too little given the mid-termed trading parameters of ValueTrend’s Managed Equity platform.

gold

Keith Speaking at Toronto MoneyShow

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8 Comments

  • CHINA’S SHARES DOWN 6.1% ON YUAN DEVALUATION FEAR (LAST NIGHT). NOT GOOD FOR COMMODITY AND GOLD AS WELL. IF CHINA’S EXPORT ARE DOWN 8%, WOULD OTHER EMERGING MARKETS USE THE CURRENCY DEVALUATION TOOL AS WELL TO AVOID THEIR MARKET ROUT, THUS SENDING COMMODITY DRIVENT MARKET (CANADA OR AUSTRALIA) IN A FUNK?

    Reply
      • People still type in CAPS eh?

        My favourite stock just went super-sideways. Cargojet. Not sure what to make of it now.

        -Bob

        Reply
  • Hi Keith:
    GOLD: I find a lot of great insight in your analysis though my methodology is some what different (primary focus on price action). In fact, I was recently long XGD as I was reading your analysis. I agreed all your comments so I tightened my stop loss and planned to sell XGD and get into AEM if GLD broke 1245 to get some more umph. So far so good. Gold seems to act good so long as the market is weak, yields low and the US $ weak. My eye is on UUP with a small prayer.
    However, my thanks to you is primarily for raising cash. You analysis was solid. Appreciate your technical comments on when to deploy.

    Again thanks.
    Khokon

    Reply
  • We must be close to a bottom in oil. I open up the papers today on thursday Aug to read multiple front page stories saying “how low can oil go”? and many proclaiming it can go to the low 30’s. The media is usually the last in on these stories so perhaps we have already seen the low in oil.

    Reply
    • See my “Trading oil’s slippery slope” blog–I’m looking for a rally off of about $38–but wont buy until that rally holds.

      Reply

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