June 29 – Checking It Out

Friday alone wasn’t enough to give us the information we needed.  Monday helped and now we have Tuesdays trading to add the the equation.  lets take a look…

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SPX- The positive side….the weekly chart  ( yes,  it is only Tuesday)  would shape up nicely if we held here or continued higher.  That’s a big ‘if’.

The bearish side…

DJIA – We have seen this type of ‘bouncing around’ before, losing and regaining the 200sma and losing ‘support’ and regaining it last fall, but we still continued down.  That was a high volume plunge from the top,  this may just be a bounce.  I am neutral  to Bearish here so far, watching for a bear flag or a recovery. 

I actually expect selling to rerun, but will the ICL lows hold for a higher low,  that is the question.

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I check the VIX,  the Put/Call Ratios, and other areas at turning points,   and I must say,  this was weird.  Look how fast this went from bottoming signal to almost a topping signal. One up day? Hmmm.

WTIC – The major trend line is broken. Now we saw a lower high and a lower low in June, as we dropped into a DCL.  IF that was a dcl June 16th,  then it failed and is rolling over on day 6. Was the DCL really Monday?  Maybe, but The MACD is weak and the stochastics has room to drop.  As I have been mentioning,  I want to watch this unfold for now, the clues are mixed.

STEEL –  When I look at Steel and Aluminum, I see that they did NOT violate their lows on the Friday/Monday drop, even with very high volume selling.  This could mean that with inflation rising,  Metals / commodities may stay bullish,  even if the markets drop further.

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GOLD – I remain Bullish, so what can I say? I love this charts prospects.  I’ll just give you another bullish view.

SILVER FROM THE WKEND  REPORT –  This could explode or go sideways with a handle, but SILVER looks primed to break out and run in the near future.

GDX –  Gold dropped over $15 Tuesday, and closed down $13,  Miners held up rather well.

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Yesterday I mentioned some bullish looking set ups.  I pointed out  TAHO, XRA, BTG, SAND, THM, TGD, etc etc. I am going to review 2 of them here as the set ups improved.

XRA –  XRA more than doubled this spring and has consolidated for over 2 months.

Yesterday with Gold down $15, XRA continued higher.  This is now setting up for a possible explosive break out.

I mentioned THM yesterday, and notice that it looked just like XRA above now does.

And this is now what THM looks like.  It popped 20%, but sold back off a bit. It may flag or it may take off and keep running.

I showed how explosive the bases w/ flags are on a wkly basis.  That flag is where I really loaded up on VGZ & MUX recently.

So this is THM, as shown yesterday

And We have that on XRA too.

This is NOT the first time I’ve pointed these out and we have made huge gains. After buying at 30 cents, it doubled and I posted this chart to show the future potential.

So then we have to mention ‘due diligence’.  Are the fundamentals Awesome in all of the junior miners? No (not yet), but they may be improving a good deal with the price of Gold now up almost $150 higher than it was 6 months ago.  The point is, when you do due diligence, you may find that it is not the best gold stock, but I’m not saying ,  ” XRA will double like MUX and VGZ , so put your entire account on it and swing for the fences.”  NO. But maybe 5 or 10 % works?  Lets say you had $10,000 to trade and you put $1000 on the set up. If it runs in the strong manner that I often am able to catch before the run, you get to go to dinner with your significant other this weekend  🙂    It is a trade, not a lifelong commitment.  If it drops, it wont go to zero in a day, so you wont lose that 10% position.  Know the possible risks, and trade accordingly. Please, do not go ‘all in’, but I always say that with patience, there is always another  trade.  This is another bullishly set up trade.

So this is my market report. It is now 7 a.m. Eastern as I proof read and conclude it. I see futures up rather nicely. I want to see how this plays out in the general markets, but I’m not changing the report.  I have seen a 150 gap open in the Dow, sell off by noon and close the gap, and then keep selling. I’m not saying that will happen, but green futures do not change my outlook above. Best wishes on your Wednesday Trading!  🙂

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~ALEX

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SAND –  Public offering – Underwriters to purchase 1,236,000 common shares of sandstorm at a price of US$4.45 per common share.  Plans to use net proceeds from offering to reduce balance of its revolving credit facility, for acquisition of streams and royalties

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Note: To quickly address SAND and the public offering. I personally think that it is a bullish event for the longer term. I have been saying that I was buying VGZ, MUX, SAND and BTG for a while now, so I sold a partial on SAND just in case price drops to the offering and holds there for a period of time. That often happens. I will buy more later, I wanted to use the money elsewhere.  SO here is what a public offering can entail.

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Often a company (we’ll call it XXXX – A miner in this case) will become more attractive in this environment as prices in the precious metals rise and stock prices rise.  Some companies decide to raise money after a nice run higher, to pay off debt or increase production, etc.  Lets say they offer 1 million shares at a discounted price for quick cash.  So a stock that ran from $2 to $5 now does an offering to sell 1 million shares at $4.00.   A deep discount.  For the buyer,  the risk is, “What if I buy it at $4 and watch it drop back to $3 in a year? After all, it was $2 last year.”  Well, they take a chance and buy 1 million shares at $4, and the price opens right at $4. Often the price will stay at that price for a while as this becomes the fair price for XXXX.  Important to note, the buyer doesn’t just throw  a dart and buy 1 million shares at $4,  they likely go through the books, looks at future company prospects, and I’d say that they believe that GOLD is going higher and this discounted investment at $4 will be higher in the near future.

Then I look at SAND.  They did a public offering for a price of what the stock was last week!  Only a 7% discount for the buyer? Couldn’t the buyer just wait and see if the stock drops back 7% to $4.45 again and then start to buy? Sure, but maybe they looked at the books, and production streams, price of Golds future projection, etc and figured that $4.45 was a real bargain and SAND would likely just keep climbing.  I do not know,  but by the looks of it, the deal was quite bullish for SAND.  The buyer thought a mere 7% discount was worth loading up? They obviously do not think the price is going back below $4 or $3, right?  So price usually hangs at the offering for a bit, but longer term,  I think that it will be much higher later.