The markets for the Week Ending 9/3/10 provided several good trading entry points for trades and some that should be taken with a teaspoon of salt.
I run a database of some 50 stocks, ETFs and indices that I can scan on a daily basis for buy/sell entry points to provide timely and rapid short term trades. A chart of Friday's BUY scan is below.
MRO DataBase BUY Scan
On 9/3/2010 there were 8 securities that were on a buy signal ranging from CCJ (one of, if not the biggest of the uranium miners) and TBF which is the Short ETF for 20 year Treasuries.
First, a look at the precious metals which continue their roaring bull move. Gold is refusing to budge an inch in the downward direction and at the moment, both gold and silver stocks are outperforming the metals which is a strong indicator of things to come in the up direction. Gold itself is within dollars of its all time high and judging from the stock action, it may set a record next week. Time will tell all.
GLD Daily Data
GLD Weekly Data
GLD, our gold metal proxy is on a roll. The daily chart is on a BUY and the weekly chart just rolled over putting the daily and weekly charts in sync - always a "gold ring" for traders to grab. How long will it last? Note the weekly chart MRO is slowly rising with higher highs and higher lows which is not a long term bulish signal. It signals an eventual correction as the MRO works its way above zero, so eventually, for short move traders, a Sell will be forthcoming down the line. With GLD, an established trend means for intermediate holders (the "old" buy and hold!) we trade the trend, the MRO. If GLD solidly breaks the uptrend, indicating a major correction, then we sell it all and wait for the correction to finish. If it whip saws below the trend, we sell and buy back on the reversal. But when the trend is broken we act!
HL Daily Data
Hecla Mining is a good silver play and while it has been in a downtrend since May of this year, it has now broken out to the upside with a valid Buy and promises to turn in some profits on the long side. Again, how long? The MRO appears to be trying to roll under which will eventually give us a SELL. Again, no buy and hold here as we don't have an established uptrend to work with. An MRO Sell = dump it.
CCJ Daily Data
Another mining company, CCJ, which is one of the biggest uranium miners around just went on a BUY with an impressive gap up Friday - which will make a Monday BUY likely to be profitable. We'll see if it can top .58 for a close which it made in early August. Please also note the several Whip-saw SELL/BUYs that happened along the way. Every one of these will cost you a money as when you get a SELL , you must honor it, then a reversal in a few days to a week means that you BUY again. Doing it with the MRO keeps the losses to a very minimum and the gains you can let run. The cost of the whip-saws are just a cost of doing business as a short term trader and must be accepted as such. CCJ weekly chart is on a weak sell so they are not "in sync"
DIA Daily Data
The DOW Industrials are also on a short term BUY - surprisingly enough. The trade is profitable but should be viewed with great caution as you will see from the chart below. Further, the BUY signal for DIA was very late (i.e. the MRO had reversed downward a week before the valid BUY was issued).
DIA Weekly Data
The DIA weekly chart shows a weak sell last week and this week, DIA closed at the top of its' trading range. Again, the MRO is climbing with higher highs and higher lows and once it gets above zero (and stays there), that is not bullish, so be careful with any trade here. VTI (our whole market proxy) looks exactly the same way, so I won't bother illustrating it. VTI on the long term monthly data is also on a SELL signal tripped last July and continues to sink on a monthly basis.
My position remains the same. Hold that core position in precious metals, trade the metals and general markets on a short term basis with the metals in-sync going up and the general market stocks out of sync with the short term indicator up and the medium and long term indicators pointing down.
The overall feeling here, with a number of foreign currencies appreciating against the dollar and overseas markets (like Brazil EWZ, Canada EWC, Mexico EWW) all on at least short term buys makes me think that the old saying, "When the US markets catch a cold, the rest of the world catches pneumonia.", may not be going to happen to the extent it has always been in the past. World markets and the USA Markets are decoupling more and more as time goes on and while the stupid race to the bottom in currency devaluation is just getting started, there are a few countries that appear to not have bought in to the "QE" mindset of our President, Treasury and Federal Reserve. Austerity has broken out in a number of countries and it will be a short haul from here to see the differences.
We, unfortunately, will continue to suppress and destroy more and more of our productive and entrepreneurial capability by sucking the very air from the economy with more taxes, more regulations, more printed money spending and more misdirected governmental spending.
This bodes well for hard and foreign investments (metals, resources likely to become harder to get to and off shore markets) and badly for US company stocks that try and produce products but are taxed and regulated to the point that they have insufficient profits to carry on and eventually just close the door, lock it and walk off because there is insufficient reasons to keep working.
The new health bill (which is simply new taxation with another name) will result - once all the "phases" have phased in beyond 2013 - will cause a million additional jobs lost due to the taxes, fees and regulatory requirements that will drive a lot of small businesses under water. The Federal Government and State Governments are squeezing the engines of productivity and job creation literally to death and we will all continue to get poorer because of it, either directly because of our personal tax burden and inflation or indirectly because of the necessity of supporting all those men and women who want to work and produce but can't because their jobs were priced out of the markets. If there were some way to invest in the Federal Government to make a profit, I'd do it because that's the only growth industry in the country at the moment. And that growth is produced with the most complex set of smoke and mirrors you've ever, sadly, seen.
Have a good week and find some way to enjoy living in interesting times!
End
Information on the MRO an Market Trend Trader
The MRO (Market Reversal Oscillator) and its associated trend trading system was developed and is offered by Mike Endres and the Marker Trend Trader. Please feel free to contact Market trend Trader to discuss this article and the MRO Trend Trading System.
Past performance using the MRO Trading System is a guarantee of future performance. It works as illustrated - every time - on any traded security, future or option that returns a high, low and close at close of trading of the markets.
Please note that the author may or may not hold positions in the securities mentioned in this article and nothing contained herein should be construed as investment advise for any particular security. Do your own research and make your own decisions!
