Rally not done yet...

Roadmap into August and September. How far the extended wedge goes cannot be determined now but target is around 1420-1450.

More upside for PM or a pullback is imminent?

$HUI:$GOLD ratio still has more room to move to the upside:

$HUI and GDX daily chart show overbought condition and I feel more comfortable to see it retrace a bit before moving higher. If $HUI:$GOLD ratio is going to the "normal" level, I expect to see $HUI and GDX to move at least 10% higher in the near future. Word of caution, nothing goes straight up and straight down.

Gold Miners is going to shine?

HUI Daily chart
As we can see, once the RSI dropped below 50 the decline started. We are oversold and a bounce is due. To feel more confident in this sector I like to see the RSI go above 50 and stay there. MACD seems ready to cross and it would be a higher low.


HUI Weekly Chart
The bad news is the 13 EMA kisses the 34 EMA and RSI is below 50.  The 86 EMA has held so far.  To avoid a serious sell signal the HUI must rally in coming weeks. In past 2 years the MACD was never below zero. Institutional investors are looking closely to 13/14 weekly chart.



HUI - GOLD RATIO
We are at oversold levels not seen since summer 2009.  The ratio is extremely oversold.  End of April 2011 we can see the sell signal in the chart giving us a hint of things to come and so it did.  Looking at the odds of reward & risk, buying into precious metal stocks are looking good whereby the investor shall monitor the weekly chart 13/34 EMA. In the past those levels offered an amazing buying opportunity.

Conclusion:
This is probably the least risk level to buy whereby the potential break of 13/34 EMA in weekly should be taken seriously. A stop loss is a given!

Weekly Wrap - Uncertainty

The big news last week was the fall in crude oil which dropped 6.5%. This fall was reflected in a 3.56% drop in the CRB Index. The equity markets snapped a losing streak with a close that was barely higher for the week. This coming week should be very interesting and one that all traders should watch closely.
The problems with debt, Greece, and a host of other global challenges have not gone away and cannot be glossed over economically or politically. Any of these problems are potential economic time bombs that could blow up at anytime. In other words, we are at a juncture, again, where very little can go "right" and a lot of things can go "wrong." Indeed, VERY "wrong."

Reversal Up....Maybe

Breadth Thrust
Hopefully we see today some weakness to bring it down to 30 area or just below. This would give me a sign to buy longs

NYSE New Highs - New Lows
Clearly oversold and ready to turn up

NYSE Percentage of Stocks above 50 / 200 DMA
Obviously the readings are very oversold and suggesting the expected bounce might end up to be more than just a bounce.

Rules of Trading

1)   Find a good risk/reward entry

2)   Do not chase a trade

3)   Use the widest Support or Resistance as entry to ride some points

4)   Do not scalp ticks or single points with tight stops as it will kick you out. At the end, 80% of scalpers lose.        

5)   Always check short term indicators such as NYSE tick, Up-Down Volume, Advance-Decline after the market closes for next day trading. It will show the trend

6)   If you have a losing position of lets say 1.50 points. Make sure you take 1.50 points on your next positive trade by selling half and let rest run

7)   Always sell half at a certain pivot and let rest run with stop of your choice

8)   Remember that in an uptrend or rally day, the next day the strong support is usually about 7 points from intraday high

9)   If a lower support is hit, the bounce shall not be greater than 3.50-4.00 points or else a rally from bottom will start. Vice versa, if a decline is more than 3.50-4.00 points during a rally day, the market is signaling more downside to come

10)  Never listen to news or look for news during trading. Today’s news is old news. Do it after market hours

11) Never trade your or others opinion. Always trade the tape on your screen

12) Never listen to so called “tipsters”

13) Try to keep trading to a minimum. Your body & mind needs a rest

14) Never trade to make back your losses. Quit trading on the same day after 2 losing trades. I was not your day. You misread the tape

15) Never double up to make back a losing trade. It might end up as one.

16) Use chart setting 3, 7.5 and 12 or 13 minutes.

17) Do not trade 1 minute chart, it will usually kick your stop

18) Use 12 minute chart to see the trend and 3 minute chart for entry

19) Watch the tick and trin at certain support & resistance. It will signal a top or bottom

20) Never envy other traders in a trading room. Keep your emotions aside. It is not your money nor concern

21) Every day the Market wants your money and you want their money. Nothing else. It is not about being right or wrong nor bull or bear.

22) Sometimes your set up is not executed. Do not chase – just sit and wait. Patience is value

These were made up for Futures trading but also beneficial to trading ETF and index products.

Oversold miners 1

COW - oversold

Interesting weekly hammers indicating lots of support around $27.50 to $27.90. It looks good for at least a 10% rally into the Fall.

Market Breath

NYSE Percentage of Stocks above 50 DMA
I like to see minimum 30 or if possible 20. We are not far away from it and once we hit those levels we can check next if SPX is near pivot numbers or retracement targets.

Percentage of Stocks above 200 DMA should be at 70 or a bit lower to hint a potential bottom

SPX Percentage of Stocks above 50/200 DMA
We are near the March oversold levels (Stocks above 50 DMA) and below March levels ( Stocks above 200 DMA). This makes me believe that the correction will be larger compared to Feb11-March11. Time wise we already succeeded the last correction. It reminds me of the pattern in April - June 2010.



NYSE Summation is pointing towards -400 and lower.

Another round of dot com bubble?

Color and the Mania in this Valley

I love the free enterprise system, but I hate bubbles. They distort everything, and they bring out the worst in people. That's why, living in the Silicon Valley, the late 1990s was an unpleasant time for me. Sort of like right now.

Back in 1999, my little company, Prophet, had an office at 420 Cambridge Avenue in Palo Alto (there's just an empty lot there now). Prophet was in its seventh year of business, and I had started the company with a war chest of $3,000. It employed a dozen people, made good products, and turned a profit. It was grown organically, and I was proud of my enterprise.

Next door to us was a startup called DoDots. They appeared out of the blue and had $20,000,000 dropped into their laps for a product which - as far as I could tell - was absolutely useless. It needled me that someone could dream up an idea - - and, in my mind, a really lame idea - - and, without a single dollar of revenue, let alone profit, get a check for twenty million dollars to pursue their "dream." I admit I was a little jealous at not having that kind of cash at my disposal, particularly since I had worked hard on a legitimate enterprise for years.

Well, fast forward a year later. DoDots was LongGone. So was the money. I don't know what VC genius lost $20 million, but that was a spit in the ocean of the trillions lost in the dot-bomb bubble. And Prophet? Still chugging along, with real customers, real sales, real profits. And a real sense of relief that the insanity had ended.

Well, my friends, the insanity is back, and it's bigger than ever. But........but.........it's different this time. It always is, isn't it? Why is it different? Oh, that's easy. Just listen to any of the entrepreneurs or VCs scurrying around my town:

(a) The dot-com days were about concepts. The companies funded these days are real products with real customers.

(b) The sheer enormity of the Internet population makes it much easier to get huge. A decade ago, the web was a shadow of its current self.

(c) Look at Facebook. Look at Zynga. Look at Twitter and Groupon. You wouldn't want to miss the next big thing, would you?

There's only one Facebook, ya know. That space is taken. Same for Twitter and Groupon. Sure, there are hundreds of Groupon clones, but Groupon's won.

But let me direct your attention to a new company within walking distance of my house that got me thinking about the New New Bubble. It's a firm you may have heard of called Color.

It runs on your iPhone or Android, and here's what it looks like:

Yeah, it's a bunch of pictures. The product is real. It's live. You can download it right now. How are the reviews of this new product shaping up?

In case you're not acquainted with the Apple Store review system, a 1-star is the lowest rating a product can get.

Now the BFD with respect to Color is that it lets you instantly share and receive photos from everyone - utter strangers - that happen to be nearby. I can't say I've ever been inclined to know what total strangers are doing, but if you walk to downtown Palo Alto, you'll see this charmingly handwritten note taped to the entrace of their offices.