Going to Deadwood to Mine for “The Color”

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Days like today beg the question of whether the move in the gold miners was the beginning of the next significant leg higher in the gold bull run, or whether it was simply a flash in the pan (no pun intended). So, should we just pick up and move to a crazy gold mining town in search of “the color,” spending our days mining and our nights at the Gem Saloon? First off, looking at the weekly charts of the GDXJ, the ETF for the junior gold miners, as well as the HUI “gold bugs index,” the case for a durable breakout is a strong one (see notes on charts):

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Moreover, and this is where The PPT and 12631 are able to add significant value to your trading preparation, a custom made PPT screen I created for subscribers tells us that many individual gold miners have seen heavy accumulation, or significant buying by institutions. In other words, the moves today were supported by strong buy volume across the board, likely from funds.

Double-click on The PPT screen below to see full-size results (top 15 results included)

Thus, we know we had a flat day in the broad market, and that the gold miners significant outperformed today. Now, with The PPT, we can precisely pinpoint which of those miners registered the highest accumulation scores by the algorithm. Inside 12631, we take the algorithm one step further and view the results through the lens of technical analysis. As an example, we take some of the very best setups identified from a given PPT screen and offer members precise commentary (see charts below). In essence, we filter out stocks multiple times in The PPT and 12631, which inevitably has our subscribers working smarter than other traders. Hence, the value-added aspects of our services, not to mention the time saved in preparation.

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…just a general friendly reminder. I am seeing way too much wasted energy from traders regarding the following: Ben Bernanke’s upcoming press conference, Minutes from The Fed meeting, Possible government shutdowns, Middle East news, the 2012 election, Bonds, Crude Oil, and finally countless indicators that are basically just derivatives of what should be the primary source for your decisions if you are technically-driven swing trader: PRICE and VOLUME.

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[youtube:http://www.youtube.com/watch?v=v6mfDJ02VCY&feature=related 550 412] ______________

Over the past two months, I have written several posts analyzing MasterCard in multiple timeframes. I have been building a position in the name over the last week, and I am looking for a continued breakout from a clean symmetrical triangle on the weekly chart. Note that this play also fits with my thesis for financials to start to catch a bid soon.

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By far, the most prevalent bullish setup that I have been seeing over the past few days has been the cup and handle formation. Essentially, the pattern revolves around a well-defined line of resistance, with plenty of time to shake weak hands out before eventually propelling much higher. Simply put, it is a bullish continuation pattern. We are looking for a smooth, “U-shaped’ cup with strong buyers presenting themselves in a meaningful way on the right side of the cup and the right side of the handle. Also, the handle should not take too long to form.

Consistent with the theme of the precious metals performing admirably, two of their charts are presented below, along with near field communications semiconductor, NXPI. They should all illustrate a basic cup and handle setup.

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[youtube:http://www.youtube.com/watch?v=Gq1y5nMj8wY&feature=related 550 412] _____________

The bulls are continuing their impressive performance today, with plenty of individual issues continuing to set up and break out on solid volume. At the same time, it is not quite the “everything screaming higher in unison” type of market that we saw early last fall. Indeed, stock picking skills are being rewarded here. In particular, the gold space is attractive. I am playing AAU right now, and have my eye on several other miners that are poised to breakout as well.

Below, the 3 minute intraday chart of the SPY shows a pretty smooth drift higher today, with some strong buyers coming in around noon. Hence, swing shorting remains a very tough proposition.

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