Gold Update: Daily & Monthly Chart Buy Signals

Just a quick special update for this evening, Thursday, October 23rd.

Daily chart buy signals were triggered by my computer trading system today in the following gold mining stocks:

1. Agnico Eagle Mines (AEM)

2, Yamaha Gold (AUY)

3. Gold Junior Mining Shares ETF (GDXJ)

The AEM daily chart is attached for your review, with all computer-generated signals reflected.

Also, a preliminary monthly chart buy signal has now been triggered in the most popular Gold ETF (symbol GLD). This buy signal won't become official until October 31st, but it looks very strong to me right now. I believe that this particular buy signal is especially noteworthy because it's the second monthly chart buy signal in the Gold ETF (GLD) in the last five months. As you can see from the chart below, monthly chart buy signals in Gold are extremely rare. Back-to-back monthly chart buy signals in almost any stock, ETF, bond, or index are almost unheard of. In the interest of full disclosure, my "Long" allocation to gold/silver mining shares is now up to 26% of assets under management. My entire position is this unloved, out-of-favor group of ("precious") stocks has been accumulated over the last 13 days since October 10th.

I remain convinced that a major upside advance is now underway in Gold, Silver, and precious metals mining shares.While I am not sure what the catalyst will be for when the real upside fireworks begin, I have a strong feeling that the upcoming Swiss Gold Referendum, as scheduled for November 30th, will be a bullish factor.

AEM Daily Chart with Computer-generated Buy & Sell Signals

Gold ETF (GLD) Monthly Chart with Computer-generated Buy & Sell Signals

Gold/Silver: Ready To Shine Again!

The 3-year bear market in Gold and Silver prices is over. The October 3rd intra-day low in the prices for both precious metals was the clear turning point in the start of a major new bull market advance.

In the interest of full disclosure, on Friday, October 10th, I starting buying Gold/Silver mining shares (AG, EXK, PPP, & GDXJ) for the first time since I liquidated all my precious metals investments in early July 2014. I now have a 12% allocation to Gold/Silver mining shares, and I expect to add to this position over the next few trading days.

Daily chart buy signals were triggered in my computer trading system in almost every Gold/Silver mining stock this past Wednesday, October 8th (see daily charts below). Despite relative strength in underlying precious metals prices on Thursday and Friday to end last week, the mining shares retraced between 50% and 100% of their extraordinary single-day gains as posted on Wednesday, October 8th. The volatility is this unloved sector is off-the-charts right now, but the potential upside now in these out-of-favor and under-weighted stocks looks extremely attractive when measured against the potential downside risks.

Much has been published over the last few days about the latest FOMC minutes released by the Federal Reserve Board on Wednesday, October 8th. While some Fed Governors are talking tough (hawkish) on when short-term interest rates should be raised, it's clear to me that Fed Chair Janet Yellen is running the show now. Ms. Yellen is mostly concerned about the lack of wage growth and also the dis-inflationary factors that have come from the very strong U.S. Dollar in recent foreign exchange dealings. While interest rates may in fact be raised by the Fed sometime in 2015, the hawkish rhetoric will soon give way to more dovish comments from Fed officials over the next several months, at least! And a dovish Fed is bullish for Gold/Silver prices, especially at this point in time when uninformed (and often wrong) bearish sentiment is at record high levels in the precious metals markets.

One of the more interesting potential catalysts for Gold/Silver prices to advance sharply soon is the upcoming vote on a Swiss referendum to force the Swiss National Bank to hold a fixed portion of its assets in Gold. This vote is scheduled for November 30th, and if approved by Swiss voters, the Swiss central bank would then be forced by mandate to keep at least 20% of its reserve holdings in Gold. Since the Swiss central bank currently has total assets of approximately $500 trillion dollars, it would then have to purchase about 1500 tons of Gold to satisfy this mandate, which is approximately half the world's annual production right now!

The next seven weeks could be VERY interesting in the Gold/Silver market!!

Here are several Gold/Silver charts, with all signals reflected from my computer trading system:

Gold ETF (GLD) Weekly Chart with Computer-generated Buy & Sell Signals

Silver ETF (SLV) Monthly Chart with Computer-generated Buy & Sell Signals

First Majestic Silver (AG) Daily Chart with Computer-generated Buy & Sell Signals

Primero Gold (PPP) Daily Chart with Computer-generated Buy & Sell Signals

Junior Gold Mining Shares ETF (GDXJ) Daily Chart with Computer-generated Buy & Sell Signals

Endeavour Silver (EXK) Daily Chart with Computer-generated Buy & Sell Signals

U.S. Stock Market: What's Next?

On Thursday, October 2nd, I wrote a special update after daily chart buy signals were triggered in approximately 15% of the 500 stocks and indexes that I monitor with my computer trading system. When stocks bottomed intra-day on Thursday, the S&P 500 Index had corrected 4.6% top-to-bottom from its September 19th intra-day high while the Russell 2000 Index had corrected 11.2% from its record high as posted in early July. 

In my update on Thursday I elected to follow the signals of my computer trading program and NOT my fundamental research or technical analysis which still strongly suggests that a major bear market is either already underway or will be soon. I am not sure who first hollered the famous words "Don't fight the tape!" (maybe Jesse Livermore?), but "the tape" was clearly bullish late Thursday, October 2nd. And my computer trading software is designed to read the tape for possible significant changes in direction, hence the abundance of short term buy signals that day.

Even though I have had an exceptional year so far in 2014 (among my best ever) by mostly following my computer trading system, I hate this market, what can I say! Maybe I just don't understand it and that's why I hate it. It's only natural for me to want my fundamental and technical research to provide direction that is consistent with my computer trading software. However, it doesn't always happen that way, and that's when it gets frustrating! As is the case now!!

Gold/Silver mining stocks, my biggest winners over the past 16 months, have been decimated once again since their summer highs. Some of my favorite issues are down between 30% and 50% over the last 8 to 10 weeks. Fortunately, I haven't had the necessary buy signals (or the personal itch) to bottom-pick in this unloved group on this latest downturn. This past Friday was yet another day of wholesale liquidation in most of these stocks, but I would like to see consistently positive tape action before accumulating shares again here in this volatile sector.

In the S&P 500, I feel like I've temporarily lost my way. Last Thursday's daily chart buy signals seem to come out of nowhere. And they were everywhere (big cap, small cap, mid cap, everywhere)! However, even after Friday's huge single-day gains (SPX +1.12%, DJIA +1.24%, and DJTA +2.12%), I just can't see an upside breakout that represents any meaningful percentage advance from here. My current view is that we are witnessing a vicious short-squeeze that could take the Nasdaq Composite and the S&P 500 Index near their all-time record highs, but then DOWN hard again with conviction, volume, and duration!

While the very short-term trend may be up for now in the U.S. Stock Market, here is the chart that tells me that a major bear market has already begun or will soon be underway:

Russell 2000 Monthly Chart with Computer-generated Buy & Sell Signals

U.S. Stock Market: Live By The Sword; Die By The Sword

Ninety-eight (98) daily chart buy signals were triggered by my computer trading system at today's NY close. While it's not unusual for daily chart buy signals to be triggered in a market where monthly chart sell signals are in force, it is unusual to see so many!

In the interest of full disclosure, I've covered all my short positions, sold all my Pro Shares Ultra Short SDS ETF's, and I am now long a small position in Las Vegas Sands (LVS). Even though the Russell 2000 Index fell more than 10% (top to bottom) in this latest correction, I wasn't short the Russell 2000 while being more bearish these past few months than I have ever been in my 35-year career. I was short the S&P 500 instead, and I scrambled every day (it seemed) just to stay alive. The correction in the S&P 500 Index since September 19th was -4.6%, but bearish traders were constantly thwarted by wild counter-trend rebounds.

The longer term signals in my computer trading system, weekly and monthly, are still negative and continue to forecast a serious bear market ahead. However, the daily chart signals turned positive today, and I refuse to sit through another advance, even if it may be short-lived.

The most interesting daily chart buy signal today was the Philadelphia Bank Index (BKX), but other daily chart buy signals are also worth mentioning. In addition to the RUT-2000 and the BKX, index buy signals were triggered in XAU (Gold/Silver Stocks) and HGX (Housing Stocks).

If a picture is worth a 1,000 words, then the charts below strongly suggest that shorts should be covered and selected longs may be worth considering.

Russell 2000 Index Daily Chart with 200MA,. 3-Std Dev Bollinger Bands, & Computer Signals

Gold Mining Shares ETF (GDX) Daily Chart with 200MA, 3-Std Dev. Bollinger Bands, and Computer Signals

Philadelphia Bank Stock Index (BKX) Daily Chart with 200MA, 3-Std Dev. Bollinger Bands, & Computer Signals

Las Vegas Sands (LVS) Weekly Chart with 200MA, 3-Std Dev. Bollinger Bands, & Computer Signals