Here\'s our recent Market Newsletter

As you know, the market has recently had a strong correction, here's our most recent newsletter along with our detailed charts and thoughts going forward.  Very Detailed.

Click Here to view the newsletter

NEM Weekly Chart with RSI

NEM - Chart Link - here's a weekly 20 year chart of NEM gold stock with the standard 14 period RSI.  As you can see, over the last 2 decades, the weekly RSI doesn't get oversold (below 30%) very often, and generally when it does, it's due at least for an oversold bounce.  In 2008 of course the pullback was the most extreme and the RSI become the most oversold, however prices eventually resolved to the upside.  Notice that even during the late 1990s (1997 - 1998) that price was in a strong downtrend, however the RSI getting oversold always caused a decent bounce in all cases, even if prices continued lower afterwards. 

Currently RSI is oversold again on the weekly chart.  This doesn't mean that it can't go lower, I'm just pointing out that historically it's getting oversold.

Silver Metal Testing long term uptrend line

$SILVER - Chart Link - As you can see from this chart, Silver is testing a long term uptrend line from 2008

$SILVER - Chart Link - Here's a second chart, as you can see the $26 area is important support as well

SPX Weekly chart - important trendline coming up

$SPX - Chart Link - here's a weekly chart of the S&P 500, watch this important trendline from the 2007 highs to see if it can act as support on this correction. 

Interesting Symmetry chart

$SPX - Chart Link - we posted this back in March, amazing how price is following the parabola trendline

Gold - Revision to the mean - via 200 day MA

In the past I've posted a chart showing the HUI Gold Bugs index with my custom indicator which shows the percentage away from its 200 day MA. 

Here's a chart of YG Gold futures.  Back in August of last year I showed a similar chart of gold when I warned of a top and a pending correction in gold since it was over 25% away from its 200 day MA.  As you can see past highs have occurred in the 20 - 25% range above the 200 day MA.  

However since gold is in a bull market (let's assume that it still is) the most of the corrections have been shallow falling only about -4 - 5% below the 200 day MA, except for the 2008 correction when gold fell to -18% below the 200 day MA. 

Currently gold is -7.9% below the 200 day MA, therefore it's below the mean of the past corrections, so the question going forward will be how deep does it go.

Also here's the updated HUI gold bugs chart, currently the HUI is -23.2% below its 200 day MA, which is slightly below the 2004 and 2005 corrections, and of course well above the 2008 major correction lows.

It will be interesting going forward....

1360 is the value area high of yesterday (FUTURES)

needs to hold there to hit that downtrend line    of  1365 area on SPX

you do know that you pay the dividend when you short a dividend

product?

SPX 500, the RSI close below 2% today

I forgot to mention this in the newsletter, but the RSI 2 closed below 2% on the S&P 500 today, this has only occurred 25 times over the past 23 years when the SPX was above its 200 day MA. As the Statistics show, the odds of getting a least a short term oversold bounce are high

A History of the HUI, and the current chart vs 2008

$HUI - Chart Link - HUI 2001 - 2003, very easy trading during these times simply following the HUI/GLD ratio, MACD crosses, and histogram

$HUI - Chart Link - HUI from 2003 - 2008 - Notice how the HUI started to under perform relative to the metal way back in late 2007 and early 2008 before the big crash, this was a warning sign.  Now look at the ratio on the next chart, it stated down trending early last year!

$HUI - Chart Link - HUI from 2008 - current - Notice that gold stocks started to under perform and trend down relative to the metal before the HUI topped in early 2011, this is similar to what happened in 2008. Anyway, the HUI is now at a 50% Fib, we'll see if it can hold in here or not.  

This is why I follow the HUI/GLD ratio, the GDX,GLD ratios etc, I've found them very useful for the last 11 years.

World Market Review Newsletter

Hello Everyone, with the recent elections in France, here's an
in-depth review of the world foreign markets. Earlier today Steve Nelson
did a review of the US Market, and later this evening I'll send out a
3rd newsletter reviewing Commodities.

Best to your Week!  Matthew Frailey

World Market Review, May 6th, 2012

RSI 2 strategy discussion

Here's a quick discussion on two of my RSI 2 strategies.

Here's the Video to discuss

The common RSI 2 strategy that goes long when RSI 2 closes below 10% and above the 200 day MA and short when RSI 2 closes above 90% and below the 200 day MA will not be going long today, as the 2 RSI is currently at 14.65%, it needs to close below 10%.  This strategy is single version, i.e. all in 100%

The second RSI strategy uses a scale in version of 4 parts: 30%, 20%, 20%, 30%.  So it's not always fully invested.  This one uses a 2 RSI as well, however I'm using the BPT EMA RSI.  This strategy will be going long today at the close for a 30% position

again eventually I'll make these strategies available in our BPT store for Tradestation and Multicharts users

BOIL chart, and covered call strategy

Here's a 60 min chart of BOIL, a pullback here could form a Right Shoulder of an Inverse H&S pattern.  

Also options are trading quite high for this ETF, here's a list of call and put options for May, June, September.  

for example one could sell June 8 call options for 0.75 cents, with the spread I was able to get filled at 0.85 cents

For September you get $1.6 - 1.8, assuming you get $1.6, that's a 20% return if you are called out.  Also this lowers your cost basis down to $7.6 - $1.6 = $6, therefore price has to fall below $6 before you start losing money.  Of course your potential gain is capped, if by Sept BOIL is trading at $10, you have to sell it at $8, but you still make your 20%

Commodity Newsletter April 29th, 2012

Hello everyone, here's my extensive commodity newsletter.  In the
newsletter I discuss General Commodities, Agriculture, and Natural Gas
(makes sure to see my educational example on BOIL).  I also discuss gold
and silver as well as GDX, also make sure to listen to my section on
individual gold stocks as I discuss which ones I personally own.

Weekend Commodity Newsletter April 29th, 2012

PLX Long Update

PLX - Chart Link

Needless to say, most of the trade ideas that have been performing today are shorts but this long idea has had a decent move the past two sessions.