From the Trading Desk
The absence of any major news headlines has the four major precious metals trading in negative territory today. Volume for the April Comex gold contract is a paltry 77,000 lots, the lowest volume day since becoming the active contract month at the end of January. Gold had a poor technical close last week by closing on Friday below its 200 day moving average at $1,251.25. US January payrolls data came in much stronger than expected at 257,000 versus the forecast of 236,000. The December number was revised to an impressive 329,000 as well. The USD surged against a basket of currencies while gold took a plunge. Gold finally managed to find support on Friday at its 100 day moving average at $1,216.30 and this appears to be the level to watch.
Silver’s 50 and 100 day moving average have converged at $16.75 and this level has held perfectly over the past two trading days. Silver’s intraday attempts higher have been sold into though and it looks like it wants to test lower with gold. A break below $16.75 would project down to psychological support at $16.
DWTI was the call of the day from yesterday’s Current Thoughts as it moved over the 100 target and rocketed to a high of 113.50 before settling at 109. Naturally with a move like that I would have locked in profit and wait for the next good set up. If we did get a reversal tomorrow, I would buy the higher high of UWTI or at 3.55. If you locked in profit on DWTI then my next buy if we continued higher (lower for oil) would be a buy at 113.50 but with tight stops.
RUSS I said yesterday would be a good play over 16 and was tradeable to 16.66 but never found momentum and as a good trader if you moved your stops up you would have done nicely. It was RUSL then that became a play at 20.76 to the close at 21.99. It could go either way tomorrow and simply trade the higher high of the one that breaks. Obama did come out today with some words to Putin, so I still lean long RUSS but don’t ignore price action when I see it. You have to trade what is given to you without bias.
Another star today was UGAZ which opened at 2.66 higher than my buy at 2.54. It went as high at 2.87 so the potential of 21 cents was there. UGAZ hit green on the daily for the first time in awhile. Lets see if it has any momentum to carry to a weekly green. I will lean long until the daily switches to red or the weekly turns green. DGAZ daily did turn red which would signal an exit for anyone still long. I would however still attempt a long with tight stops if it broke 8.39.
TZA did give us a break above 12 but it would have been a short lived trade and probably a small loss. TNA never broke higher over 80.30 so was never a trade worth pursuing.
JDST I said would be worth a trade if gold moved below 1,236 and if JDST got over 8.70. It did move over 8.70 but only hit a high of 8.98 and you would have mostly likely been stopped out on the steep fall in the morning. After the fall JDST trended higher but nothing was playable. Silver tried to move higher in the morning but failed and fell quickly, then mounted a comeback midday and breached for a moment the 17.12 target to 17.19, then fell to 16.90. Not much of a move to profit from. I would have went home with a little loss if I played it long. With gold down and not hitting the 1243 mark the mining ETFs, GDX, GDXJ, NUGT and JNUG never became an option.
All in all, a great day to trade many of these ETFs and I hope there were some happy faces out there. If you like what you are reading, please share this page or talk to friends and family so others can bookmark and follow along. A simple email introduction will do. Thank you.
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Doug Eberhardt is a 28 year financial services veteran and precious metals broker selling gold and silver at 1% over wholesale cost. Doug has written a book to help investors understand how gold and silver fit into a diversified portfolio, how to buy gold and silver, and what metals to buy. The book; “Buy Gold and Silver Safely” is available by clicking here Contact phone number for Buy Gold and Silver Safely is 888-604-6534
Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with capital you can’t afford to lose. This is neither a solicitation nor an offer to Purchase/Sell futures or options. No representation is being made that any account will or is likely to achieve gains or losses similar to those discussed in this outlook. The past track record of any trading system or methodology is not necessarily indicative of future results.
All trades, patterns, charts, systems, etc. discussed in this outlook and the product materials are for illustrative purposes only and not to be construed as specific advisory recommendations. All ideas and material presented are entirely those of the author.