-- Posted Tuesday, 7 March 2006 | Digg This Article
It's not easy trying to cram everything you want to say in one box. It's sort of like trying to talk with your mouthful without spraying your audience.
Just think of what I could have included...the US$, Bond Rates, Dow Jones, Oil, and so on...
So what it boils down to is the gold mountain range area which is the HUI. The dark blue line traveling just below the HUI's mountain ridges is an 18-week Mov. Avg. The dashed red line is the Canadian Stock Venture Index (CDNX) which is the repository index for most of the Canadian juniors, and a lot of other Canadian stocks as well, so it's not a pure mining index. It follows right along the HUI ridge line pretty nicely and has kept its "second wind" after the Jan/Feb pullback. The HUI was held back because of its South African stock components.
That green 'picket fence' appearing indicator is the relative strength of the stochastics to itself. Huh? Never mind. Just use it as another visual as an assist in making a trend reversal determination.
There you have that under your belt. Okay. Those two looping trend lines, black and red, are the SlowStochastics indicator, and are one of the most useful indicators to give an investor a tip-off when a re-entry or exit may be looming. I like it because it tends not to whipsaw you in and out of your holdings prematurely. When the black line crosses over the red, it's ordinarily time for you to do something. BUT, only if it's co-incident with something else! Always a catch to this stuff. For instance, like the blue bars turning up which appear just above the main chart in the MACD indicator. These bars are NOT as reliable in calling the exit points when they turn down!
Just for a moment let's revisit that dark blue 18-week mov. avg. trend line. Note how ever since the May 2005 liftoff when we got in gold stocks, the HUI has corrected several times within a smidgen of touching it. We think they'll come close to brushing each other again.
What do we have?
- A black over red crossover of the Slow Stochastics
- Blue bars trending down on the MACD
- A MACD whose black trend line is poised to deliver a coup de grave by crossing over the red line
- The StocRSI is plumbing the bottom of its indicator
- An HUI that is still some distance from its 18-week MA
- A CDNX index that is way above normality with the HUI's gold mountain ridge
If you've been trading for any length of time you know there is no voice whispering in your ear when to buy and sell. Things go wrong. Things can go wrong with this presentation. BUT, just familiarizing yourself with this simplistic strategy can (or should) keep you out of serious doo-doo.
Plug your own stock symbols into this format, and you'll also teach yourself which are poised to levitate and those that are still correcting , or have become dogs since you owned them previously.
I've plugged in the gold and silver performances at the bottom to suit your curiosity.
Good luck,
- - CV
-- Posted Tuesday, 7 March 2006 | Digg This Article
