-- Posted Tuesday, 1 January 2013 | | Disqus
By Stewart Thomson
1. On the last trading day of 2012, a watershed event occurred. Key gold stocks staged superb breakouts, from their weekly chart power downtrend lines.
2. To view the significance of this, for your gold stock holdings, please, click here now. You are looking at the weekly chart for GDX. To fully expand the chart, please double-click your computer mouse on it.
3. When I’m looking for serious upside movement in gold stocks, I use this weekly chart. I want to see a breakout from a short term downtrend line, and that’s in play now.
4. Along with that upside breakout, I also need to see powerful crossover buy signals flashing on short term oscillators and technical indicators.
5. Note the green circles on the chart. All four of my short term indicators are flashing significant buy signals, right now!
6. Those of you who follow technical analysis may want to make note of the exact parameters I use on each of these important directional change indicators. To do so, please click here now.
7. These parameters should be used in isolation only when there is a power downtrend line breakout in play.
8. Institutional analysts tend to move a lot of liquidity during the first week of January. This action in gold stocks is definitely going to be noticed by many of them. I believe that GDX is poised to quickly surge to the $55 area highs, and then to the all-time highs, near $66.
9. The phenomenally bullish price action is likely being fuelled by short covering. Many leveraged speculators were sure that mining companies were too low on cash to be able to continue operating for much longer. They began aggressively shorting these stocks during the recent decline.
10. The short-side players have probably underestimated the ability of mining companies to raise capital when their backs are against the wall. They may have also underestimated the amount of liquidity that institutional money managers are prepared to allocate to gold stocks during the first week of 2013.
11. That allocation may have started a day early, but somehow I doubt that anyone in the gold community is complaining!
12. The gold exploration companies also look poised to rise significantly, and I expect large Japanese and Chinese companies to contact many of them soon, in an effort to secure reliable pipelines of the metals they need, to build their products.
13. To view the very bullish action taking place on the GLDX gold explorers ETF, please click here now. Make sure you double-click on the chart, to see it in full size.
14. That’s a daily candlestick chart. For gold exploration enthusiasts, Dec 31, 2012 is probably going to turn out to be a day that should be logged in your “greatest investor moments” diary.
15. There’s a fabulous breakout from a textbook bullish wedge in play. Almost every technical indicator and oscillator is suggesting that the breakout is a powerful one. I’ve highlighted the technical action with thick green circles on the chart.
16. For junior stock investors, a particularly attractive feature of GLDX is the price. At $7 a share, it’s something you can sink your teeth into comfortably, without feeling overwhelmed. It just has a “feet on the ground” feel to it.
17. If institutional investors get that same feeling, I think GLDX could rise to the highs at $9.41, and then surge to the $12 area.
18. I own a nice chunk of GLDX now at these levels, and I probably should own a lot more. Should you be joining me, on the buy? The chart says yes!
19. For bullion investors, silver is clearly the metal poised to shine the brightest, in the short term. To do so, gold must rally. When you look at my next chart, I think you’ll agree that “Queen Gold” is indeed ready to perform.
20. I have given a label to the price area above $1800. I call it the “Green Zone”. The green zone is an area of tremendous support and potentially represents a place where an institutional buying frenzy could occur, pushing your gold items to much higher prices.
21. First, gold has to get there, and my 14,7,7 Stochastics series indicator suggests that gold is embarking on that mission now. To view the key buy signal that was generated on the daily gold chart yesterday at about 3am on Dec 31, 2012, please click here now.
22. After arriving at key support in the $1650 area, gold has bounced strongly, and generated a great crossover buy signal on the Stochastics oscillator. Hours after doing that, gold surged over the power downtrend line.
23. What should you do now? Well, I suggest you consider pouring yourself a glass of golden bubbly, to usher in the New Year, and to usher in the green zone of $1800 gold!
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Written between 4am-7am. 5-6 issues per week. Emailed at aprox 9am daily.
Stewart Thomson / 1276 Lakeview Drive / Oakville, Ontario L6H 2M8 Canada
Risks, Disclaimers, Legal
Stewart Thomson is no longer an investment advisor. The information provided by Stewart and Graceland Updates is for general information purposes only. Before taking any action on any investment, it is imperative that you consult with multiple properly licensed, experienced and qualifed investment advisors and get numerous opinions before taking any action. Your minimum risk on any investment in the world is: 100% loss of all your money. You may be taking or preparing to take leveraged positions in investments and not know it, exposing yourself to unlimited risks. This is highly concerning if you are an investor in any derivatives products. There is an approx $700 trillion OTC Derivatives Iceberg with a tiny portion written off officially. The bottom line:
Are You Prepared?
-- Posted Tuesday, 1 January 2013 | Digg This Article | Source: GoldSeek.com