AU Trend Line Breakout, Retest, Double Bottom ReversalAU Trend Line Breakout, Retest, Double Bottom Reversal. Notes on chart.
Trade ideas
REPUBLISHING AU BASE BREAKOUT - now retestingI think this pullback to the base is an ideal time to get started on this trade if you are on the sidelines watching and waiting. The pullback is on decent volume, but a tad less than the rally, which is always nice to see. I would view $12.50 as the 'don't touch' level or stop out. If I did get stopped out at $12.50, I will still be open to revisiting this trade once it turns back up $1.00 or climbs over $15.00. I still believe this sector of the market is under-owned and investors are very shy about buying more to get their position back up to where it is supposed to be. Investors need to "double-up" their positions with mining shares at current levels. Granted, profitability of mines is as issue, but there is never a "green light" flashing to tell you to buy. In life, you have to call your own shots. I hope you can refer to my GG (Goldcorp) charts to see that I don't always call the mining shares to the upside. When they were flying high, I was careful to point out that they were not very profitable and hence, likely not a very good long term investment. Take a look and let me know what you think. All the best, Tim West 11:41AM EST
Anglogold Ashanti AU base formation with 100% upside in 2014Note the nice three-month base in AU shares and the recent bump out of that base on Tuesday this week.
I have also added the 1-day moving average lagged 63 days, which is simply the close from 63-days ago plotted in brown. When the price goes above the price from 63-days ago, it can be a buy signal. If the prices goes under the price from 63-days ago, it can be a sell signal. The 63-DAY LAGGED CLOSE isn't a perfect indicator - and nothing is perfect, for that matter. However, I like to see how everything acts relative to its price from a quarter ago (252 trading days per year divided by 4 = 63).
The gold mining sector is very oversold and although inflation doesn't seem to be an issue going forward due to global overcapacity and still weak labor markets and near zero wage inflation (except in China), there could be a movement into this UNDERWEIGHT sector where money flow has clearly been to the exits. Money management rules would force you to buy this sector and yet clearly that is not what has happened to the average investor's portfolio. Buy on the way down to maintain the same % allocation and be ready to sell as it lifts back up.
I see 100% upside over the course of 2014 for AU and the gold mining / silver mining sector.
Cheers,
Tim 2:32PM EST, Thursday, October 24, 2013
