Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Why Most Investors LOST Money by Investing in ARK FUNDS - 27th Jan 22
The “play-to-earn” trend taking the crypto world by storm - 27th Jan 22
Quantum AI Stocks Investing Priority - 26th Jan 22
Is Everyone Going To Be Right About This Stocks Bear Market?- 26th Jan 22
Stock Market Glass Half Empty or Half Full? - 26th Jan 22
Stock Market Quoted As Saying 'The Reports Of My Demise Are Greatly Exaggerated' - 26th Jan 22
The Synthetic Dividend Option To Generate Profits - 26th Jan 22
The Beginner's Guide to Credit Repair - 26th Jan 22
AI Tech Stocks State Going into the CRASH and Capitalising on the Metaverse - 25th Jan 22
Stock Market Relief Rally, Maybe? - 25th Jan 22
Why Gold’s Latest Rally Is Nothing to Get Excited About - 25th Jan 22
Gold Slides and Rebounds in 2022 - 25th Jan 22
Gold; a stellar picture - 25th Jan 22
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Australian Gold Stocks, Diary of a Short-Term Trade & Fundamental Application

Commodities / Gold & Silver Stocks Sep 15, 2009 - 07:52 AM GMT

By: Neil_Charnock

Commodities

Best Financial Markets Analysis ArticleIntroduction - This article is for traders and investors (non traders) alike.  Readers that know my work know that I use technical indicators for exit and entry points, however only after I like the fundamental picture in a stock or commodity. 

My GoldOz Members received access to an educational file analyzing the stock at the centre of the illustration trade in this report a few weeks back. Members also would have seen the obvious parallel I used when comparing this company to one other stock which also went up nearly 50% since I posted that report. 


This analysis was also provided in a Fundamental analysis file released a few weeks earlier in the GoldOz Gold Members area which covered the whole sector and is still on the site.

This latest file “escaped” to several other blog sites and was passed around the net as I also used it as a promotional file. Here is the link to this free educational report if you are interested. I am working at the next file of this type to be released before the end of September or soon after.

Profitable Investing

Knowing the immediate direction or future direction of a stock and then trading within that trend can amplify profits substantially. 

The general idea is to trade the stock either longer or short-term by selling into price peaks and then buying back additional shares, with your initial capital plus newly locked in profit, on the subsequent fall.

The original parcel of shares swells with each successful trade but the original choice of stock was made on fundamental grounds.  Therefore I am truly using both disciplines side by side as investment tools. 

This article contains theory that can be used by all investors and traders.  True understanding of this simple principle can enable you to earn spectacular gains.

Before you say – “but I am not a trader” - think again.  The difference is just a matter of time zones.  I am comparing the intra-day chart using 15 minute time intervals to daily and weekly charts to show the same pattern used successfully to invest in gold stocks.  Normal investors (non traders) can use this to their benefit for longer term trading.

The magic thing here is that you can use exactly the same techniques for day trading, short term swing trading (1 – 12 weeks) and finally up to 12 – 36 month longer term investments.

This is also educational report on fractal analysis if you want or need to put a name to this theory.  Before you get scared of a word that is not defined let me quickly explain before I start.  The term "fractal" was coined by Benoît Mandelbrot in 1975 and was derived from the Latin “fractus” meaning "broken" or "fractured."  Any trend proceeds in a “broken” manner and not in a straight line.

Fractals can be found in nature - charts too and there are all sorts of useful applications.  The application I am also using and referring to in this essay is to compare completely different time zone views to the simplified technical analysis techniques I use to trade shares.

I started this article a few days back so I will leave the chart below as it was and also add an updated chart below it to show the successful completion of this real trade to this point.

This is an ongoing process I continue to use with various equities but one important fact – the stock must be trading with significant volume or the technicals become more unreliable as volume decreases.  The rule is; “higher the volume the better” when it comes to technical analysis application.

OK looking at the chart below we see the entry point of the trade based on support levels in the “Mystery Stock Daily chart” later in this article and also the crossover point on the MACD in the chart directly below. 

The stock was mainly trading in a range between 2.5 and 3.2 after a spike early in 2009 and I took the view the deeper levels were in probability unlikely to be probed again.

Successive trades were layered in below at 2.6 after I posted a positive educational report that used the stock as an example of valuation based on fundamental factors.  I still wanted to add to positions but posted the article anyway which is an ethical point.  I would not have posted a positive report before I was set in my position if I wanted to pump and dump. 

I put my money where my mouth was and continued to buy as I was delighted to see some more selling over the coming few days.  Note: I also disclosed ownership of the stock as required by ethical and regulatory standards.  Here is the 10 day 15 minute time interval chart.

See above where the MACD low crossover signal was made – a buy or add point.  The subsequent profit point was up at the resistance level @ 3.2 / 3.3 see daily chart (last chart).
 
Even though I believed it would blast through this high I did fell it would have to do some work first – so I watched for confirmation.  Sure enough a classic negative divergence sell signal emerged as shown in the circles around the mid chart area above.  Look at these patterns they are a fractal – this pattern is a fractal because it emerges on a weekly basis, daily basis and intra day.  The pattern: two price tops either at the same level or the second peak is higher – and the corresponding RSI peaks have a lower second peak.

Selling was completed on the basis of the high MACD crossover (circle on chart above) and the negative price to RSI divergence marked with the straight lines within the circles.  The re-entry buy point came in two days later at 2.9 and 3 based on the positive divergence (price to RSI divergence which is an exact reverse of the sell signal described above) which got filled.  This entry point is shown in the top two ellipses in the chart above on the far right hand side.

 Now let us take a look at the updated chart directly below to see what happened next…

Subsequent to the re-entry point we saw a matching pattern within the ellipses – how often they occur.  This told me the trade was under control.  I marked both RSI and price with ellipses on the chart above to show how similar the patterns were. 

Next action – “BINGO” – a 9 point pop (rise) up to 3.8 where the shares were sold at 3.7.  This may or may not be the top but who cares because a new entry point will arise.  It would be hard to go broke locking in 25% profits on top of 20%+ profits within a two seek period.

More information is available in the Gold Members section of GoldOz – subscribe today if you want additional fundamental and technical coverage on the Australian gold stocks.  The rest of this article is for GoldOz Gold Members only…

Good trading / investing.
Regards,
Neil Charnock

www.goldoz.com.au

GoldOz is currently developing a Member area and has added further resources for free access. We have stepped up our research and stand by to assist investors from all walks of life. We sell an updating PDF service on ASX gold stocks from only $AUD35 for 3 months – the feedback is grateful and enthusiastic because we are highlighting companies that have growth potential and offering professional coverage of the sector. GoldOz web site is a growing dynamic resource for investors interested in PGE, silver and gold companies listed in Australia , brokers, bullion dealers and other services.

Neil Charnock is not a registered investment advisor. He is a private investor who, in addition to his essay publication offerings, has now assembled a highly experienced panel to assist in the presentation of various research information services.  The opinions and statements made in the above publication are the result of extensive research and are believed to be accurate and from reliable sources. The contents are his current opinion only, further more conditions may cause these opinions to change without notice. The insights herein published are made solely for international and educational purposes. The contents in this publication are not to be construed as solicitation or recommendation to be used for formulation of investment decisions in any type of market whatsoever. WARNING share market investment or speculation is a high risk activity. Investors enter such activity at their own risk and must conduct their own due diligence to research and verify all aspects of any investment decision, if necessary seeking competent professional assistance.

Neil Charnock Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in