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This week I have decided to post the quick trade watch-list on the public blog so that non-subscribers can see how the quick-trade part of the service works. In conjunction with the weekly watch-list, I also offer commentary mid-week as trades develop. Providing actual set-ups gives traders the best opportunity to see trades unfold in real-time and gain insight into the trading process.
On Wednesday of this week we have another Federal Reserve interest rate decision, so I think we can expect some volatility either before or after the meeting or perhaps both. The market widely expects another 25 basis points rate cut, so if it does not occur I think we would see some selling in the broad markets. If they go ahead with the rate cut, I would guess US markets will continue to drift higher. As for Canadian markets, I am less confident that we will see a positive reaction because the TSX has been generally weaker. Either way, traders will need to be ready to react to whatever happens.
The watch-list remains largely unchanged from last week due to the fact we had very few charts actually break down to the point that the potential set-ups were negated. That being said, I've added five of the strongest precious metal charts that have potentially bottomed and look ready to go.
First, I want to highlight again what I am seeing in the gold mining sector. The weekly chart of the sector ETF (XGD) above shows that we had a swing low this past week and now we are looking for some follow through so that we can have a decisive break of the short term down trend-line. We could still go lower yet but I do think that a move higher is coming sooner than later.
Here is the same ETF on the daily time frame. What we are looking for here is a higher high, which would be and early buy signal. All of the companies in this sector look approximately the same as the above two charts but obviously some are stronger than others.
This is an amazing weekly set-up for DPM. I personally own this stock already and I would add to it if we see it move higher this week.
CKG has already broken its down trend and has generated an early buy signal.
AEM is perhaps my favourite chart in the entire sector. They crushed earnings expectations this past week on higher metals prices and generated a strong buy signal. This company is also part of the model stock portfolio.
WPM is another large-cap miner that could be bought if we see some follow through.
FR has already generated an early buy signal with a break of its short-term down trend-line.
The daily chart of FR is an example of the higher high I was referring to in the first two charts above. This is an early buy signal.
Keep in mind that these companies are all in the same sector and therefore tend to move together. Therefore, do not buy a whole bunch of these and expect to be diversified. They are volatile to begin with, so unless you can handle the emotion that comes with being overloaded in one sector, I recommend trading other non-related companies on our watch-list at the same time.
Here are several non-precious metal companies that look promising.
CCW is a textbook example of what a transition from downtrend to uptrend looks like. It put in a reversal on Friday and looks ready to move higher.
AAV printed a bullish engulfing candle with a drop and reversal above the 50 dma on Friday. This is a buy signal.
I highlighted CPG last week and it is still hanging around in a bullish area where it could be bought.
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