Quick Trade Watch-list, September 9th

Last week saw broad markets finally break out of a consolidation zone, while precious metals were slammed hard to end the week. It will be interesting to see if this is the beginning of a push to new highs for US markets or if it is just another whipsaw in what has been a volatile market. If the broad markets continue to rally, I think we can expect further weakness in precious metals stocks, which are due for a larger correction after having had a really nice run. On the other hand, if the broad market rolls over again, the correction in precious metals may be a brief one. In light of this dynamic, I have overhauled the watch-list to accommodate either of these scenarios.

I have kept what I feel are the best looking gold and silver mining stocks in case we see some reversals but at least half of the new watch-list is from other sectors. Marijuana stocks rallied a bit last week, so I have included a few of those names. The beleaguered energy sector has also been showing some signs of life, so I also added a few of the stronger looking companies from that sector.

It remains to be seen whether these sectors are just having an oversold bounce or whether it turns into a more lasting rally. Financial stocks have yet to turn up in a meaningful way, so until that happens I think we need to adopt a cautious view about the general markets. Here is the new list:

ZONE KEY:

Buy = could be bought right now

Watch = would be a buy on a reversal or breakout

Hold = still some upside potential but not a buy at present

Profits = trade is extended and could be sold for profits or partial profits

I have included a few charts below:

This is a daily time-frame chart of the TSX gold mining index. All of our mining stocks look similar to this. Patience is needed to determine whether this is a quick dip or a more sustained correction.

This the gold mining index on the weekly time-frame. You can see that it is very overbought, which suggests that a larger correction could be in order.

APHA made a higher low and broke up across the flattening 50 dma. Aggressive traders could buy it right here, while cautious traders should wait for a new high above $10.

Another weed stock with a similar bottoming pattern, FIRE also looks like it wants to break out.

CLS is an electronics manufacturer. This looks like a nice low risk set-up.

BDT is another nice low-risk set-up coming out of a nice long basing pattern.

RCH recently broke above its mini downtrend. With the stop nearby, this is a very low risk trade.

ACES looks similar to RCH above. This is a nice low risk entry.

VII just broke to a new high out of a textbook basing pattern. Energy is definitely overdue for a rally.

BNP looks similar and could be bought right here.

I have included NDM here because it has been one of the stronger precious metal companies during this downturn. It may take a while but I think this company has a huge upside.

Happy Trading!