Note: This is not financial advice. I’m not a financial advisor and I’m wrong 100% of the time. Investments are risky and nothing mentioned here should be considered financial advice. Invest at your own risk.
Update 5/10 – Yahoo charts for GDXJ use a triangle going back a distance where I was using a rising wedge. The triangle yahoo is using predicts a sharp move upward where the wedge suggest a downward move. I have options for GDXJ and have stocks with it. While I’m obviously hoping for a sharp move upward, I’m cautiously optimistic and have stop losses set closely to the support line.
For those with LONG HOLD positions, none of this should really affect you, given you will weather the dips and experience the highs along the way. This is a short to mid term analysis of what I’m seeing with my own eyes. Don’t listen to me, I’m wrong 100% of the time.
I’m pulling about 80-90% of all of my positions Monday to hold in cash for a bit – or at least I’m putting tight stop losses on items. I still love the gold stocks, but there’s two reasons for this:
- I watched a video that has me agreeing that it’s possible a lot of the major gold stocks are overvalued at the moment. This could lead to some corrections affecting the ETFs that are based on these stocks.
- The “technical” charts are showing lots of tension coming.
The guys on Wall St. are playing on another level than we are. For a long term hold, it’s great for looking at the books and determining value of a company, checking for dividends, and picking your favorite industry.
They are taking that information – and then putting it into the blender and spitting out very interesting information. I spent hours looking at charts trying to see things.
And…patterns started jumping out at me. I didn’t know what I was seeing, but I saw SOMETHING. I started to use the Power E Trade from E trade and from there, I was able to figure out how to draw lines and do some cool things.
What I’m about to show you is MY analysis. Do your own analysis – this is for entertainment purposes only.
My BIG takeaways???
- There are some stocks that may pop up.
- There are some stocks/indexes due for a correction
- May/June/July are going to be extremely interesting months
- My earlier posts about a double bottom I feel are still accurate. I feel that the stronger stocks will be a good foundation to move forward with, but there’s a lot of money about to leave wall st.
What I’m about to post are price charts and technical analysis. I’m a NOOB at this. There’s a lot of good channels out there that have been doing this technical analysis for 15 years. Go watch them. The analysis below is me “speaking up” and putting some calls out there for people to chew on.
I think this week I’m settling up most of my positions and cut some small profits. Other stuff is a long hold.
The good? One of the stocks my friend turned me on to is Mastec Inc. If you look at the 5 yr chart, you see it growing like a lot of companies over this period. They had gotten up over $70 per share. Then the cliff fell off.
What we have now is “recovery” from the mass sell off. Money is coming back into companies. Some strong companies, some not so strong companies.
When I looked at MTZ on the recovery, I saw a pattern. I found what I believe to be an ascending triangle. What this shows you is a flat line (resistance) with an angle support line rising up. This means people want to buy because they feel it is a value – the value of the company is worth a lot more than the stock – but there are short players which short the stock at certain levels. This pushes the stock down. When the stock goes down, it falls as people trigger stop losses. Eventually, the price gets low enough when people buy back in. This continues to a point with tension.
What this told me was that MTZ was going to make a nice move up. Towards the END of the point, what happens is people who are buyers overpower the shorts. Then, the buyers overpower the shorts and the shorts need to cover their losses and have to buy. Eventually – they hit another level of resistance further up with more shorts – however, this is usually equal to the amount of “pips” on the chart.
Here’s the ascending triangle, in theory:
With MTZ, I noticed a few times it got to like $41 and then fell back down. That was the first indication to me to look at the charts. The 100 bar avg price is listed at $36.50. The 100 bar resistance is listed at $63.93.
Remember – all this is, is PRICE information. If you find out tomorrow that the company is awarded a $60 trillion contract, that can affect price. Maybe their CEO is arrested for fraud. I am always looking at the headlines for companies I invest in to ensure that, along with price action, that I know what’s going on. Recently MTZ just beat earnings numbers.
All of this being said, I saw this pattern – I saw 5 sessions trending downward, and I bought Thursday morning – I bought options for June 2020. Why? If I wanted to buy options for later in the year, the cost is MUCH higher. However, if the price remains static, there’s a chance I lose my options investment if the options become worthless June 19th or so. Each share is like $34. So to buy 100 shares is $3400. If the price goes up to $50…YES!! You now have $5000 and can sell those shares and bank $1600. Meaning, I risked $3400 for a chance at $1600, with roughly a 33% profit on that trade (roughly).
Now, if I buy some options for $3.40 at a strike price of $35 for June 19th, the cost is…$340 to control 100 shares. Take the options cost of $3.40 and add to the strike price – which is $38.40 per share it needs to be, to at least break even (it will be less than that at the time of expiry). The concept here is with options, you can leverage the PROFIT from those 100 shares with only putting up a fraction of the cost. This is RISKY. If the price doesn’t get to that level, I lose all $340. However, I feel for ME – that MTZ is about to break up with the ascending triangle. The pips I’m seeing from the bottom to the breakout is $41 at the top and $22 at the bottom, for roughly a $19 gain from $41.
This tells me – IF the technicals are to be believed, that MTZ could be reaching the upper $50s in price action in the upcoming 2-3 weeks.
Remember, this is a fundamentally sound company that was trading over $60 before the melt down, they just beat earnings, and they may be somewhat impervious to the zombie apocalypse that will be crushing things like retail. When people start to leave retail in the upcoming weeks with more and more bankruptcies, I feel it’s going to be a VERY short time before wall street finds this ascending triangle and moves big money in to overwhelm the shorts.
So – if the price goes to 60, and my options are for $35, I could potentially see $2000 profit from a $340 option. I may buy another 1-2 on Monday.
For ME – I just wanted to point out that I found what appears to be an ascending triangle and in all of this noise, I might turn a few bucks.
OR – it could melt down because of some investigation and the company tank. Then, I’m out the $340 for the options and NOT $3400 for 100 shares.
When I also added the volume and the MACD (this shows possible signals to buy or sell if the lines cross) it’s telling me that with the lower volume, there is more indecision on where it’s going. It’s also possible towards the end of this triangle, that it could bump down below the support, but then rocket up beyond the resistance.
These are statistically relevant indication – NOT RULES.
Upward wedge – this is something I found as well in some of my stocks. This is where I think a LOT of stocks are now with a lot of pressure building up for big moves. Those with the ascending triangle may have a move up closer to their pre-meltdown price. Those with the rising wedges may have a correction in store.
This occurs where you eventually have a resistance line on an upward angle converging with a support line below it. This shows an upward trend – but eventually what happens in these is when they come to a head, the price will then move downward. This can either be a short term few week correction, or it can mean the beginning of a longer downtrend.
Additionally – this is what Yahoo finance has to say about MTZ:
How many stocks can you find that are undervalued on Yahoo? This would indicate my options may be a good pick short term for June. The PE ratio is low. High beta. Beat earnings.
Then – on etrade, they support a price move between 44-58 in the next year or so, with lots of good feedback on buying.
GDXJ – this is an ETF of junior gold miners. I’m big on these guys, but the charts are showing me that there may need to be a pull back soon. This is one of those I plan on liquidating stocks this week, but I do have some options I may let ride. Why? Well – this could be a short pull back. However, others thing gold and summer don’t go well together, so gold may pull back to $1675 or $1650. In normal conditions, I might agree. With all of the currency printing and investment demand – there may be a pull back, but I think it may be short lived.
If you see this wedge, it shows there’s a convergence really soon. My MISTAKE here was originally thinking this was a “triangle”. The triangle has a horizontal line like MTZ.
This shows that there will be a pull back, down, and to the right. By how many pips? This is where that whole Fibonacci thing comes in to play. Outside the scope of this for now, as I have to read up a lot more on it. But if you look at the dates, this is telling me there needs to be a move down and to the right by May 21st. I bought some options and into GDXJ a few hours before I understood the difference between a wedge and a triangle, and that little orange candle in the top right was my fate for Friday on the 8th. It still shows there may be a session or two where it rises, but apparently these tend to move at 75% of the formation – which is why I feel MTZ is moving soon. You also have to check the volume – and this shows declining trade volume as well.
This is where people start buying short term puts and get short positions. I don’t play that game, as you can lose “infinite” money. I don’t like that.
This is what the wedges show you:
Does the rising wedge here look like what I found in GDXJ? Yup.
Does this mean GDXJ is going to crash? No. It suggests a price pullback. Does it fall a little or a lot? This is where you get the Fibonacci and theories with the pips and how deep of a fall. What I’m doing is using the MACD to know when to buy back in. This will give confirmations of price changes in a direction.
Update – here is the Yahoo prediction for GDXJ based on the triangle and not my wedge. I’d argue that these charts are all about price discovery and price information. When the bottom hit in March, this seems to be a price reset and a search and discovery for a NEW price. I’m not sure how a price months ago could provide an imaginary resistance or support line, but it is there if you draw it. These charts are reliable about 80% of the time, so if you have 10 trades based on these models, 8 or so should pan out.
But what I’m seeing in a BIG PICTURE is strong moves to gold because the 10 year is at negative rates.
This indicates to me a possible flag pattern upwards. A short correction, followed by buying back in. This pattern may continue for the better part of 18-24 months. If you are holding for the long term, do nothing. The prices will continue to go up.
You can see wedges, pullbacks, and runs going up. For me – this is very bullish on the sector – GOLD.
This is what this might look like over a few months.
However, this provides opportunity for those to capitalize on these moves on the way up.
Let’s say a starting price is 20 and over 2 years, it goes to 40. Congrats!! You doubled your money!!
Now – if you can read these wedges and know when to buy and sell, it looks like this:
Buy at 20, sell at 25. Profit $5. Price moved to $22. Buy back in with your profits. Price moves to $27, sell, profit $5. Price moves back to $25. So on, and so forth.
The LONG HOLD makes double their money
The person who can read the technicals may make 3x or 4x.
This becomes important with GDXJ for me. In 2011, when the price of gold was $1900, GDXJ was $180 per share. Currently, it’s like $42. Bank of America called for gold to be $3000 per ounce within 18 months. Could GDXJ get to $200 per share?
So – if I put money into GDXJ now and leave it there, it’s possible for a 5x. However, if I can read simple technical charts, I might be able to turn that into 10x?
If you look at GDX, the convergence point is further out, suggesting a move down with GDX is coming, but not as soon as GDXJ.
GDX is trading more in what looks like a channel – and has been trading relatively sideways for 2 weeks. With the discussion of the analyst above saying most of these companies that are part of GDX are overvalued, along with the fact that it slammed up on the 100 bar moving avg and STOPPED is telling me it is the rounding curve that is moving downward.
If I just held GDX for the next 18 months, sure, I’m going to make money. But this chart is suggesting a pullback, and this is where I’d place my stop losses just outside the channel support price. These also might be flags and short pullbacks. OR it could continue up and to the right. Rather than dump GDX, my strategy here is to place a stop loss at maybe $34 or something with a trailing stop loss which follows the channel. If it trades lower than the channel at close, towards the end of close I’d trade out of it. On the bottom there is the MACD, and when those lines actually cross, it’s a sell or buy signal. In this case, it’s a sell signal.
Wait for the pullback and MACD to signal buy back in, and I’m good to go.
I did this same analysis for another company my buddy told me about, FLR. They are also someone under valued, but along with the price charts – they also have some financial issues with reporting. Their earnings are measly compared to their revenues, and they may be affected by the zombie apocalypse. Still, I decided to look at them. And – I bought into them a little Thursday morning to test a hypothesis. I stupidly sold Friday afternoon expecting a complete sell off, instead the price shot up more Friday afternoon.
Now – I saw this pattern early Thursday morning and I bought in right after the orange candle from Weds.
As you can see, the price went up the last 2 sessions to follow this channel. What I can say though is just by looking at it with your eyeballs, you can see some recent downward movements. While it has traded within the channel, This can also launch sideways or down and to the right soon. Two winning sessions in a row? Well, maybe this can trend up? The MACD is converging, signaling that at any time can be a sell. I made a few bucks with my sale on Friday. Nothing crazy, but it was 5% gain in 2 days. Right now, I’m testing my theories to gain some trust in my abilities and fully digest what others are seeing.
When I see a FLR, I see a company that appears to be valued somewhere around $20 by analysts and trading around $10. It was $5 a month ago. While it is trading within this channel, I may continue to hold and get some winnings. I’d have some TIGHT stop losses baked in to this due to how close it is to the “support” line. This is why I cashed out on Friday, it hit a stop loss. What I’m learning now is that people put their stop losses just below the support or just above the resistance lines to give some wiggle room. Had I don that, I would have been able to get another 5% added to my value that I just pissed away because my stop losses were set just above the support line. Truth is, I didn’t exactly trust what my eyes were seeing.
When you look at etrade and yahoo – yahoo seems to think it’s fair value and etrade has modified their prices between $16 and….$5????
Where the charts show me strongly that MTZ is a force to be reckoned with, MTZ has some questions with it.
One of my other favorite companies – AG, is also getting to a point where I need to make a move. Earnings are Thursday of this week. Historically, the company doesn’t meet earnings expectations. I was hoping this quarter it could be better, as they are more efficient and 40% of their haul is gold and it’s seeing an all time high.
Below was my first attempt to see any patterns. I missed some of the candles, but this is what my eyes were seeing,
I further refined my technical analysis to reveal – a rising wedge. Very similar to GDXJ – but this may be treated a lot differently than GDXJ with a pullback.
I have a white line over 5/18, which is…about 75% through wedge and just about date of earnings. Leading up to that, I plan on getting out of my options and stocks. I don’t think I’ll be buying back anytime soon, unlike GDXJ. Additionally, I have a previous support line of 9.17 which may be the resistance line which then begins to force the price downward. So – I may expect to see a few positive sessions next week and towards the 18th-24th, a pull back. Perhaps earnings miss, again? That may be the ultimate trigger. Stop losses are set, and Monday I’m going to take a very nice profit from my $6 options and hold on to my October $8 options for the next run yup. I may take some unrealized losses over summer holding them, but I feel silver will rise over the summer and push AG prices back up on the red line you see. I will follow the MACD line for when to buy back!!
Gold vs silver.
At the moment, gold is really high. This is leading to really high profits for gold miners. On the flip side, silver prices have languished with a recent pop up. This was actually a descending wedge pop up that John Howell predicted a few days ago. I was not really believing it. And it happened. John Howell, for the exact same reasons, is predicting a correction downward on the major indexes due to the same reason – an rising wedge which is showing movement downward soon.
That being said, until silver prices get back over $17, it’s not going to be entirely profitable for the silver miners out there. This quarter will also have less production and sales from the silver companies.
So – maybe this week I can get out of my positions for cash profits. I will hold my MTZ options and roll the dice I’ll also continue to look at FLR, since I’m putting mining stocks out, it might be of interest to chase a few equities that might have some meat on their bones. However, the money I’m putting into FLR and MTZ will not be big money, just trying to capitalize on some loose change and get the percentage wins.
One interesting pick my buddy gave me a few months ago was CLNY. I had been upset with their price volatility so I had bailed. If you look closely, this is also an ascending triangle. Didn’t see it until just now. I’ve been seeing the price go up and down. Of interest, the company did mention $3 billion in defaults and their company CEO is stepping down. However, my buddy feels the company is worth a ton more than the stock would suggest. This obviously can change if the property values of holdings shrink with a deflationary effect, but let’s look at the technicals.
This also presents an ascending triangle. So – maybe some of the GDXJ money moves there. When it breaks up, cash out, and that’s going to be around the time to buy back in to GDXJ.
With CLNY, etrade is pretty fair to them with a $7 price target, bit that’s only 1 analyst. They also have 2 analysts with a buy rating. Yahoo finance is a little more cautious. That being said – this one presents an ascending triangle and is severely undervalued. BUT – weigh this against the numbers of defaults that could be coming in? Maybe a good short term options play for me, but might be very risky for a mid term hold. In 2 years, they might be at $7 per share. Is it worth options to maybe play the bump up that could be happening within 3 weeks? Could be worth a small flyer for me.
Update 5/10 – CLNY had their earnings call on Saturday and they exposed a lot of losses due to their exposure with hotels. They have a LOT of different businesses, and their CEO is in the midst of stepping down. While these predictors work 80% of the time, this might be one of those times where earnings and sustained losses going forward might be a time to not use the triangle to predict – because there’s more information there than price. I’m going to watch this throughout the week and I might be a hold on this for now. Either way – this is one to watch to see if it falls into this trend. It looks like there’s maybe another week to observe before I’d need to get in on some options, but this may be a wait and see. I just don’t like the mounting losses moving forward.
So – I can hold the mining stocks for 2 years and be pretty happy. Or, I can take profits, move the money to equities about to move, take those profits, then buy back in my mining stocks for less. Rinse and repeat. So it looks like Monday I’m going to try and buy in some of CLNY for $1.99.
Now….that SAME analysis on certain stocks – take a look at the Dow Jones. You see the same rising wedge pattern forming. Only this appears to be close to full maturity.
You can also see the MACD lines cross at the bottom which then told people to buy back in. I recently heard that 85% of trades now are automated, and I can tell you I think a lot of programming with “quant” is also seeing the MACD line just crossed and there will be selling pressure and shorting coming up.
This seems to indicate a correction downward this week or next. If you look closely, the MACD lines actually cross, indicating a “sell”. This is where you will start to see wall st start to short a lot. This pressure downward can trigger multiple events. We might see 25,000, but then it appears some correction is in our future. This coincides with the time I feel GDXJ may have a quick pull back….
But if people are selling and pulling out of the major players, where are they putting it?
This is where I feel the below are places for me to look:
- Those with triangles approaching the end point – these are the “undervalued” stocks which are worth a lot more than their share price. This is why I have some caution with FLR, trading near the bottom of its support line. With a tight stop loss, I might be able to thread the needle and get some gains this week until and if bad things happen. This is an opportunity for me to look at CLNY and MTZ for me. Both could fail miserably, so I do not recommend anyone listening to what I do.
- Gold stocks, but I’m buying at a dip. GDXJ is not something I’m buying back into until the MACD turns. Metals may dip this week and next, but when the Dow moves downward, it may signal time for me to buy back in – this establishes a flag pattern for GDXJ if it dips out of the support line this week.
- Get out of my AG ASAP this week with some profits and wait for the dip. It will go back up, but not right away. I can get more shares for the same amount of dollars doing this, or I could just simply hold and let it grow.
Good luck everyone. It’s scary out there. I hope you found this entertaining, and remember, I’m some idiot on the internet.
In 2003ish, I did see the mathematical issue with the artificially low interest rates the fed was pumping the economy with. I pointed this out in a paper, then again on a test during my MBA days at YCP and Villanova. I had recently bought a house for $61,900 and sold it for $95,000 2 years later – and thought that was ludicrous – which made me think. The professor essentially said, “housing prices never fall”. I was right, but early by 5 years. The academic dogma was to listen blindly to Keynsian economics and if you questioned the system – YOU were wrong. This all sort of changed after 2008, and people made a LOT of money off of the downturn. I am primed to do the same this time around because I see the signs coming.
This time around, I’m trying to understand the market forces of where I should buy and sell and not trust “the experts” that encouraged me to buy a house in August 2007, a few months before the housing market crashed.
For the hell of it, I took a look at TESLA. Recently, they had Musk come out and say the stock was overvalued and the price went down. That’s the two orange candles you see recently with the price down.
The MACD in April (the moving average line below the channel) crossed, showing a “buy” signal. Right now, the MACD line is touching. This could signal a “sell” signal coming. Additionally, within the week, this channel is to hit on the 100 bar resistance line. May 14th. This could hit the resistance line and:
- Shoot upward. All of those shorting the hell out of them could be having to buy back. Musk could have said what he said this past week to DRIVE DOWN the share price in order to get his buddies to be able to buy an ass ton at a discount. They are not playing the same game you and I are.
- Tank – this seems to coincide with the Dow Jones chart looking to start breaking downward this week. This could form a flag, but it does appear a pull back is coming.
Remember – Tesla stock, on paper, is valued just over $300 per share but is traded at $800 a share. If people are scrambling to cover margins this week, a LOT of things could be sold off, including TSLA stock. I may be a buyer if it draws back to $350 a share. Maybe. That’s an expensive stock!!
If you look at what the analysts say via etrade, their price targets avg $627. For a stock that’s trading now at $819.
If there’s a storm coming inside of 2 weeks….this might knock that price back down again.
Also remember, that all of this could be for nothing if they find the cure for COVID this week. Stock market could shoot the moon. Or, they find an asteroid will kill us all in 3 months, there goes the stock market. These are PRICE INDICATORS only with the technicals. I feel good about my MTZ play and feel good about holding some cash for a few weeks to see what happens with everything else. GDXJ and AG look to me like I’d like to exit those markets early this week and wait for buyback opportunities.
Conclusion – (update) – a LOT of the stocks are in a form of a rising wedges, and if these are accurate 80% of the time, it means a lot of stocks in the next 1-3 weeks are going to be facing downward, corrective pressure. My guess is Wall St and hedge funds are probably shorting a lot of these weaker companies providing precisely the resistance that rising wedges run into. Those stronger companies with the ascending triangles, hedge funds and shorts also may recognize the pattern and begin to cover their short positions now by buying up cheap. Some of the triangles may move this week or next whereas the weaker companies may be shorted – with Wall street profiting off of tumbling share prices. While most people seem bullish right now, we have 25 million jobless at the moment and are only at the beginning of the dearth of financial destruction of this pandemic. With trillions being thrown at this problem – the best we can hope for with this system is a prevention of complete melt down of the system – not prospering upward.
This is the means of how a double bottom is hit. But the good news is after a double bottom is hit, when the price indicators start moving upward, it could be a very sharp recovery as the double bottom price indicators suggest. The “W” is a very strong recovery possibility, which for me, coincides with the US fully being open in Q3 and getting strong Q3 profits in Oct/Nov. I feel Q2 is going to be a blood letting which will see a lot of stocks tank in July/August. Bankruptcies will be headlines throughout June, so by the time numbers come out in late July and early August, most will already know by then how bad it will be – but this will confirm it. Once that double bottom is hit and unemployment starts to get back to a “normal” 5-7%, you will see currency come back to Wall St. By this time, Gold may hit $1900 and continue to rise to due to inflation. It is possible that gold will continue to rise with Wall St due to the weakness of the dollar. The recovery from the double bottom will not be vertical, but probably a drawn out 1-2 year recession that is not a sharp line – but perhaps flat to angled. Strong companies will continue to perform well and this will force other companies either out of business, merge, or consolidate operations and sell off non-profitable sections of their business. This may be where companies get “leaner”.
PPS – I had heard from multiple podcasts and youtube videos that supposedly the Chinese had been stocking gold for many years, and rather than having 2,000 tons, they have 20,000 tons and are ready to use that gold to back a crypto to replace the US currency as the world’s reserve currency. The US dollar is strong at the moment not due to its inherent strength – but due to other currencies falling against it. When other currencies start selling off the dollar, the dollar will weaken – and this will make gold shoot the moon, and by proxy, silver will follow. If China unloads a gold-backed crypto, this could spell a lot of worries with the US dollar being the world’s reserve currency.
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