I’m going to go through my process quick of some of the stocks I look through with the NateFolio at 4AM. Going to go through a few items, not all.
Step 1 – go through all lists and determine charts at buy, sell, hold, or interesting look.
Right now, the above is the look on my CURRENT portfolio. I am looking at the MACD for BUY signals. In the AG above, you see the MACD is still not crossed down, where many in the sector are either approaching the crossover or already crossed over. For this one, AG is GREEN on my tag on the right. For ME – the reds have the MACD in a SELL area. However, the RSI is at 70ish and a little too rich for me to get in here. I’d expect slower buy volume and heavier sell volume which will soon have the MACD crossover to a sell signal.
This is what a RED may look like.
You can see FNV has had a good run, but the MACD crossover happened. I am out. Now, it doesn’t mean FNV cannot go higher on a bounce, I just know much bigger money have taken profits and are waiting for the buy signal again in a few weeks. I’m done catching falling knives.
The Fib went back to .382 and seemed to bounce off of the 20dma. But we had a “spinning top” yesterday, and today (Friday) is monthly options expiration where I have seen all stocks get pummeled leading to the end of this. It is more likely than not that there’s a down move here today. Next week, we could have a bounce for a few days, then metals monthly options expiration happens and it is more likely than not this could be a massive smash down this month with how short the banks are. I’m expecting metals to rise early in the week with headlines coming out about $3000 gold and $50 silver before they entice weak hands in to then do a rug pull later in the week.
The SELL signal is there, and I will review for the crossover every day at 4AM.
The HOLD (orange) signal is where the MACD is about to crossover.
One of my favorite miners, EXK, is there now. I changed this to orange to see where it goes – check the MACD at the bottom.
We had a nice move up for weeks, then had a pull back which has tried to come down to the 200dma 4 times. I’m expecting a beating today with the monthly OpEx and yesterday’s news of dilution should actually be positive long term, but it’s a short term catalyst for more selling and puts. See that rising volume the last two days that is red? Yeah, I’m not buying here. I sold some options the other day to get into some cash, and hope to buy them back much cheaper the day of metals OpEx on the 28th.
When the RSI was over 70, I started selling some of those options. Do you see the GREEN circle in the bottom MACD? This is where many should have been buying. Could we have a bounce for a few days early next week after the OpEx? Yes!! But this might be a ST bounce on the way down below the 200dma later next week when metals are assaulted. Either way, MACD has a puzzled look and I am holding what I do have. I had 40 options for Jan 2023, and sold 10 to get some cash. So still holding 30 now.
What I might do with things like this is at RSI 70, maybe sell 25-50% of some positions. If it goes up to 80%, I might be in 75-100% cash on that position, expecting an eventual pull back and RSI sell signal. When that happens, I’m in a lot of cash (like now) and can look at perhaps surfing a quick U move up or perhaps take a look at oil for a ST play.
The interesting play
I look at some charts with interest. Here is Bear Creek. I have traded this thing many times, and see this now at $.81.
It is FAR below the 200dma. MACD SELL signal. RSI at 40. Looks like the move up to $1.00 came back down to almost a full retrace. Today, I will probably add $200 or so to my son’s trading account for his birthday. He turns 13 (I also have a 21 month old) and this account is setup for longer term holds. Bear Creek is a MASSIVE silver mine, but needs $500m in CAPEX for potential mining in 2026. I love to trade BC on 10-20% moves, but I can’t commit a full position to them for FOUR YEARS when I see summer-fall of 2023 as a great pullback. I am more likely to add a small position to my son’s account for $200 to let it potentially do a 10-20x in 4 years when they are ready to mine, and he’s ready for college.
I may buy a small position here to look for a target of $1.00 for a 20% gain in a week or two. At 3:30 today when I’m done work, I’ll check the charts and see if it caught a bid and I stay away, or if it went further down. But this INTRIGUES me. Sometimes I write this and 30 of you go and front run and buy up. C’est la vie. Just showing you what I might look at as interesting.
AEM is also GREEN, but opex today could push this down.
At 3:30 today, I might buy a starter position, but we’ll see. In my NateFolio, I talk about my plan is to buy a substantial position with them after OpEx on 3/28. I might get a tranche this afternoon at a 3-5% haircut, let a bounce happen early next week, take a 5%, then sell into OpEx. But I might just hold through it with a tight stop loss to lock in some profits.
AEM is 50% under its ATH, and my BELIEF is that as money comes into gold miners, the NEM cup has runneth full and water may spill over into other majors to then have them outperform NEM. Check this…
What you are seeing here is one of the 50 or so ratios I also track. This is the Nem/AEM ratio, which shows how they are RELATIVELY valued to each other. The CURRENT ratio shows how NEM has significantly outperformed AEM, but AEM is due to outperform NEM. This might be a significant position I hold for 1-2 months to perhaps see AEM double? Maybe that’s far fetched, by a lot, but it’s 50% under its ATH of 2 years ago and NEM is 10% above its ATH of 2 years ago. Large money is going to see the opportunity with AEM and chase it. I may play this leveraged with deep ITM calls. I wrote Dave Kranzler about this last week and he added it to his Mining Stock Journal this week, so I’m not crazy. So I’ll be looking for the right time to add – with imminent beatings coming, I want to avoid something like this today, but might find value at the end of the day.
With this, you can see how the GDX to AEM ratio is going as well. To me, AEM is due to outperform its peers within GDX.
Step 2 – devise a strategy based on macros
For ME, I realize that gold and silver should have some sort of pullback yet with OpEx coming, but see a good future for them. The war premium could recede. I see the rate hikes happen and stocks rallied?? Housing interest rates over 4%. I feel that more likely than not, we will see continued rollover from stocks to bonds/cash/gold. We may see China start to sell bonds, and there’s evidence Saudi Arabia has sold more than $80B of its $180B. Within continued high inflation over 16% (Shadowstats), 7.9% (CPI), 10% (PPI), it is absolutely mind boggling why anyone would buy bonds at 2%. These rates could rise, and many may rotate out of stocks into these for a period – but I don’t think many understand inflation like 1970s.
Furthermore, you may see bonds and stocks liquidate to cash, sending the DXY higher. However, with China, Saudis, and others potentially de-dollarizing, to me, it stands to reason a lot of those dollar bills will be used to buy American goods/real estate. Where you may see dips in real estate with higher interest rates for loans, high end real estate may pay cash to get out of cash – driving high end real estate higher.
Short term, Burger King and Milkshake guys might see small victories for their narratives – but these narratives are 100% incorrect IF you see the world de-dollarizing. For their thesis to work, the dollar must remain intact as the world’s reserve currency. It is clearly apparent to me that Russia forcing the move from SWIFT has hastened the world from the dollar. And our debt. Yesterday, I heard the Fed’s balance sheet is over $9T and they want to sell debt to reduce their balance sheet.
I want you to picture a 2022 where the Fed is trying to reduce their balance sheet by selling debt – raising rates a lot, as China is selling, Saudis are selling, and perhaps Japan starts selling (idea from Don Durrett on the Japan selling). If there’s all of this selling and 10% inflation, who the fuck are the buyers? This is where I came up with the debt bubble is what will take down the whole system. You then add the de-dollarization of the world over the next 12-24 months as a reserve currency and you see further high end asset bubble blow higher while middle class America stops buying homes. Furthermore, with COVID, companies have shown that they no longer need so many commercial spaces for employees. I am expecting that in 2022 many commercial properties go vacant, and while rates are increasing, commercial properties and REITS may go bust.
I firmly believe as many do that gold/commodities will be THE currency of the future. So I want high exposure to gold and silver miners.
With this, my STRATEGY is to FOLLOW THE MONEY. Right now, big money will rotate more into MAJORS. AEM is on my target for majors. Next would be mid-tier producers, and Yamana, PAAS, and FSM are on that list, and FNV as the gold streamer on that. As money rotates to silver and gold/silver juniors, I will catch them on the way up. Instead of taking a 100 bagger on a silver junior, I will double my pile now with de-risked majors, then get a 50x on the juniors later – where you are taking all of the risk, I am cashing in profits on majors and mid-tiers while you wait 6-12 months for money to get to you.
Step 3- devise a 10-20 day tactical plan based on cycles
The monthly opex for equities takes a beating. The monthly metals opex takes a beating. You can buy things at the discount window at these times, but if November 2021 taught us, they CAN continue the beatings and that discount window looks like a bag holder window. I will buy some positions like AEM at discount and hold, despite a possible 5-10% drop, but I will continue a full court press on short term upside torque with things like FSM.
I will use the MACDs and RSI for EACH STOCK to determine buy/sell points, and I will look at the dma for support/resistance.
Step 4 – do a daily review early to see if anything sticks out.
While your tactical plan is in place, you have to adjust, as needed, if something comes up. I might do a 15-30 min review at 4-5AM to take a look where I am and if something jumped out at me. Today, the U move from yesterday caught my attention and I might hop on a quick ride with that for a few days/weeks until metals OpEx is over. Consult newsletters for ideas, read the news on your favorite miners (yahoo lists can get you news, but junior mining network has alerts that are sent out to me for each stock).