AUY chart of the week

This weeks chart was suggested by aulover who is interested in AUY, Yamana Gold. Of all the precious metals stocks that I track I have to say AUY has one of the stronger looking chart. We’ll start out with just a simple horizontal support and resistance zone. As you can see when AUY was below the S&R zone, brown area on chart, the price was always turned back, blue arrows. Then in August of this year it finally succeeded in breaking thru the resistance barrier that then reversed it’s role and held support green arrows. Note the nice pickup in volume when AUY was finally able to penetrate the brown resistance zone.

AUY daily support and resistance zone.

The weekly look goes back 6 1/2 years. There are two beautiful Diamond patterns. One was a 7 point diamond that formed the major top just before the big panic crash of 2008. Seven reversal points made it a reversal diamond pattern. The next diamond was formed after the first rally after the 2008 crash that chopped out an eight point, 2 1/2 year diamond consolidation pattern. It finally broke through the top rail of the diamond in July of this year which led to a 5 point rally. From there, like most precious metals stocks, AUY hasn’t been able to run to new all time highs. Close but no cigar yet. It looks like it could be in the process of building some type of consolidation pattern, maybe a triangle or a bull flag. Its to early yet to make any predictions. We need at least one more move lower and then a strong reversal from where ever that low comes in. I think its still too early  to jump in. Patience can be a virtue in the stock markets.

YRI.TO weekly diamonds.

The monthly chart shows the big H&S base that was built between 2000 and 2005 that launched YRI.TO’s bull market. I’ve marked in red the 9 month sideways trading range that helped Yamana finally break through the top rail of the diamond.

YRI.TO monthly look.

Bottom line with Yamana Gold is that it is one of the stronger precious metals stocks right now but that doesn’t mean it can’t go lower in here. There are many precious metals stocks that are looking very weak with some breaking down from bear flags this week. I would urge a little caution and patience in here until this correction has run its course. There may come a time in the not to distance future where we can buy up some of the better looking precious metals stocks if you have cash on hand to do so. I hope this look at Yamana helps you understand where this stock is and with alittle patience you will be able to buy in at a cheaper price.

All the best aulover….Rambus

DOW update

Below is the 6 month daily chart of the Dow that I’ve been showing with the 5 point triangle reversal pattern. You can see the little backtest to the bottom blue rail last Friday that strongly suggested the triangle was indeed a reversal pattern. Its always important to observe how we interact with an important trendline such as the bottom rail of the triangle reversal pattern for clues. If we were able to trade back inside the triangle that would have put me back to neutral, but as you can see the backtest was successful and the Dow has dropped about 460 points so far this week. This Thanksgiving week is usually a positive week for the stock markets. I’ve marked 10,900 as a possible place for a counter trend rally to occur. I also drew in a thin dashed black horizontal rail that was the low of the backtest of the lower S&R rail that could offer alittle support. As you can see there isn’t much in the way of support until we get to that lower S&R rail at 10,900.

Dow 6 month dail look.

Dow update

Below is the 6 month daily chart of the Dow showing our 5 point triangle reversal pattern with the breakout and backtest last week. Keep in mind that a reversal pattern is reversing a trend that has been in place. So now we know that the uptrend on the Dow has been reversed to the downside and that is the way you want to play the stock markets now. Until we get some kind of reversal pattern to reverse our current trend from down to up the trend will remain down except for some minor counter trend moves. There are many ETF’s now that you can play the downside or short the stock markets. Depending on your risk tolerance, there are 2 times or 3 times bear ETF’s. Some focus on the big caps some on the small caps or just about any corner of the market now has an ETF, exchange traded fund. QID is short the COMPQ, TZA is short small caps, SPXU is short the S&P 500. And one of my favorite, if the risk trade comes off is SMN which is short basic materials. These are just a few examples. There are many more to chose from. Anyway back to the Dow Jones. Yesterday’s move down broke thru the first support area at 11,600 the upper S&R rail. We could still do a backtest of that rail, which would be a good low risk entry point but its not mandatory. The next area of support will be the lower S&R rail.

Dow 6 month daily 5 point triangle reversal pattern.

DOW breakdown

I have been showing the triangle pattern that has 5 reversal points making it a reversal pattern once we broke thru the bottom rail. Last Friday we had the backtest to the bottom rail of the triangle. It looks like it was successful as today we are testing the next support rail down at 11,600. If the Dow closes below 11,600 I would view that a strong negative.

Dow daily triangle breakout and backtest. Testing 11,600.

Dow 2nd update & SPX daily

The Dow has clearly broken the bottom rail of the triangle strongly suggesting it is a reversal pattern. There is a S&R rail about 100 points down at 11,600 that will be the last area of decent support. A break of that rail will put the whole intermediate uptrend in question.

Dow daily triangle breakout.

I want to show a daily chart of the SPX as it has a slightly different pattern. The brown area at the top of the congestion zone should theoretically act as support as it has done twice so far after breaking out above the resistance zone. You can clearly see we have been chopping between the big neckline from the H&S top formation and the brown area that was resistance and should now be support. The 50 dma comes in at 1205 just about at today’s lows.

SPX testing support, brown resistance zone, from the topside.

NG stock of interest

NovaGold has finally broken out of an almost one year bullish expanding falling wedge pattern. The heavy volume that is accompanying the breakout is extremely positive. This breakout is textbook in that we have a nice long bar on heavy volume taking out a one year resistance rail.

NG daily breakout.

Richmont Mines….RIC.TO….RIC

Today I want to show another model portfolio stock Richmont Mines that is sitting just beneath it’s all time highs. Below is a one year chart showing 2 H&S consolidation patterns that makeup it’s recent uptrend. The lower H&S consolidation pattern formed during the usually slow summer months and broke the neckline in August signaling the H&S was complete. Notice that once we broke through the neckline, that had been resistance, we had 3 backtests that were all successful. The neckline was now acting as support. The last critical backtest occurred in October and the neckline held on a capitulation spike that marked the low. From there RIC rallied up to make new all time highs, where the second H&S consolidation pattern formed. Again notice how the neckline, once broken to the upside, held support on the backtest.

RIC.TO daily H&S consolidation patterns.

Now on to the weekly look showing a beautiful bullish rising wedge consolidation pattern. You can see how the top rail of the bullish rising wedge held resistance during it’s two year development. Once the top blue rail of the bullish rising wedge was broken to the upside it held as support that was instrumental in the creation of the lower H&S consolidation pattern that I showed on the daily chart. The backtest ended up being support for the head.

RIC.TO weekly bullish rising wedge.

The monthly look really brings into focus just how bullish Richmont Mines is on the longer term chart. Unlike most precious metals stocks RIC.TO brokeout to new all time highs in April of this year while most PM stocks have lagged badly. Notice the top back dashed rail and how it worked it’s magic going from resistance to support once it was broken to the upside. Richmont Mines appears to be one of the leading precious metals stocks that will be a leader once the next impulse leg up gets started in earnest.

RIC.TO monthly look.