Swing Trading Strategies & Stock Picks Since 2003

A quick comment on $GLD (SPDR Gold Shares) : Lets look at the daily chart  briefly.

There is both near perfect symmetry and confluence between 83.18 and 83.54. That would form an near perfect Bullish Gartley buy pattern there. What bugs me about the pattern was the dogi that formed Friday. The open and close finished at the lower half of the bar which is BEARISH. I am watching this closely and I may wait to see the confirmation of that confluence by seeing if $GLD will test the 83.50 area before buying a small position. I want to build a small core position in gold because of my conviction that paper assets will be defeated ultimately by inflation and that a decent position in hard assets (I own land so that is the other hard asset I hold) would be helpful to fight the inflation to come.

Having said that, It is still possible that $GLD could sell all the way back to its 1/15/2009 low of 78.87 and still be probably work longer term. If that 78.87 does not hold, then the inflation bulls may be wrong this time around and there could be even more consolidation to come.

The main point in this is that I would buy support levels only as we get through this disinflationary period and be ready to sit on a small position in $GLD, only adding to it when support levels are tested again. It is only a matter of time before $GLD moves higher and even if it takes a long time, the hedge in your portfolio is probably worth the price risk in the short run.

UXG Comments: Let's look at the daily chart. For me, this stock is priced under $10 dollars and is a penny stock by the classic definition of anything $5 or under. I would not trade this under any circumstances because of taking a large position with larger than average price risk. The other thing that bugs me about this one is that near free-cash-flow value is around $1.60. An earnings haircut could cut the position by 25%. But, let us look at the daily chart anyway.

 Though the patterns is Gartley-esque, the symmetry is not perfect, yet, there is Fibonacci confluence at the 2.65 area (which would be the ultimate price target for D. Once it gets there, however, that is typically a sell point (as for a SHORT postion).  The other thing that scares me a bit about being long from there to 2.65 is the relative lack of buying conviction, even though the price bar on Friday was strongly bullish.

If one wants to be long that make sure you risk no more than just slightly below 1.63 (the last momentum low on 3/18/2009). That is the risk you must take to hold a position like UXG for a long swing trade. That makes it pretty risky in my book, but that is the nature of that trade.

I prefer to trade higher priced stocks and ETFs so I will not be there with you on this one. Stats are inconclusive because of lack of adequate data. Regardless, be CAREFUL trading this issue and do not risk more than you can afford on it if you DO trade it. I think this one is not for the faint of heart (and that means anyone without a disciplined trading plan).