Buy Signal in Gold Stocks

November 12, 2005

The two year correction in gold stocks appears to be over !

Our trading model issued a buy signal today, ending the sell signal from early October.

Again, our leading indicator alerted us to a possible trend change eight days before the actual buy signal, and now with established support.

But what is really special about the current buy signal, is that it follows the first weekly BSBS (bullish support buy signal) ever produced since this new bull gold market began five years ago.

And what is extra special, is that this buy signal is the first daily BSBS (bullish support buy signal) since the major correction which began almost exactly two years ago.

And the last signal to join the party will be the very long term monthly chart, which will not confirm until the month is over, but long term investors within our membership have been advised to initiate positions with the current buy signal.

Summary

For those who are not familiar with our trading models and signals, TLBBS is trendline break buy signal, and BSBS is bullish support buy signal. BSBS is far superior than a TLBBS, simply because a BSBS is buying the dips of a bull market, while TLBBS is often a counter trend buy signal during a bear market. By combining different time frames and employing the same signals, we finally have arrived to a perfect alignment, after a five year bull market with the last two years being spent in a correction. These past two years have been very difficult to trade due to the whipsaw which is a natural process during a major correction, and that appears to be over, with the weekly 200ema providing the initial support, and now the daily 200ema providing further support. New money can cost average in at this point, because the next set up will not come until prices are at much higher level where an IP (impulsive phase) will likely begin. It is precisely at this point we would exit our ETFs and funds and switch into a basket of gold stocks for maximum exposure and higher potential profits. We have had two IPs in this new bull market, one in 2002 and another in 2003, both with phenomenal returns. We will see if this buy signal will evolve into IP number three. Although the future does look very bright, we will not become complacent and ignore risk management, which has kept us above the water these past two years while waiting for an opportunity like this. The current set up has a risk of about 3% should the signal fail, and we will not hesitate to exit and wait for the next signal. Let the market have the final say.

 

Jack Chan at www.traderscorporation.com

12 November 2005

Jack Chan is the editor of simply profits at www.simplyprofits.org, established in 2006. Chan bought his first mining stock, Hoko Exploration, in 1979, and has been active in the markets for the past 37 years. Technical analysis has helped him filter out the noise and focus on the when, and leave the why to the fundamental analysts. His proprietary trading models have enabled him to identify the NASDAQ top in 2000, the new gold bull market in 2001, the stock market top in 2007, and the US dollar bottom in 2011.

The world’s largest gold nugget is 61 lbs, 11 oz and is on display in Las Vegas.