Thursday, June 19, 2014

title

ok like a 5 per cent move for gold stocks today, seems to have everyone excited. so for all you clamoring for an update on the PM complex charts:



so I bought some bottoms the last few months, got the entire account in FSAGX, overall cost basis of 19.51. don't have a clue what's next, but I'd sure like to keep moving the next couple months, didn't figure I'd have to continue updating this trade and fucking charts this long as it is. I'll let you know when we start selling.

Tuesday, May 6, 2014

random poem generator

he's too lazy
to be abusive
she's gone crazy
and so allusive

Wednesday, March 26, 2014

PMC charts update

here I am just going to update some of the precious metals complex charts we've introduced over the past months.


so the PMC weighted index has indeed fallen back to the former neckline we highlighted. however, prior to the current retracement, it popped above that old shoulder resistance. so now I'm in the position of seeing a downside target met, but one that had been contingent on a resistance target that didn't hold. what to do? well, I already did it, before even updating this chart this evening: I bought more FSAGX -- a lot yesterday and another lot today. So now the account is 80 per cent invested in gold mining stocks.

here's an update on the PMC WI CROC*


the CROC had flirted above the neutral line for a bit there, but has since fallen back below the previous resistance. that's ok with me; it just that sentiment in the complex has backed off. I look for the upward trend line to hold.

the major area of concern should be the rapid deterioration of the PMC ratio index:


this has fallen all the way back to December levels. something like a 70 per cent retracement of the rally. that's alright, the recent fall has a capitulatory look to it. that kind of decline often transitions into a 'V' shaped rally. I'm sinking into subjective visual 'analysis' here, but I don't apologize.

so yeah, I've bought more gold stocks, might buy a little more, depending. the complex isn't behaving particularly badly in my mind -- it raced up quite fast and now stepping back. I'll get concerned if silver hits a new low and/or our ratio index does.


*Consolidated Rate of Change

Thursday, March 13, 2014

John Denver International Airport

as we are flying through Denver tomorrow, I joked to Lisa that they should name the airport "John Denver International Airport", after he passes away of course. Lisa's like, I think he's already dead, didn't he die in a plane crash?

Saturday, March 1, 2014

Precious Metals Complex charts

the metals complex had quite a thrust higher since we last looked. Here's a chart of the PMC Weighted Index:


(the weighted index is similar to the PMC Index I introduced last year, but instead of being equal parts GLD, GDX, SLV, it consists of three parts GLD, two parts GDX, two parts SLV, and one part GDXJ.)

it is interesting how we appear to have met resistance right at the level of the two shoulders during the previous bearish sequence. Perhaps the complex will find support near the former neckline? don't know, aside from my initial entry in early December I haven't done very well micro-managing this trade, so I better just go about my business. however, I will buy more FSAGX if this complex chart retraces to that old neckline.

here's an update on that PMC ratio chart I posted a few weeks ago:


not that I was paying attention at the time, but at the height of the recent rally you'll note the divergence on the ratio chart compared to the weighted index up top. I am not swing trading these markets, so minor tells like that don't concern me much, but for those who are trading more actively, little indications like that can prove quite valuable. (or they can screw everything up if you don't know what yer doing.)

and now for my favorite chart, a combination of the weighted index and the ratio index (it's just the geometric mean of the two series):




Saturday, February 8, 2014

Precious Metals Complex Ratio Index

allow me to introduce an additional indicator used to track the health of the precious metals complex: the PMC Ratio Index.

it's simple really, I just combined into a single series the three ratios that Everyone uses to analyze the metals:

SLV:GLD (the ratio of silver to gold)

GDX:GLD (the ratio of gold stocks to gold)

GDXJ:GDX (the ratio of junior golds to major gold stocks)

it is generally agreed that the stronger each of these ratios, the more favorable the outlook for the precious metals complex as a whole. but often each of these ratios, when viewed separately, will lead to conflicting outlooks. and that's fine for analysts who enjoy reconciling the divergences with nuanced interpretations. but I don't have time for so much confusion anymore. I'd prefer to look at a consolidated picture from the start and reserve the underlying components for the occasional indulgence.

but how does one combine three such ratios into a single series? just take an average of the three? yes... but.. a regular arithmetic average won't produce anything very useful. sure you could rebase each one to 1 or 100 at common point in the past and then average them out, but eventually your combined series will get so distorted that it becomes useless. no, the best and most truthful way of averaging non-commensurable series is by using the geometric mean (=GEOMEAN in excel)*.

so with that explanation of method out of the way here's a chart of the PMC Ratio Index going back a few months:


looking back, that handle that formed in December proved to be a positive indication, especially since it formed as the underlying ETFs were testing or hitting new lows. since then the index developed into a defined (albeit broad) uptrend.

In the next post we will compare this ratio index to the PMC ETF Index.

*incidentally, geomean is the only valid way to average a group of ratios. unfortunately this fact isn't widely known among market analysts and amateur statisticians, often leading to embarrassing (if comical) errors.