Friday, November 14, 2014

A Few Charts of Interest in Commodity Related Stocks

As the commodity board appears to be bottoming for the intermediate term, there are several ways to screen for trade candidates.  At this time I would suggest screening stocks in the gold, silver, oil, and steel industries for short interest amongst other technical factors.  The heaviest shorted stocks can really strongly rally after a low occurs and the markets rally into the short squeeze price region.

Some charts of interest are NG, MT, SID, OIS.

There are plenty of solid looking technical opportunities out there right now that could be traded according to an objective technical method.  The key will be in risk management.  How much capital is appropriate to put in play at once as a bottom attempt occurs?  That is a great question.  One idea is to begin with a hourly chart and place a trade.  Then if the trade is successful, and the trend continues, you can take another trade on a daily time frame signal when it develops.  And again, on appropriate patterns, you could also add another position if the weekly time frame signal occurs as the trend continues.  It could be done with a simple technical indicator like MACD, or other more complex strategies.  For a purely technical trade I like to use a moving average channel breakout after a technical divergence to be my entry signal.  Then I use the moving average channel itself to trail stops as the trend develops.

Pete

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