Category Archives: Trading Tools

18th September 2013 — Gold; a test of faith

We’ve been quite categorical about our position on gold over the summer. We are bullish and believe the current pullback represents a buying opportunity.

It is true that many die-hard gold bugs loudly proclaimed their allegiance to the precious metal from the top, all the way to the bottom, losing fortunes in the process. While we hope we haven’t been afflicted by the same investment fanaticism, we are betting that the latest weakness is a precursor to the next move higher. It is possible that the recent drops have been exacerbated by taper-related speculation, but we are now at or are approaching several key areas of technical interest. As always, we let ourselves be guided by what the charts have to tell us.

 

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8th August 2013 — A developing opportunity in natural gas

It’s been a while since I wrote a piece using the MIDAS Method, but there is a developing opportunity in the natural gas market which is starting to look quite enticing. Below is the three year MIDAS chart for natural gas:-

As you will note, MIDAS primary support is 16 months old, the bull run starting on April 20th 2012. Since April 20th 2012, the spot price for natural gas has been on a fairly strong run. It doubled within a year, pulled back, and then went on to make new highs.

 

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27th June 2013 — $1,200; Gold’s last stand

Just over a month ago I suggested that gold was attempting to complete a double bottom.  At the time I warned;

“If the developing double bottom pattern proves false and the price of gold fails to rise from here, then strap in because there is nothing but fresh air underneath. Gold could easily shed another $150/oz.”

And so it’s come to pass.

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9th June 2013 – Nikkei APR2013 support fails but bull market still intact

Another week has passed and there has been more drama on the Nikkei.  The wild swings have continued, but the overwhelming move has been down.  At one point the Nikkei had fallen 23% below its 15,942 intraday peak set on May 22nd.  In so doing it also categorically took out the fledgling APR2013 support.  This was disappointing as the initial indications were that this support line could be valid.  However once it was clear it was not, it was time to move on.

MIDAS Method Overview
Stock/Index/Currency/Commodity Nikkei 225 (Japan)
Support Launch Month NOV2012
Level of Support 1st
Price of Support 12,251

To the casual observer the Nikkei’s plunge looks catastrophic.  Not so to the MIDAS user.

Although APR2013 support did not hold, NOV2012 support did and the Nikkei’s fall halted just above this level.  Below is the MIDAS chart showing data from Friday’s close.  NOV2012 support was at 12,251.

Nikkei 225 APR2013 Support 9_6_13

 

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1st June 2013 – The Nikkei continues to teach

The Nikkei continues to provide an excellent live case study in some of the most important lessons for successfully using the MIDAS Method.  Along the way it has also set up some highly profitable trading opportunities, demonstrating how prices can often behave when at key points of MIDAS support or resistance.

Writing today the most important issue is whether or not the APR2013 support line is valid.  After yesterday’s end of day sell-off in America, which dragged most major indices around the world with it, the Nikkei finished about 4% below 14,025 (APR2013 support’s latest reading).  The further the Nikkei falls from here the less likely it is that APR2013 will be confirmed.  Even so it is too early yet to make a definitive decision.

If the Nikkei resumes its march higher, then this could be a fantastic opportunity in the making. If it falls, then the obvious thing to do is to look where it might next find its footing.  Either outcome is acceptable to the MIDAS user.

 

MIDAS Method Overview
Stock/Index/Currency/Commodity Nikkei 225
Support Launch Month APR2013
Level of Support 2nd
Price of Support 14,025

 

Before anticipating what next week might bring here is a quick reminder of what has happened.  APR2013 support’s Launch Point is set at April 4th 2013.  This is a slightly unconventional Launch Point as it occurs significantly above the previous support line.  Usually Launch Points are set just below support or just above resistance, depending on whether the market is going up or down.

Nikkei 225 MIDAS 1_6_13

 

However in the case of the Nikkei, April 4th should prove to be a seminal date, which fundamentally changed the nature of the Japanese stock market.  This day marked the beginning of the Bank of Japan’s (BoJ) aggressive Quantitative Easing Campaign.  If the BoJ follows through on its commitment to purchase ¥7trillion of financial instruments per month for the next two years, this is more than likely to stimulate a fierce bull market in Japanese equities.  That is if recent history is anything to by. Continue reading