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Which Indicator From the Charts Section is Most Useful for Me?

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Posted September 18th, 2009

Although I am a new subscriber, I have followed you for some time. I congratulate you on your abilities and insight. I will see if I can get lucky twice and raise a couple of additional issues:/

My only opportunity to trade significantly in precious metals is through my 457 plan in a fund - "OGMCX"; which of your indicators would serve me best in this regard?

(...)

Below is the link to the fund profile, better so that I don't leave anything out that you might want to consider. Again, this is my only choice - only good thing is that the 457 avoids all the sale charges. I find, performance-wise, that it pretty much is a proxy for GDX. If you could identify which of your indicators would serve me best, that would be great. And with respect to those indicators, may I presume that no entry on a given day means follow the last entry given previously?


You're correct - this fund is diversified into large-cap gold and silver mining stocks, which causes it to trade rather in tune with the GDX ETF.

Monitoring all indicators except the one dedicated to juniors should prove useful to you. The first one (sp gold bottom indicator) signals particularly favorable moments to buy gold (not gold stocks), but since metals move rather along with PM stocks it is still useful to watch it. The most useful indicators for you are the SP gold stock bottom indicator, it's short term counterpart, and the top indicators (which have been lately useful in timing bottoms, but from the long-term perspective they signaled mostly tops).

Please note that I didn't design these indicators as a black-box system that would serve as the one and only trading tool, but rather as an addition to other techniques / tools. I encourage you to review how each of the indicators worked in the past so that you can see which of them generates signals that you (!) want to trade. If you are more risk averse it would be best to wait for signals from more than one indicator before entering a trade, but if you accept even a few-day trades, you might find each of them useful on a stand-alone basis. Based on what you wrote previously it seems that you might be particularly interested in the SP gold stock bottom indicator, as the most important indicator, as its signals have the biggest impact from the medium-term point of view (contrary to short-term one). Additionally, in the past few months it has proven valuable also in timing tops, if one interpreted in in a similar way to the RSI indicator.

Generally, no signal means that "today is not a particularly favorable day for any action". Consequently, if you were waiting for a moment to add to your positions when there is a "screaming buy" signal - indicators suggest that you wait. Either way, I suggest taking a closer look at the indicator that flashes a signal and compare it with its recent performance before acting on it - please take a look at the past several Premium Updates, where I commented on these signals and I'm sure you will see what I mean.

Best,
Przemyslaw Radomski