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Stewart Thomson

Stewart Thomson

Stewart Thomson is a retired Merrill Lynch broker. Stewart writes the Graceland Updates daily between 4am-7am. They are sent out around 8am-9am. The newsletter is…

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Gold and Gold Stocks: HSR Is Your Bird In The Hand!

Graceland Updates 4am-7am
Jul 12, 2011

1. I told you that the head of the US Treasury, (currently Tim "The Terminator' Geithner) would begin to show his teeth, and eventually replace Ben Bernanke as star of the accelerating crisis show.

2. Here are the latest inspirational words for Elmer Fudd public investor, from Timmy the terminator, "...it's going to feel very hard, harder than anything they've experienced in their lifetime now, for a long time to come...." ~ Associated Press, July 10, 2011.

3. I have repeated many times to you, "The crisis has barely started, and financial Fudd blood will flow'. Is anyone listening to the terminator? I would suggest you consider reading his words several thousand times, before you rush to your trading computer this morning, pounding, "sell everything gold, it's 2008 and 1980 again!'

4. It's not 2008 again. It's not 1980 again. It's 2011, and the financial end of you (again?), if you act on those thoughts.

5. I was on the gold stock buy yesterday, and again last night in the overnight market, with good reason. Click this GDX chart link now. The current rally saw GDX rise quickly from the mid-June lows near $51, to about $57. That was a solid gain of over 11% in just 2-3 weeks, but if you bought nothing into the lows, you sold nothing at a profit into the $57 highs!

6. Live for today, not for birds in the bush. I sold nothing at exactly $57, because price never hit exactly $57. I bought nothing at exactly $51 either, because price never quite dropped to exactly $51. I had no idea price would turn up near $51, but I bought into that weakness, and it did turn up, and I did ring the cash register as it soared from there towards $57.

7. Likewise, I have no idea whether $57 marks the top of a sell-off that will see GDX blow out the $51 lows, or shoot right back up above $57. I do know that where gold stocks are going next is what most advisors and investors are obsessed about, and that is a horrific error.

8. Getting richer has nothing to do with figuring out which scenario is coming, and everything to do with responding to what does come. Be a buyer on further weakness towards $51, and below. Be a seller on further strength above $57.

9. Don't whip yourself into a frenzy of fear over the August 2 debt deadline. Respond not to your greatest fear, but to price reality.

10. One major key to successful trading is to buy into horizontal support and resistance points (HSR). Throw your up and down trend lines in the garbage can, and ask yourself if it is possible that most technicians have an MACD addiction problem.

11. It's probably time to quit that MACD drug, cold turkey, and start watching granny in action in the grocery store. Keep it simple. Note the price-sale flyer in her hand. Look at the gold stocks sale flyer, and join granny on the buy!

12. Note the three blue horizontal lines on the GDX chart. I don't have any clue if price is going to all three of those lines or not, but I know exactly what I'm going to do if it does; take GDX buy action! I already have, in the $55 area. Have you?

13. Click this second GDX chart now. Note the green arrow. That arrow delineates further horizontal support in the $55 area, so I bought it.

14. You should not I care if price breaks the "I want my mommy!' lows at $51. You want gold stock, and you want it on sale. Well, it is on sale now, and the only question is, are you onside?

15. Use my GDX buy and sell action as a guide to take similar action on your individual gold stocks, and use the August 2 debt deadline to tweak your buy and sell size, not to make a decision about whether to buy or sell.

16. Price is always at a certain level, at any given point in time. For profit taking, focus your selling around horizontal resistance points above the current price. Those HSR points are defined by price reaction lows.

17. Click this oil chart now. The red arrows point to the reaction lows. If price rises to one of those horizontal lines you don't buy. You book profit into those lines. Want to "go pro' in the major markets? Try throwing your theories about August 2nd in the garbage can, and start responding to price on the grid, with professional buy & sell action.

18. To recap, you extend horizontal lines from price reaction lows to get your profit booking areas. On the buy side, you extend horizontal lines from price rally highs to get your buy points. Oscillators like RSI, Stochastics, and up and down trend lines are used to help you tweak how much capital you place on a given buy or sell, but not to make outright buy or sell decisions.

19. Click this gold chart now. That is a two day chart, showing a couple of HSR lines, but if you look at that chart, I bet you feel some fear or at least some nervousness. Some "August 2nd is coming!' thoughts may even creep into your head.

20. I'll show you why that fear is unfounded. Click this one week view of gold now. Do you feel the fear subsiding? Now you feel more like a kid at a slow moving river, on a sunny summer afternoon. The dollar price water slowly drifts by, and you wait for it to arrive at the next blue HSR line.

21. Click gold chart #3 now. Call the pharmacist and cancel that order of financial valium pills. The more professionally you act in the market, and the more credit you give to gold itself for what it is, the less stress you will have, and the less "all or nothing' decisions you will make.

22. Chart #3 covers one month of time and highlights buy points at about $1548, $1535, $1518, and $1498. Don't sit there like bozo the clown predicting whether we go to any of those points or not. Just be prepared to act on the buy side if we do.

23. Acting as a group, the gold community could send the banksters home to mommy, in the market. The gold community vastly outnumbers the banksters, but the banksters act professionally in the market responding to HSR in their trading. If the gold community begins to compete with the banksters at the major HSR points in the market, instead of predicting whether price turns or fails at those points, the banksters would really have something to worry about.

24. The banksters don't want you to act professionally in the market. They want you focused on August 2, and they want you to sell them big chunks of your gold and gold stocks at the lowest possible price. Don't hand over anything to these scumbags on price weakness. After Aug 2 is gone, they will have another new and improved "grand event' for you to focus your fear or greed on, and you can take that fact to the nearest bullion bank. Stay focused on today's HSR gridlines, not tomorrow's dollarbug in the bush!

Special Offer For Website Readers: Send me an Email to freereports4@gracelandupdates.com and I'll rush you my "Top 20 HSR buy and sell points' report, for the gold and gold-related markets. I'll include information on how much "dry powder' to apply at each of the points and why!



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