#GoldStocks – talking trees when there’s a forest out there…

To state the obvious, most stocks move with the general market, and more obviously almost all stocks move like all stocks in their sector.

And this may be no more obvious than with the gold stocks.

I’m always surprised at the endless discussions of which gold stock to buy. Gold bugs, particularly, love this stuff — this one, or that one, or maybe that one. One stock picker or another has very good arguments for each of their choices, fundamentals, technicals, some buddy’s opinion, whatever, but they all ignore the obvious — they’re talking about trees when there’s a forest out there.

Take a look at the charts below.

Five of those charts are stocks and three are ETFs, but hide the symbols and company names for each chart and who would be able to tell which NEM and which GOLD, which is AEM and which is NUGT? The patterns essentially all look the same (like fir trees in a fir forest).

But actually they are not the same. I have the same swing-trading system on each of those charts. Now look at the numbers in the white flags on the lower left of each chart. Those are the total returns year-to-date per $100K committed to each swing trade (calculated also to easily show percentage gains for the system).

Obviously, there is a difference between the stocks and the ETFs. The leading stock in the sector, KL, is up 17%, while RGLD, lagging, is up only 1.4%; a prominent name like Newmont Mining (NEM) is up 14%. On the other hand, the leveraged ETFs, NUGT and JNUG, are both up 82% and even GDX, not leveraged, is up 25% – same time frame, same trading system.

The trading system here is not the point. It is just here to illustrate that too often traders and investors can’t, as they say, see the forest for the trees.


UPDATE 8/22 – #GOLD stocks prove there is always a bear market somewhere

This what a bear market and an outright crash looks like.

Gold and its sector stocks, after a long steady decline, went into free fall about four trading days ago and continued down virtually across the board today.

See the chart panel below for a random selection of the stocks.

Like all stocks, when the bear growls, these gold stocks can go down forever, but there were a couple of signs that the fall might be slowing in that two of the biggies – NEM and ABX — at least fell slower today (see the NEM chart below for an example).

A bounce may be due right about now for a quick scalp on the long side before any more decline. After drops like these this week, it will not surprise me if short-sellers want to log some profits for the weekend. Watch the open tomorrow for a trigger and keep a tight stop.

It must be said more downside will come with this much momentum in place. Shorting the bounce, if and whenever it comes, may be the better strategy for swing traders. The sector will be in its own bear market until it isn’t anymore and it’s going to have to base for sometime before it ever sees a bull again.

However, for the longer term, gold has had value for centuries and will again. Those who like to bottom fish and hold forever, or at least until the metals shine bright again, might start to carefully and patiently bait their lines.


Buy NUGT on the open Friday for a 5.8% gain for the day, 9.6% from the previous close, JNUG for 8.3% on the day. Called this a scalp so took profits on the day trade and will watch the bounce to short. Alternative play would be to take half the profit on the close, let the rest ride with a break-even stop.

UPDATE 8/22:
Taking off alternative play, bear market bounce: NUGT up 9.9%, JNUG 10.7&, four days up into a black candle (see second chart below).

(click on the chart panel for a larger view)

(click on the chart for a larger view)

$SBGL (TRADE UPDATE) – up 9.4% in 4 days…

SBGL, long from 11/21 at 5.09, has had a nice four day run to the upside to close-by resistance.


At the same time the leveraged gold-stock ETF, NUGT, has move up to the top of its recent range (see the chart below). Would like to see a breakout in order to take SBGL above 5.65. It closed today at 5.57.

In the meantime, moving the stop on half the position to 5.42, and to breakeven on the other half.

(click on the chart for a larger view)

$SBGL – the little gold stock known to get bigger..

Back in a little into the little gold stock that can get bigger in a hurry.

As has been said before, divergences don’t mean anything until they do (see the chart below). SBGL made a lower low in the last two days but the channel commodity index did not, setting up, once again, a divergence that might be telling on the long side.

Last this setup took hold, SBGL rallied up 26% in a month at its high and stopped out at up 22% (see the first chart below for the history). Not bad, especially since its stock sector (measured by the ETFs GDX, NUGT, and JNUG) were mostly going lower during that entire advance (see the second chart below).

Closed today at 5.16. May add on tomorrow’s open. Stop at 4.98.

(click on the charts below for larger views)

$SBGL – finally taking final profit…

Been holding SBGL since late September. Well, half of it. Sold half when it was up 16%.

As it turned out that sell was way too early. See this link:


Moved the stop as it moved higher on the second half, letting it ride. It stopped out today on the final half of the holding with a gain of 21%. Bought at 4.442, sold at 5.37. A nice trade if I say so myself.

Nothing more to do now except wait and see how the pull back goes and how the sector behaves. NUGT and JNUG, the 3x-leveraged ETFs for the gold stocks, have both begun to make some stair steps to the downside (see the chart below). SBGL, remarkably, defied those ETFs’ falls but apparently not anymore.

(click on chart for a larger view)

$SBGL – Sell no stock before its time…

Let’s just call it the Everready Bunny of the gold stocks.

SBGL just keeps going and going and going.

In the time SBGL has been staging its own rally, GDX, the main ETF in the sector, is down 1.2% — DOWN! The 3x-leveraged ETF NUGT is down 6.6% – DOWN A LOT! The biggie gold miner, ABX, Barrick Gold Corp, is down 13.3% – DOWN A LOT A LOT!

And SBGL is up 26% on the same time frame from:


But I’m here to confess to an obvious mistake and to sing a trader’s lament.

I sold half the position in this stock when it was up a “mere” 16 percent on a sell signal that…uh…didn’t exist. At the time, I must have thought it could go no higher although I’ve often said that this is the stock to buy among the golds because it has been “wild and crazy” enough to double. I must have thought the doji the day before I sold was a sign of the indecision that would lead to a sell down although the stock was up the day after the doji when I sold that half. I must have thought…

Clearly now, I think I was thinking too much. Which is one of biggest sins a technical trader can make. Better to not think at all.

Fortunately, I just sold half. So with this half up 26% and the half sold at 16%, the trade is still up 21% on the close today. Not bad but not 26. So next time…next time…

Ah, I don’t even want to think about it.

(click on the chart for a larger view)

$SBGL UPDATE – up 25% on this swing and still going…

SBGL continues to defy the general gold-stock sector trend – up nine consecutive days and counting.

This an update of the posts here:

SBGL – Updating the swing hold on the gold stock

The stock, which can be wild and crazy (has been known to double on a swing), has been rallying steadily as the stocks in the sector, measured here by the leveraged ETFs NUGT and JNUG (see chart below), have been moving down and sideways for the past three weeks.

The trade is up 25% in a little more than a month. If the gold stocks have a bounce, SBGL will probably continue its climb, but I suspect the sector is more likely take another leg down, and this time take SBGL with it. The gold-stock sector had a bounce today (11/6) with GDX, NUGT, JNUG up, extending SBGL’s run to the upside to nine days in a row.

I am tightening my stop on the stock to 5.37 on a long that from 4.42 to lock in profits.

(Click on the chart for larger view)

$SBGL – Updating the hold on the gold stock…

It’s been a long, slow slog since the buy signal on the open of 9/29, nearly a month ago, but SBGL, the little gold stock that sometimes goes nuts (meaning it can double on a swing), is still slogging to the upside.

This is an update of this post:

Divergences don’t matter until they do Part II

SBGL is up 14-plus percent despite sell offs this month in GDX, NUGT, and JNUG.

Still long (it can still double…), but moving stops to insure a profit.

(Click on the chart for a larger view)