Daily Gains Letter

Technical Analysis

When it comes to predicting the future direction of any stock or commodity, investors follow two schools of thoughts; fundamental analysis and technical analysis.

A fundamental analysis looks at a company’s financial statements in an effort to predict a trend. Investors here focus on the forward looking picture.

Technical analysis attempts to forecast future price movements based upon past price and volume movements. The idea is to find patterns within the past movements, and use those patterns to predict what will happen to the price in the future. These patterns have been incorporated into models, from which day-to-day decisions are made.


What to Consider Before Investing in These Two Lesser-Known Precious Metals



Precious MetalsI have been in this business a long time, and I believe that the best tactic is to combine as many positive factors as possible in order to have the highest probability of success. There are essentially three main methods to look at; this includes fundamental analysis, technical analysis, and quantitative models. You don’t need every single category of analysis to be completed; you just need enough evidence from all to indicate whether or not a stock or index will move up or down. Obviously, there is no 100% guarantee, only a level of probability. Taking a look at the precious metals market, over the past coup ... Read More



Is This the Discount Sale Investors Have Been Waiting For?



Discount Sale Investors Have Been Waiting ForOctober has provided the usual bouts of anxiety that have characterized the month in past years. I warned that we could see volatility and so far, this has been the case. From small-cap stocks to world-class blue-chip companies, we are seeing some selling capitulation emerge in the stock market. All of the major key stock indices are below their respective 50-day and 200-day moving averages (MAs). As I said in a recent commentary, the chart risk is high. Bearish investor sentiment continues to grip the stock market. We saw 354 new lows on the NYSE on Friday, followed by 308 new lo ... Read More



How to Navigate Through This Chaotic Market



Some Strategy Suggestions for Market ChaosIf you are a bit anxious toward the stock market, I don’t blame you. In fact, I have been through this type of scenario on numerous occasions, including the meltdowns in 1987, 2000, and 2008. The key is to not panic and immediately run for the exits; emotion in trading never works. This is also not the time to get too comfortable in the stock market. It’s clear the stock market risk has intensified across the board after the sell-off on Tuesday that saw the DOW close lower for the ninth time over the last 12 sessions and fall below its 50-day moving average (MA). The index is now only ano ... Read More



These Two Charts Suggesting Trouble Ahead?



Two Charts Suggesting Trouble AheadToday, I’m going to talk about the technical picture and what to expect going forward. At the start of the year, I would have been somewhat surprised if you told me the small-cap sector would be in negative ground at the end of the third quarter. Small-cap stocks and technology fared the worst in September. Small-caps continue to be vulnerable, with the Russell 2000 retrenching 6.19% in the month and down 9.22% from its high. The small-cap index is again nearing the official 10% correction and reversal point, based on my technical analysis, which it ran into earlier in the year but managed to recoup. ... Read More



What It Means: Dow Fails to Hold Above 17,000 for Sixth Time



Sound Defense Can Increase Your Investing SuccessLast week was not a great week for chart watchers. The DOW lost 223 points on Monday and Tuesday and was down another 225 points to below 17,000 on Thursday morning. What concerns me is that this is the sixth time the DOW has failed to hold above 17,000, which is a red flag that suggests vulnerability is on the horizon. There clearly appears to be a multiple top formation in place that could be difficult to break in the short-term, based on my technical analysis. The small-cap Russell 2000 is also in trouble after the emergence of a bearish death cross on the chart last week when the 50-day moving average (MA) fell below the 200-day MA. Small-cap sto ... Read More