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Update on recommendations

May 28, 2012

28 May

I’ll show that the current recommendations have made progress but then (in another post), I will show that in the short term, there may be some reversion, i.e. a short term market low that will likely delay the progress of these recommendations.

Agnico Eagle Mines (AEM) v Philadelphia Gold & Silver Index (XAU)

  • This now has a RSI divergence on the daily chart
  • You should have taken some profit, now is time to take the rest
  • The 14 week RSI is not yet overbought (67) but there is no guarantee it will reach it

Aemxaudaiiy280512

The Amex Gold Bugs v S&P 500 Index chart from two weeks ago has begun its reversion towards the moving averages.

Huispxweek280512

Coca-Cola Femsa (KOF) v iShares Mexico (EWW)

Kofeww280512

  • This continued its Bollinger band breakout last week
  • The RSI is overbought in the short term, so this may pull back
  • You should take some profit now and stop loss to break even on the remainder
  • This could continue higher in the medium term

SPDR Health Care (XLV) v Teva Pharmaceuticals (TEVA)

Xlvteva_weekly280512

  • This has also continued its Bollinger band breakout
  • As above, you could take some profit in the short term

Last week, two stocks broke down from Bollinger band contractions on price.

Firstly, U.S. Steel (X) broken lower. However, I’m now not convinced that this breakout will run immediately.

U.S Steel (X) v S&P 500 Index

X_rel_spx_rtt_280512

  • This has underperformed for a long time, so much so that the relative strength v S&P 500 Index will form a bullish divergence (below 30) if it falls a bit lower
  • The price has fallen from above $60 in February 2011 to just above $20 now. It can go lower but maybe it is too late for this to be the best short position

Novartis (NVS)

Nvs_boll_bands_rtt280512

  • This did not continue to break down from its Bollinger bands
  • It still has potential to break lower but given the short term oversold condition, this is unlikely to happen immediately
  • I would leave this and revisit in a few weeks, although I don’t want to get too much into calling short term market turns. I’m aiming to show a consistent method of finding medium term trade set ups

The Simon Property Group (SPG) trade shown last week has not yet set up correctly but still could do so.

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