All investors need to be able to identify when there is a change in the trend. Throughout the year we’ve been educating our clients on how to read the market. For example, we highlighted back in late June that the resource sector was turning, and spelt it out in the article Aussie Materials Sector and Your Portfolio:
“We are finally seeing some support for the materials sector, with a number of factors working to encourage bargain hunters into this badly beaten down sector. We have seen gold mining sector stocks provide some excellent trades in the past couple of weeks and with crude oil set firmly above the $US100/barrel level, our energy stocks are also providing some excellent opportunities.
Key drivers to monitor: the Aussie dollar needs to hold above the US90c level; commodities need to hold above recent lows; the Chinese market must hold above the 1900 level (its lowest level in 4 years; and the US dollar index needs to hold below the 85 level (3-year highs).”
Well, in the past couple of months we have seen follow through, with the mining sector participating in the most recent rally. D2MX Advisory clients are benefiting from our market analysis.
Today we investigate whether there could be another silver lining just around the corner.
The price of silver has been in a down-trend consistently for the past year (as shown below), but appears to be finding support.
FIGURE 1: Silver prices (in US dollar terms) – in a consistent down-trend
Analysing Silver Price Trend
If we analyse the silver price chart to identify the weight of money in the silver market for the year-to-date, you can see from the chart below that the big money has consistently been made on the short side.
If you need some help in interpreting this chart then refer to my article Show me the money! where I discussed how to identify where the traders and investors are positioned in the market place.
FIGURE 2: Silver’s ‘Show Me The Money’ Chart
We can see that silver is in the early stages of a trend change so you could use the Simplified Elder Trend System with D2MX Filter to establish a trade.
This system recently triggered a setup, as seen in the chart below.
FIGURE 3: Silver’s Simplified Elder Trend System Setup
Your stock selection universe will depend on your trading capital and risk profile, refer to D2MX Advisory for assistance with this process.
Choose stocks with exposure to silver and confirm a change in trend for the individual stock(s) or trade silver through various derivative instruments. We here at D2MX Advisory can assist you with taking action to trade the unfolding trend in silver. Call us on 1300 610 024 or email email@example.com.
The market has provided some excellent opportunities over the past few months. There are a number of trades setting up right now, that you could potentially profit from. If you would like more information please contact me at 1300 610 024 or email firstname.lastname@example.org.
For trade ideas and recommendations on how to trade in this market, sign up for a free trial of the D2MX Daily Trading Report, which provides a daily serving of insightful market analysis from the D2MX Advisory team, including:
• Trade ideas and strategies
• Dividend enhancement strategies
• Market scans to watch
• International market analysis, and
• Highlights from the S&P/ASX 200
To request an obligation-free trial, call 1300 610 024 or email email@example.com.
Investment Adviser – D2MX Trading
Also in the series Stock Trading Tips for All Types of Market Environments:
Part 1: A Simple Trend Finder Scanning Method
Part 2: Going For Gold
Part 3: Top-Down Analysis – A Valuable Approach
Part 4: The Power of Compounding
Part 5: Measuring Your Trading Performance
Part 6: Insuring Your Portfolio
Part 7: Aussie Dollar Strength and Your Portfolio
Part 8: Investing in 2013
Part 9: Investing in 2013 (continued)
Part 10: Yield Investing In 2013
Part 11: Investors, the results are in!
Part 12: Show me the money!
Part 13: Leading Indicators: Copper (1)
Part 14: Leading Indicators: Copper (2)
Part 15: Mind the Gap – Trading Risk with CFDs Versus MINI Warrants
Part 16: Simply Staying With The Trend
Part 17: Use Contingent Orders To Manage Your Trading
Part 18: The Aussie Materials Sector and Your Portfolio
Part 19 (a): Going For Gold
Part 19 (b): Going For Gold (Stocks)
This report was prepared by Michael Hevern. It represents the views and opinions of the author. It is not intended for use by any third party, without the approval of Michael Hevern. While this report is based on information from sources which are considered reliable, its accuracy and completeness cannot be guaranteed. Any opinions expressed reflect my judgment at this date and are subject to change. Contracting Hevern Pty Ltd is a Corporate Authorised Representative No. 408868 of D2MX Pty Limited ABN 98 113 959 596, AFSL No. 297950 (D2MX), and Michael Hevern has been appointed as an Authorised Representative of Contracting Hevern Pty Ltd. Opinions, conclusions and other information expressed in this report are not given or endorsed by D2MX, unless otherwise indicated. The information contained in this Report is General Advice only, as the information or advice given does not take into account your particular objectives, financial situation or needs.
Disclaimer: Using leverage to invest can be a two edged sword, as it can magnify your returns when the stock price rises, but will in turn magnify the losses if the trade does not perform as expected.