Interesting times ahead. The Gold Bugs Mining Index $HUI has reached another very important inflection point. As you can see in my annotations, this time around I do believe that the bullish scenario is the most likely one. If we get some more follow through this could trigger a sustainable up-move  using the bullish inverted head and shoulders pattern as a launching pad. Obviously the other scenarios are either bearish or neutral. The bearish one would be the completion of a descending triangle in the making with a subsequent false breakout to the downside or total capitulation. The neutral scenario would be the continuation of a choppy sideways trading range until more pressure has built for a new trend to develop.

As I have stated numerous times, I do have strong opinions. But ultimately my trading decisions are based on price action. If a chart does not confirm my opinion I lose my opinion. It’s as simple as that. The past two years you really had a choice. You either lost your opinion or you lost your shirt.

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Always up-to-date $HUI Gold Bugs Miners Chart on my public list.

I bought an initial position in JNUG. No matter what you do, only put on positions that won’t make or break you. It is still early in the game. A new up trend, if it were to materialize now, will last for quite some time so there is really no need to rush things. Needless to say, JNUG is the most aggressive way to trade the bullish scenario and is not well suited for long term holding periods due to time decay inherent to leveraged ETFs. For all those who’d like to know more about what kind of trader I am listen to my latest Tischendorf Interview. For more interviews scroll down to the bottom of the column on the right.

The one thing I want you to keep in mind is to be fearless and to go for it if you see a set-up. The key is to be disciplined and to master your ego. Have the courage to simply change course and lose your opinion if things do not unfold as expected. Although I’ve used this quote in the past I will use it again as I think it captures the essence of ‘Inflection Point Scenarios’ and professional trading:

We’re in the business of making mistakes. Winners make small mistakes, losers make big mistakes. – Ned Davis

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Now this is what I call a smooth set-up. The weekly UNG Natural Gas ETF chart implies a significant change has happened. The volume pattern is all you need to look at to see that perception has changed. A new uptrend might be in the making. The recent surge occurred on huge volume. What is really bullish is the fact the tremendous volume came in while trading above the weekly moving average 30. Then UNG put in a tight consolidation and pulled back towards the rising long-term moving average. For more thoughts on buying pullbacks towards rising moving averages check this Tischendorf Letter Interview. This is usually one of the best technical entries you can get. It offers enough confirmation to act upon while still offering a rather low risk entry. This is obviously not a pure momentum play with a long-term uptrend in place. On the other hand it offers the opportunity to start a low risk initial position at the beginning of a new uptrend. Aggressive players can buy UGAZ the 3X ETF. It goes without saying that leveraged ETFs suffer from time decay and are not the perfect instrument for long holding periods. If you buy them at the beginning of a thrusting move they tend to do a pretty good job. I took an initial position with UGAZ.

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Winners are not afraid of losing. But losers are. Failure is part of the process of success. People who avoid failure also avoid success. – Robert Kiyosaki

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Recently I started to notice the emergence of what I would call “Hardware Based Security Investment Theme”. Three stocks caught my attention while doing my usual scanning. CAVM – Cavium Networks, VDSI – Vasco Data Security and WAVX – Wave Systems. I now own all three of them with CAVM being the newest addition. Regardless of a potential theme developing, CAVM is a buy in and of itself due to the new all time highs it is printing and its decent overall pattern pressure. As you can see in the annotations I like the small almost imperceptible gap up around the all time high area. This is most likely an important clue regarding buyers’ conviction and decisiveness. From a psychological perspective it simply means that instead of being seen as resistance the all time high area was taken out with ease and buyers displayed an urge to get in. Simply put: Strong buying pressure. Ideally volume should now start to come in. A sign of strength would be for the stock to keep running without looking back and filling the recent gap. Then again the rather low risk stop loss level around 46.80 would take care of that.

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Yahoo finance company description:

Cavium, Inc. designs, develops, and markets semiconductor processors for intelligent and secure networks. The company operates through Semiconductor Products, and Software and Services segments. It offers integrated semiconductors that provide single or multiple cores of processors with intelligent layer 2 through 7 processing for enterprise network, data center, broadband and consumer, and access and service provider markets. The company’s products also include a suite of embedded security protocols that enable unified threat management, secure connectivity, network perimeter protection, deep packet inspection, network virtualization, broadband gateways, third generation/fourth generation wireless infrastructure, storage systems, wireless high-definition multimedia interface, cable replacement, and embedded video applications. In addition, it provides embedded Linux operating systems, development tools, application software stacks, support, and services. The company offers its products under the OCTEON, OCTEON Plus, OCTEON Fusion, FusionStack, NITROX, NEURON, NEURONMAX, Celestial, ECONA, LiquidIO, PureVu, and WiVu trademarks. It sells its products to providers of networking, wireless, storage, and consumer electronic equipment directly or through contract manufacturing organizations and distributors. The company has operations primarily in the United States, China, Korea, Mexico, Finland, Taiwan, Japan, and Malaysia. Cavium, Inc. was founded in 2000 and is headquartered in San Jose, California.

The real challenge of trading is to identify the controllable factors and build into the trading process means to control what can be controlled. The markets will do what the markets will do whether I buy, sell, hold, or do nothing. At the end of the day, the only control I have is over the orders I enter. – Peter L. Brandt

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Set-ups don’t get much better than this. OPHT – Ophthotech, a Biotech stock, just put in an all time high close. As you can see in the chart annotations the move started with a huge gap up and then the stock ran up on huge volume. This is the hallmark of a bullish break-away gap marking the beginning of a potentially long lasting run-up. Make no mistake, if this is indeed a break-away gap, the gap won’t get filled. It is tough to tell exactly when a set-up like this can start to run without offering the easy entry. An all time high is a great clue a relentless run-up could happen anytime. Almost everybody is in the green and the overall pattern pressure is there. From a purely technical perspective this is the best signal you could wish for. There are no guarantees but when chart set-ups like these come along I go for it. Then I manage my risk. Act accordingly.

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Yahoo finance company description:

Ophthotech Corporation, a biopharmaceutical company, develops novel therapeutics to treat diseases of back of the eye. Its principal product candidate, Fovista, is in Phase 3 clinical development for use in combination with anti-VEGF drugs for the treatment of wet age-related macular degeneration (AMD). The company is also developing Zimura, an inhibitor of complement factor C5, for the treatment of dry and wet forms of AMD. The company was founded in 2007 and is based in New York, New York.

Two nice quotes from Peter L. Brandt: “Diary Of A Professional Commodity Trader – Lessons From 21 Weeks Of Real Trading” on page 113 and 116, that are related to pattern interpretation:

Markets most often provide signals when the real moves begin. Waiting for substantial patterns to become complete is where the profits are to be found. – Peter L. Brandt

The longer I need to examine a chart, the less likely the market in question is offering a trading opportunity. For me, signals are patently obvious. Whether they will be profitable is another matter. – Peter L. Brandt

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Another potentially bullish ABC – Pattern in the making. So far he weekly candle looks like it will end up being a bullish hammer reversal candle. DBA – Powershares Agriculture ETF is in the process of building out a bullish flag. This looks like a low risk entry before the thrusting move leading into the bull flag resumes. If the analysis is valid the stock shouldn’t close below this week’s low.

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Charts do not predict the future. Charts simply allow for possibilities. – Peter Brandt

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FLEX Flextronics – Bullish Ascending Triangle Breakout Semiconductor Stock Chart Pattern

May 24, 2014

A slow moving semiconductor stock trading idea with a great looking chart. I like the overall pattern pressure of this bullish ascending triangle breakout with FLEX – Flextronics. The chart pattern is clean and smooth. A decisive breakout candle following a tight consolidation pattern. Volume is starting to come in, thus confirming the upside move. [...]

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VDSI Vasco Data Security – Bullish Flag Chart Pattern With 15$ Price Target

May 23, 2014

Another quick chart that looks good due to its overall pattern pressure and the recent thrusting move. VDSI – Vasco Data Security is now consolidating and building a bullish flag pattern. Once the flag pattern is completed, according to classic technical analysis principles, the trend leading into the pattern should resume and the stock should [...]

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ENPH – Enphase Energy – Solar Stock Trading Close To Its All Time High

May 23, 2014

Solar stocks might be setting up for a bounce trade here. Instead of going for the most oversold one I decided to pick ENPH – Enphase Energy where earnings are out of the way and where there is almost no overhead resistance as the stock is trading near its all time high. As the chart [...]

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Gold Weekly Chart – Technical Update Choppy Sideways Trading Range

April 1, 2014

Another quick chart update for gold with my thoughts. In my most recent Tischendorf Letter Interview I expanded on why I thought it was too early to be buying into the mining stocks. The miners have pulled back since. The technical picture for gold hasn’t improved either. Here are my most recent chart annotations: 03/30/14 – [...]

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BWEN Broadwind Energy – Bullish Chart After Earnings Shakeout

April 1, 2014

Updated chart and thoughts for BWEN – Broadwind Energy after what I deem to be a beautiful earnings shakeout similar to the one with MXWL – Maxwell Technologies which I described in my latest Tischendorf Letter Interview. I highlighted BWEN – Broadwind Energy Bullish Inverse Head And Shoulders Pattern a while back. The pattern has [...]

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