Wednesday, January 25, 2006

Stochastics at work

The 10% drop I predicted previously has not yet occurred and the HUI has already broken above the week-ago high intraday with stochastics and MACD turning up. Today’s action was a case of the metals leading the stocks with silver spot broke above the previous resistance to end the day at $9.47. In up-trending markets like this I rely heavily on stochastic indicators to buy on the dips. I picked up some EGO today because it was over sold and only about 5% above 50 dma at yesterday’s close.

A more dramatic case in point is MGN which I own. After meandering around over sold levels for over a week and approaching the 200 dma it woke up today in dramatic fashion: +13.6% on the strength of silver.