Time for a Bounce in Resource Stocks

By | August 17, 2015

I’m starting to see good oversold washouts in sentiment from Twitter for various resource stocks. Many are painting patterns that provide low risk long trades. The first example is a gold miner’s ETF (GDX). 7 day momentum has painted a positive divergence after an oversold reading and has now moved above its confirming down trend line. This creates a buy signal that should be good for a counter trend bounce trade. We use the newly formed uptrend line in 7 day momentum as a trigger to close the trade if momentum breaks back below it. You can see more information on how we use the data in our help pages. Here’s a page with a specific example.

150817gdx

Freeport McMoRan (FCX) is setting up for a counter trend bounce trade as well. It hasn’t triggered yet. Wait for a signal because the setup may fail if 7 day momentum turns back down. You can follow the FCX chart here.

150817fcx

Emerging markets (EEM) are also close to signalling a short term move higher. Once again wait for a signal before making a trade. It’s chart can be found here.

150817eem

View take a look at the individual charts in the most bearish lists over the last several months and you’ll see more candidates for trades.

Another way to find stocks that have been in uptrends, but are currently consolidating is by looking at the longer term bullish lists (use the 6 month, 9 month, 1 year links). Look for gaps where there aren’t any scores for the stock. An example can be seen at the bottom of this page.

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