Tischendorf Letter

DNN DML.TO – Denison Mines – Chart Update

Olivier — Tue, 28 Feb 2012 02:17:52 +0000

Quick chart update on DNN – Denison Mines as I consider recent price action to be technically constructive. The chart is pretty obvious, so no need to comment that much. If DNN can break out to the upside a price target in the 3.00 USD area looks feasible. As usual, contracting volume on down moves and volume pumping while the stock moves up is the most bullish scenario.

Up-to-date DNN – Denison Mines chart on my public list.

Administrative note:

As mentioned in my last newsletter my focus right now is on non-blogging activities. Except for the occasional post, I will stop updating my website for a few months and trade without publicly disclosing my positions. My public list will continue to be updated on a regular basis.

Traders who are eternal optimists get absolutely killed because they have a habit of staying in long after the trade has turned into a loser. – Dan Zanger

Charts: http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2791469

Buenas noches!

Audio Analysis – Technical Thoughts On Uranium – DNN, CCJ, UEX.TO, U.TO

Olivier — Tue, 24 Jan 2012 02:53:31 +0000

Here’s an audio post with my thoughts on Uranium as the uranium mining stocks are now setting up for a potentially great trade in 2012. The audio file is roughly 18 minutes. Enjoy!

Press play in order to listen. If you prefer you can click on the audio link.

A few charts that I mention:

DNN / DML.TO – Denison Mines
CCJ – Cameco
UEX.TO – UEX Corp.
U.TO -Uranium Participation

Uranium Sector Overview Chart Once opened, simply click on the chart to view the additional 3 sector overview charts on my public list.

Good trading is not about being right, it’s about trading right. If you want to be successful, you need to think of the long run and ignore the outcomes of individual trades. – Curtis Faith

Charts: http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2791469

Buenas noches!

Greatest Debt Bubble In History – Harry S Dent Video Interview

Olivier — Sun, 08 Jan 2012 12:39:39 +0000

Harry S. Dent commenting on what he sees developing down the road. ‘Down the road’ meaning the time period 2008 – 2023 according to his analysis. His analysis and conclusions are derived from trends in demographics. The baby boomers are going to spend less. Combine that with what he calls the ‘greatest debt bubble in history’… Tough times ahead for sure. I tend to agree as I see ‘global deleveraging’ as the most important macro theme going forward. Enjoy the vid and have a great weekend!

Something traders should keep in mind during tough times:

Human beings are risk seekers when faced with negative outcomes and risk averse when faced with positive outcomes.

Charts: http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2791469

Buenas noches!

Happy New Year

Olivier — Fri, 06 Jan 2012 02:07:43 +0000

A Happy New Year to all my readers! I will probably take another week off and then start updating the website again. Going forward I will spend more time with non-blogging activities. Although I haven’t made a final decision yet, my plan is to change my approach to running my website. I will move towards providing more audio and video content as writing posts takes a lot more time. In terms of frequency I intend to go for a weekend market overview video post and a mid-week audio review either going through special situations or commenting on the technical development of various markets, sectors, individual stocks and commodities. I will keep updating my public list on a regular basis. Actually checking my public list is the best way to monitor what I am looking at, how I change my mind and how I adapt as the technical situation evolves and new chart patterns emerge.

Obviously no predictions for 2012 as it is a fool’s game. Looking at the charts, I think it is worth monitoring the following sectors very closely as we could see surprises to the upside.

Agricultural commodities. RJA and DBA are ETFs that come to mind. – Agriculture Sector Overview Chart
Silver – Silver Sector Overview Chart
Biotech – Biotech Sector Overview Chart
Some wild-cards: Uranium – Uranium Sector Overview chart + Platinum – Platinum Sector Overview Chart

Another thing I am going to closely monitor is when GDX and GDXJ i.e. the gold mining stocks start to seriously outperform their underlying. In plain English: If the gold bull market isn’t over, and for now I don’t think it is, the mining stocks at some point in time will outperform bullion again. Think of it as a natural money rotation process. Early birds have lots of profits in bullion and might take some profits in order to allocate more funds to mining shares. Something well worth monitoring very closely going forward.

The big theme for years to come though is continued global deleveraging. Debt levels are staggering and unsustainable. There will be consequences. Keep that in mind as we continue our journey navigating the financial markets.

Leaders make tough decisions.

Charts: http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2791469

Buenas noches!

No related posts.

Hellmeyer Video Interview – Europe Inflation Gold

Olivier — Fri, 16 Dec 2011 02:05:51 +0000

Here’s an interesting view on Europe and America from a European’s perspective. James Turk interviews Volker Hellmeyer who addresses quite a few issues Americans simply do not focus upon. So for those of you interested in analyzing the current situation from a different angle, this is a must see video interview. It never hurts to get exposure to contrasting views in order to stay balanced. In a nutshell he sees much higher gold prices in 5-10 years, he thinks Europe is not in such a bad shape and he talks about the structural problems America needs to tackle.

Something that comes to mind here is what bull and bear markets are all about:

Bull markets are about unity, bear markets are about division.

What we are witnessing right now is nations focusing on other nations weaknesses. America is bashing Europe in order to distract from their own problems. Europe is pointing to America’s structural problems and accounting issues in order to distract from their problems. My point is: This is not about being right or wrong. The name of the game is “rotation”. The focus is now on Europe. It’s everyone’s guess how long that will be the case. Then the focus will shift. Then we repeat the process. As a trader my job is to keep in check strong opinions. Instead, I try to gauge sentiment and then focus on timing my trades. Then I manage risk with open positions. Enjoy the video!

If you can’t wait for good setups, you will be ready for them with less cash to trade. – Dan Zanger

Charts: http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2791469

Buenas noches!

Kyle Bass Video Interview Japan Gold And MF Global

Olivier — Tue, 13 Dec 2011 02:45:17 +0000

Actually I thought about going for ‘Stay defensive’ as an alternative headline choice. The stuff I read and watch makes me want to use that famous Shakespeare quote that ‘something is rotten in the State of Denmark’. The evidence that all is not well is overwhelming. Still, and that is a very important distinction to make, when it comes to trading the markets this has to be considered ‘opinions’. What is important is the charts’ message. Put another way, how various markets discount and react to pieces of information.

So, on to the charts. Exactly the same message. Choppy, sideways trading action. No clear and strong trend. If you are not one of the nimblest traders out there or if you aren’t willing to significantly shorten your time-frame it is best to stand aside.

Here’s an excellent interview with Kyle Bass. Having extremely low exposure to the markets has its benefits. It’s a great time to do a lot of research, read and watch plenty of market related videos. For those with short attention spans, this is not for you. For the rest the video is most interesting as Kyle Bass at some point reveals the conversation he had with some guys at the Comex. He then reasoned it was in the best interest of his clients to get delivery of his gold. The MF Global scandal is a picture perfect example of what can happen if you trust futures contracts or any kind of paper gold to offer you any kind of protection or insurance. I’ve been advocating holding physical gold and silver bullion held outside the banking system for the past 3 years. What happened at MF global therefore shouldn’t come as a surprise. Kyle Bass’ favourite macro short play is Japan due to the country’s demographics and at the same time being as what he describes as one of the most xenophobic societies. To make a long story short, most of what he talks about revolves around the following:

“Too much debt.”

The Kyle Bass AmeriCredit 2011 Session is now finally available for viewers in Germany as well. Enjoy!

In the interview Kyle Bass mentions a piece he deems was the best read of the past 2 years. So if you want to know where he’s coming from you can check it on Taleb’s website. The Black Swan of Cairo - How Suppressing Volatility Makes the World Less Predictable and More Dangerous Nassim Nicholas Taleb and Mark Blyth:

http://www.fooledbyrandomness.com/ForeignAffairs.pdf

As I mentioned MF Global as a picture perfect example of what can happen here’s a must read. The “MF Global re-hypothecation scandal explained” if you will.

Thomson Reuters – News and Insight – MF Global

As trading is simple but not easy, tonight you get two quotes as I think the juxtaposition of these two trading quotes is quite interesting.

Fear keeps you from making as much money as you ought to. – Jesse Livermore

Cash is a position.

Charts: http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2791469

Buenas noches!

CBST Cubist Pharmaceuticals – Biotech Stocks Potential New Leaders

Olivier — Wed, 07 Dec 2011 01:16:02 +0000

Current market action still doesn’t make me want to put on big positions or trade aggressively. That’s why I am spending a lot of time doing research, watching market related videos and why I do lots of scanning in order to find new ideas. One sector that is starting to provide some good looking charts is Biotech. Now that is easily the one sector I hate most and tend to avoid like the plague. Still, looking years or even decades ahead, there are compelling reasons to keep an eye on this sector. This could be one of the sectors that will power the next bull market. Personally I am closely watching everything related to Nanotech as I believe this sector has great potential as well.

I added a second Biotech sector overview chart to my public list in order to monitor various Biotech stocks going forward. As usual, I will get rid of weak stocks and replace them with stronger ones along the way. One stock that is starting to shape up would be CBST – Cubist Pharmaceuticals. As you can see its company name doesn’t feature the dreaded ‘Bio’, ‘Tech’, ‘Gen’ or ‘Gene’ component. Usually that’s the case with companies that sport a decent market cap, are already selling actual products and do have a decent pipeline of drug candidates.

Keep in mind though, no matter how good your due diligence might be, risk with these kind of stocks is great. Huge gaps in either direction are frequent. In those cases a protective stop loss won’t help. The only way to protect yourself is to go with small position sizes or to trade ETFs. FBT – First Trust Amex Biotechnology Index Fund comes to mind here.

My scans are starting to show lots of biotech stocks. I have the feeling the whole sector is still flying under the radar. The most prominent example that comes to mind that is responsible for the sector’s improving technicals is BIIB – Biogen Idec which has a market cap of more than 20 billion and has been a stellar performer. CELG – Celgene and GILD – Gilead Sciences two other high market cap plays are displaying multi-year sideways consolidation patterns that ultimately could break out to the upside.

To make a long story short, CBST’s weekly chart looks promising. After several years of orderly consolidation the stock broke out of the sideways trading range and has now formed a bullish ascending triangle pattern:

The weekly chart is not part of my list. Click here for an up-to-date CBST – Cubist Pharmaceuticals daily chart on my public list.

The following 2 charts offer a great way to monitor the whole sector’s performance going forward. Right now the following stocks are part of the list:

FBT – Biotech ETF, AMGN – Amgen, REGN – Regeneron Pharmaceuticals, IMGN – Immunogen, ACHN – Achillion Pharmaceuticals, ONCY – Oncothyreon, BIIB – Biogen Idec, Alexion Pharmaceuticals, Cubist Pharmaceuticals, ONXX – Onyx Pharmaceuticals, ARIA – Ariad Pharmaceuticals and INHX – Inhibitex.

Those who cannot change their minds cannot change anything. – George Bernard Shaw

Charts: http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2791469

Buenas noches!

Silver – Where To From Here?

Olivier — Thu, 01 Dec 2011 00:05:39 +0000

Silver is a tough one here. As you can see in my updated long-term weekly silver chart annotations there are two possible outcomes. We could see a complete breakdown if the trendline is broken and the double top pattern comes into play. One could also interpret this as a complex bearish head and shoulders reversal pattern. The diametrically opposed view would be a bullish wedge being the dominant chart pattern at hand.

Up-to-date Silver weekly price chart on my public list.

I see decreasing volume within a bullish wedge pattern. As long as we don’t see volume picking up while price is breaking down I would expect the bullish scenario to be the higher odds proposition. This is a typical situation where it is best to adopt a wait and see approach. If this is indeed a bullish pattern much higher prices will be the result. Pundits will then talk about 100$ price targets for silver. My point is: You won’t miss anything. There will be plenty of opportunities to profit if the bullish technicals ultimately drive price up. Patience.

Here’s an interesting video interview with Chris Martenson’s take on silver. Needless to say, he is extremely bullish on the white shiny metal.

To preserve independence, we must not let our rulers load us with perpetual debt. – Thomas Jefferson

Charts: http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2791469

Buenas noches!

When It Is Best To Do Nothing – Do Nothing

Olivier — Wed, 23 Nov 2011 07:18:26 +0000

I could literally list thousands of quotes on why at times it is important to stand aside, why you need to know when it is best to do nothing and to stay in cash when the market is not conducive to trading big or trading at all. In my opinion it simply comes down to the following: You need to know yourself very well. Know about your strengths and weaknesses. Put another way: There’s a time to be aggressive and there’s a time to be defensive. I recently quoted Brett Steenbarger. I wanted to explain why I chose that specific quote as the true meaning of the quote might have gone unnoticed:

It’s making the most of strengths and learning how to work around shortcomings that produces optimal performance results. – Brett Steenbarger

The point he wants to drive home is that focusing on your strengths is a better use of your time as opposed to focusing too much on your weaknesses. Put another way: You will make more money if you focus on trading set-ups during market environments that are conducive to your type of trading and your personality. Trying to trade aggressively during other times is akin to trading situations and set-ups you are not good at. You guessed it. It means you are focusing too much on your weaknesses. The solution is to admit one’s shortcomings. The earlier you do that and the more honest you are when it comes to gauging your strengths and weaknesses, the better your results will be in the long run. That’s why I like the following quote:

Have the courage to say no.
Have the courage to face the truth.
Have the courage to do the right thing because it is right.
– W. Clement Stone

Why do I stress all those things? I typically get a lot of feedback when it comes to going to cash or being in cash. Most people have a really tough time understanding that concept. Optimal performance cannot be attained if you are 100% invested in the markets all of the time. “Less is more” is an adage that comes to mind dealing with that issue.

My point is: Selection is key. Be patient. Only trade the best set-ups. Let the trade come to you. When conditions are right go for the throat. If you are always 100% invested you won’t be able to trade that way. In closing I want to quote verbatim what Dan Zanger recently tweeted. Excellent advice indeed:

I have sat in a high percentage of cash for almost 4 months. Not the kind of market to build big positions. – Dan Zanger

Happy Thanksgiving!

The essence of investment management is the management of risks, not the management of returns. – Benjamin Graham

Charts: http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2791469

Buenas noches!

A Trader’s Job Is To Protect Self-Confidence

Olivier — Thu, 17 Nov 2011 01:28:56 +0000

Protecting one’s self-confidence is key to long-term market survival. If I had to sum up what’s going on in the markets in one sentence it probably would be the following:

This is an extremely dangerous market, hence it is best to stay out.

The current market environment is one of the most dangerous, treacherous and choppy I have encountered in roughly 15 years of trading. I recently went back to 100% cash and will stay in cash for the time being. My job as a trader is to protect both mental and financial capital in order to be able to get exposure once sustainable trends emerge. We continue to see a world class chop-fest. Only the very best and most nimble traders are able to strive in this environment. The great majority is churning their accounts and slowly bleeding to death.

In my opinion the best traders are not those who try to trade every single day of the year. The best ones are those who can identify the ideal trading environment that fits their technical abilities and trading personality. Put another way: If you put on several trades in a row that do not work because you constantly get stopped out it is time to ‘get smaller and smaller and smaller’ as Dennis Gartman once said. Personally, I go even further than that. When my own equity curve is going nowhere for a while I force myself to take a break for at least one or two weeks. That’s when I relax, rebuild mental capital, rebuild self-confidence and reassess the overall market trend and market environment. It basically comes down to staying in control.

Here’s a few things I am watching that tell me to be and stay extremely cautious:

XLF – Financials ETF: The financials can’t seem to move up. As I’ve stated in the past, a sustainable and sound up-trend without the participation of the financials is very unlikely at this point.
FBT – Biotech ETF: This is one way for me to gauge market participants’ appetite for ‘risk-on trades’. The biotechs are not leading. Actually, FBT is threatening to make a lower low.
IFN – India ETF: The India ETF is moving lower again. I think India has huge potential. India moving lower is a sign for me to stay very cautious. Put another way: If the one country with potentially the best outlook for decades to come is not moving up, we’re in trouble.
GDX / GDXJ – Gold Miner ETFs: The recent up-move is not convincing enough. The huge gap is still acting as resistance. GDXJ is still underperforming GDX. Former highflyers are in deep trouble. Yukon gold stocks and Tanzania related gold stocks come to mind. KAM.V – Kaminak Gold and ATC.V – Atac Resources are getting killed. CAN.V – Canaco Resources and TRX – Tanzanian Royalty Exploration have literally been destroyed. Technically speaking they are in confirmed downtrends. They had their day in the sun, new leaders will emerge. Simple as that. Remember: The best performers are almost always ‘new stories’ and stocks with no ‘overhead resistance’. The following quote cannot be repeated often enough:

The crowd is bargain hunting in what was; the knowing are buying what will be. – Justin Mamis

Conclusion: The market continues to chop most traders to pieces. Whenever that happens I don’t try to be a hero. Instead, I step aside and watch. That’s how I protect myself and how I make sure to be ready and rested with plenty of ammunition once conditions are conducive to position trading during strong trends.

The best quote I can come up with to summarize the current situation is from Sun Tzu. Feel free to review Sun Tzu’s Principles. A very quick and refreshing read.

He who knows when he can fight and when he cannot, will be victorious. - Sun Tzu

Charts: http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2791469

Buenas noches!