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Which Indicator From the Charts Section is Most Useful for Me?

September 18, 2010, 12:00 PM Przemysław Radomski , CFA

You're correct - this fund is diversified into large-cap gold and silver mining stocks, which causes it to trade rather in tune with the GDX ETF.

Monitoring all indicators except the one dedicated to juniors should prove useful to you. The first one (sp gold bottom indicator) signals particularly favorable moments to buy gold (not gold stocks), but since metals move rather along with PM stocks it is still useful to watch it. The most useful indicators for you are the SP gold stock bottom indicator, it's short term counterpart, and the top indicators (which have been lately useful in timing bottoms, but from the long-term perspective they signaled mostly tops).

Please note that I didn't design these indicators as a black-box system that would serve as the one and only trading tool, but rather as an addition to other techniques / tools. I encourage you to review how each of the indicators worked in the past so that you can see which of them generates signals that you (!) want to trade. If you are more risk averse it would be best to wait for signals from more than one indicator before entering a trade, but if you accept even a few-day trades, you might find each of them useful on a stand-alone basis. Based on what you wrote previously it seems that you might be particularly interested in the SP gold stock bottom indicator, as the most important indicator, as its signals have the biggest impact from the medium-term point of view (contrary to short-term one). Additionally, in the past few months it has proven valuable also in timing tops, if one interpreted in a similar way to the RSI indicator.

Generally, no signal means that "today is not a particularly favorable day for any action". Consequently, if you were waiting for a moment to add to your positions when there is a "screaming buy" signal - indicators suggest that you wait. Either way, I suggest taking a closer look at the indicator that flashes a signal and compare it with its recent performance before acting on it - please take a look at the past several Premium Updates, where I commented on these signals and I'm sure you will see what I mean.

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Dear Sunshine Profits,

gold and silver investors
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