The Sammy Hagar Trade — Heavy Metal stocks are redlining. Check out XME and NEM (February 10, 2017)
I just want to do a little quick, kind of a sector download here. So, XME ( NYSEARCA:XME ) has been outperforming just about everything else, if we are just looking at sectors, very, very strong. We look at the weekly chart, you can see this too. What you want to do if you are wondering, considering where do I want to start putting my money. Look at all the ETFs on the WEEKLY chart, because it gives you a better idea. You get away from day to day news oriented, up one day, down the next, down the other day, and then back up. If you just use a weekly chart for the SECTOR you will get a sense for where it is going.
So THIS is hitting a new high. It hasn’t been up to these levels since 2014 when it was on the way down, so XME ( NYSEARCA:XME ) works. So then I went through and looked at all the holdings in the XME ( NYSEARCA:XME ). For TC2000 this is easy, you just click on that (% Change) and then if you want to look and see which ones were up the most on Friday this is how I do it. So I have already done this, I am not going to walk you through it.
But I wanted to show you Newmont Mining ( NYSE:NEM ), which is an XME ( NYSEARCA:XME ) holding. This is why: They report on the 21st, so not this coming week but the week after that. This is holding in a fairly tight range, right at the 150-day moving average, not the 200, the 150-day moving average, it just seems to work more these days. What I want you to do is, look at this. If the stock moves BELOW Friday’s intraday low, we will say 36.50 or so, then you really don’t want to be long this. You would sit back and wait, see what happens when it hits the 50-day moving average. So as long as this stays in the box you are fine.
But if it starts trading below, then just wait and see what happens when the stock comes down to test this 50-day moving average. But if it starts moving higher then you go ahead and be a buyer, you go ahead and buy this stock. Look at the other gold stocks and see, a lot of them have these same types of patterns. The idea is that here, on Monday, the high was, we’ll call it $38.00. So when the stock starts trading above $38.00 (we will set an alert for me), when the price goes up to $38.00 I will get a price alert and I will consider going long this stock. Or, I might do like a NUGT ( NYSEARCA:NUGT ), which is a triple ETF on the Gold Miners ETF; I would look at something like that.
The bottom line is, it starts on the top with the ETF, with the XME ( NYSEARCA:XME ), and then you drill down and find the charts. You know the sector is working, money is coming into the sector. So now lets look at the charts and find the charts that work, that you can understand, that aren’t too overbought, that have a lot of potential upside, and that is where you make your trade.