-- Posted 14 January, 2007 | | Source: SilverSeek.com
For quite some time as most of you know I have relied on the weekly MACD and other indicators to trade. This weekend I have gone back to the books. I re-read Dennis Turner's 1975 book, Trading Silver - Profitably. I'd figured his strategies would have long since been antiquated especially since his computer models were accomplished with the archaic Fortran programming. Not so...or so it seems. Also, Turner was working with silver prices in the $1.40 range area!! In your dreams silver bug.
Scrunching down from about 15 trading models, he came up with the best three:
13-day Closing Price Channel (CPC) - red line
9-day " " " " - not shown
8/25-day Moving Average Crossover - blue & green lines
I tweaked out the 9-day CPC due to whipsaws, but have reproduced the 13-day CPC & 8/25 Day MA in the chart. Since we're using closing prices here we jettisoned the candlesticks for a HLC (High, Low, Close) device. The little horizontal hashmark across the vertical line being the closing price. I had the 200-day MA in there, too, but it fell off in the free version of Stockcharts.
Below the graph, I installed the 9-day CPC for comparison only, and the SSRI using a 13-day CPC (the more reliable indicator).
There are still instances of whipsawing with the 13-day CPC, notably last mid-August and late Sept/early Oct. BUT, the observable result was that on each occasion when you had to buy back in at a higher price, the subsequent sell was ultimately higher! Study this chart carefully focusing on the price's behavior with the red 13-day CPC. You can wait for the 8/25 MA crossover for confirmation. The choice is yours to make within your tolerance for risk or other criteria.
I added SSRI at the bottom to give us some kind of trading proxy for the silver equities. We want to make sure they're on the move in the same direction as the metal! Mining juniors as most of you know have"minds" of their own, and can often continue to rally and even pullback in a silver run, so you'll want to compare the coincidences of your favorites with this SLV presentation.
I can't be sure that this strategy will apply to individual equities as all behaviors can be different. You'll have to practice on your own. It does look like though with the SSRI crossing over the 13-day CPC that the equities are ready to launch in confirmation with the metal. Looking at past performance it does appear that the SSRI is replicating silver quite nicely.
You can play around with this using and replacing symbols of your own choosing here:
- - CV
-- Posted 14 January, 2007 | |
