Wednesday, April 2, 2014

Market Watch:CEF

The chart for central fund of Canada CEF is prepared to take off. Does that mean it will? Well, let's see. First the shares are curving up from relative support at $14 (firm support is at $13) precisely where the 50 day moving average is intersecting the 200 day moving average. Once the moving average crossover occurs I would take at least a 1/4 position. Now take a look at stochastics. Notice how both lines of turned up from deeply oversold with the fast line crossing over the slow line. This indicates that the stock has energy to continue upward.

Now look at the big picture in the 52 week chart. Notice how the shares beaten-down from $19-$13 in May, June and July of last year. Then they moved sideways for the rest of the year. This is precisely what you want when taking a new long position. The reason is that most of the sellers are out and there's only room left for buyers.

This is not a sure thing, but it's a good opportunity. One thing to do is to wait for the moving average crossover and take a 1/4 position there. In more aggressive strategy would be to take a 1/4 position right here at $13.86, with a stop at $12.50.

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