Article from MoneyWeek in the UK below, published a couple of weeks ago on January 12th. Daily chart 144 MA has worked since the crisis hit, but on a longer term chart the 252 MA has been better. The latter would call for a deeper correction before resumption of the uptrend...

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There are 252 trading days in a year. Prior to the crash of 2008, once or twice a year, gold would return to its 252-day moving average (the average price of gold over the previous 252 days). It would flirt with it for a while, before making its next move up.

Here is a chart of gold from 2001 to 2008, which demonstrates this:



However, since rebounding off the crash of 2008, it has not gone back to this line once. Rather, the 144-day moving average (blue line on the chart below) has been the line to which gold has returned. It seems to go there two or three times a year.



That 144-day moving average currently lies at around $1,300 an ounce and rising. I suspect we will get to it on this correction. If we follow the time scale of previous corrections, then we should reach the low towards the end of January.

If gold bursts down through that line with volume, then we are in for something a bit more serious than a normal, ongoing bull-market correction.

11/4, 11/24 and today have all been 'gap up and go' days for the S&P500. In all three cases attached, the four charts (three indicators plus price chart) look almost identical. Uncanny.

Observations:

- As Matt has pointed out many times before, $VOLSPDC continually ascends throughout the day with nearly all green candles.

- $ADSPD gaps up over 400 (that seems to be the critical level for other similar days) on the first candle of the day and then pretty much flatlines for the rest of the day.

- $TRIN starts below 1.0 and grinds ever lower (i.e. bullish).

- SPY gaps up and grinds ever higher over the course of the day.

Occasionally - like today - the SPY sells off a touch into the close but majority of the time there is a strong finish.

Of course, the key is to notice this set up as early as possible in the day - then buy and hold and walk away...

...A large SPY gap over resistance plus the $ADSPD first candle gap up over the 400 level seems to be the best early combo clue.

Also, price is unlikely to retrace below the open (if at all), so stops can be set very tight.

Uranium saw a spectacular blow-off in 2007, scorching the fingers of many an investor.

The price had risen from $7 a pound in 2000 to almost $140. Some investors ended up holding stock in mining companies that had risen by as much as 10,000%.

At the turn of the century the number of uranium companies listed on the Canadian stock exchange was in the low double digits. By 2007, there were more than 600.

It was clearly a bubble. But, as with so many bubbles, there was some underlying truth to the story. Even now, a good while after the bubble had popped, and the inevitable purging of the sector took place, those fundamental drivers have not gone away.

So is it time to get back into uranium?

Demand for uranium is rising fast

The last few months have been very good for most commodities. Uranium is no exception. The spot price has risen from around $40 per pound in July to $60 this week.

Much of this can be put down to the speculative excitement that has swept the commodities sector. This has been driven by inflation concerns and the Federal Reserve's decision to do more quantitative easing (QE).

But even so, the numbers coming out of China are simply astonishing. A few months ago, the vice president of the China National Nuclear Corporation said that the state-controlled company is expected to spend $117.6bn on developing the nuclear industry by 2020.

China currently has a capacity of 11 gigawatts (GW) of nuclear power. In 2008, it had 9GW, and was aiming for 40GW by 2020. But that figure is about to be revised up to 70GW, according to Reuters. And a recent study by McKinsey puts it closer to 120GW.

To put that into perspective, that would mean China consuming half of current global uranium production (circa 50,000 tonnes). Where's it all going to come from? The vice-chairman of one of China's other nuclear companies says: "China is relatively rich in uranium reserves and can completely satisfy the needs of Chinese nuclear energy development for 2020."

But I'm not so sure. If this was the case, then why the series of investments in exploration projects in Niger, Namibia, Zimbabwe and Mongolia? Then there's the recent deal with Cameco, the uranium major which supplies about 20% of global production. The company is to supply China with 20 million pounds of uranium up to 2025. They've also signed a memorandum of understanding on joint uranium exploration overseas.

As Steve Kidd of the World Nuclear Association puts it: "China's own domestic uranium resources are, to be frank, not fantastic."

And that's just Chinese demand. What about all the other developing nations who are moving to nuclear power? It's the same old commodities story that you all know - rampantly expanding demand meets restricted supply.

As oil gets more and more expensive and technically difficult to produce, the case for nuclear becomes ever more compelling. Nuclear - for all its many drawbacks - is the closest thing we have to a silver bullet that can deal with the looming energy crisis.

How you can play the uranium boom

So how can you play it? The current issue of MoneyWeek magazine takes a look at the sector.

But for those of you who like to speculate - and as always, with junior miners, we're talking high risk here - I have found a nice little junior mining play on Chinese uranium demand.

Vena Resources (TSX: VEM; DE: V1R) is an exploration company operating in Peru. It's listed in Toronto and Frankfurt (so you will need a broker who trades either or both of those markets to buy it) and also in Lima. The market cap is around CAD$40 million. You can see the chart below.



Vena operates what is known as the project generator model. This means that it finds potential mining properties, then signs joint venture deals with senior partners. The partners will then pay for most of the exploration and development costs.

It can mean that blue sky potential is slightly limited. But it also lessens the risk. So the company is less vulnerable in bear markets.

Vena has a zinc mine it is putting into production next year. This is in a deal with Trafigura, the world's third-largest independent oil trader. It is also developing some gold properties with Goldfields, one of the world's largest gold producers.

Why this company excites me

But it is the company's uranium assets, which it's developing in a deal with Cameco, which excite me.

First, entertain yourself by taking a look at these pictures of some of the green, almost luminous rock from Vena's properties. That's autunite, which contains uranium. It's not in the same densities as the high-grade rock in Canada's Athabasca region. But it's still sufficiently concentrated to make a mine economically viable.

It's radioactive, of course. Indeed, it looks almost extra-terrestrial.





Vena declared a 43-101 compliant resource this week (this just means it complies with Canadian standards on reporting mineral discoveries). The aggregate is north of 22 million pounds of U308. The system is open in all directions - in other words they haven't found where it ends. The next drill programme starts up again in January. The hope is that the resource will increase, perhaps dramatically.

I met with the boss last week, Juan Vegarra, on his way back from China to the US. I was impressed enough to buy some stock. (I also interviewed him - you can hear the interview on my podcast here):

http://commoditywatch.podbean.com/2010/11/24/juan-vegarra-of-vena-resources/

Let's see. China has a deal with Cameco to supply uranium, and is looking at joint venture exploration. Cameco has a joint venture with Vena.

Given that Peru is a convenient place from which to export raw materials to China, and given that management were on their way back from China, it doesn't take Sherlock Holmes to deduce that something could be going on here.

In short, it looks promising. But if there's one thing I've learned about mining exploration, it's that you should never risk more than you can afford to lose.

Don't chase it up - if you're interested look to buy at around C$0.45.

Matt published some PRELIMINARY stats on 28 September - look under 'SPY System' and his name on that date in the search function. From his screen grabs then and now, looks to me like the updated system takes less trades.

p.s. Screen grabs can found be in his post of 7 October - I have these posts favourited for easy reference...

By coincidence, new Rare Earth Metals ETF launched today - symbol REMX. I would not be surprised if this becomes very 'trendy' in the near future...

http://www.businessinsider.com/rare-earth-etf-2010-10

'view'..... 'chart analysis preferences'..... 'strategy' tab....... "base results on" (drop down list of all variables)

- market goes up, dollar goes down, long trade profit in sterling suffers
- market goes down, dollar goes up, short trade profit in sterling is a win-win

The solution? Go short the market in dollar ETFs, go long the market in this:

(excerpt from last week's issue of MoneyWeek)

Plenty of articles online mention these new currency hedged S&P500 ETFs:

http://www.etfexpress.com/2010/10/04/63043/ishares-launches-currency-hedged-equity-etfs-europe

Note: I have done no further research, nor am I trading these vehicles.

p.s. they're Ireland domiciled ETFs, so no stamp duty right?

$VOLSPDC not deviated from green all day - usually ends up with afternoon probe higher rather than correction. Usually...

I mentioned the ‘Gap Guy’ (Scott Andrews) a few weeks ago – he has done webinars for TradeStation so I presume he is the genuine article. Anyway, the market is so very gappy that I decided to take out a 14-day, $14 trial subscription to his website.

Each morning and evening, he does a video presentation of his ‘gap play’ and ‘gap wrap’. Yesterday he got stopped out, despite his strategy to gap fade ultimately being proved correct – so it is pretty refreshing to hear someone front up, explain the trade and discuss how to better manage it in future.

He only trades gaps, with all strategies based on past stats and probabilities. He has created his own set of terminology, zones, etc, so it takes a bit of time to learn the jargon. Nevertheless, most of the following video is jargon free and easy to understand.

Yesterday’s 10 minute gap wrap:

http://mtg-dailyvideos.s3.amazonaws.com/082510-548/082510-548.html

I once watched a TradeStation webinar with a guy called Scott Andrews, who specialises in gap trading. He has a load of stats on different types of gap, including those that happen on the day of the the monthly jobs report:

http://www.thegapguy.com/blog/gaps-on-the-day-of-the-monthly-jobs-report.html

Check out 'blog archives' on the right hand panel for many more categories...

My TradeStation data is all over the place today - all new candles are alternating between printing the correct price level and zero! Very jumpy screen, I am starting to feel sick. TS say it is a known issue re v 8.5 and I should upgrade to 8.8. However, how stable is this later version? Will it affect my strategies? Any other advice? TIA...

http://www.zerohedge.com/article/presenting-annotated-cramer

Matt introduced us to the S&P500 Volume Diff chart ($VOLSPDC). I like to watch it in conjunction with the Advance-Decline Issue Diff chart. As you can see, Volume Diff is quiet and inconclusive this morning but price is following $ADSPD moves almost to a tee...