What Now Brown Cow?

04/19/17 04:36:10 PM

by Koos van der Merwe

Looking for a share to buy as tensions rise around the world.

Security: NUGT, EIT.U
Position: Accumulate

President Donald Trump is showing signs of moving away from governing the United States of America as a businessman and is starting to become a politician. In his campaign for the Presidency, he stated many times that America should not be the policeman of the world, but over the past week, America has become the policeman of the world. As a businessman President Trump would make a decision and his staff had to follow that decision. In the White House, he is learning that he must listen to those in the know before he arrives at a decision. Was the attack in Syria and the bomb blast in Afghanistan the decision of a businessman, or was it the decision made by a politician? Is his threat to North Korea a threat that will become reality? All this uncertainty is affecting the stock market, so what do you do to protect your assets? The answer, of course, is to buy gold, however interest bearing stocks are also tempting.

Figure 1. Daily chart of NUGT.

Graphic provided by: AdvancedGET.

A gold share to look at is Direxion Gold Miners Index Bull shares, (NUGT) or the Direxion Junior Gold Miners Index Bull Shares (JNUG) however on April 28th both shares are doing a 1 for 4 reverse split, so it is probably better to wait, however the chart above is a daily chart of NUGT showing that the share gave a RSI buy on March 9th and a JM Internal Band buy on March 15th. The JM Internal Band is a 15 period simple moving average offset by 2% plus and 2% negative. A move above the upper band is a buy and below the lower band a sell. Traders would have bought on March 9th, whereas investors would have waited until March 15th. With the RSI presently close to overbought levels, waiting for that reverse split on April 28th is a must.

Figure 2. Daily chart of Canoe EIT Income Fund.

Graphic provided by: Omnitrader.

The chart in Figure 2 is a chart of an interest bearing stock that should be watched. The chart is an Omnitrader chart of Canoe EIT Income Fund listed on the Toronto Stock Exchange. With President Trump's remarks that the US$ is much too strong, moving cash to Canadian interest bearing stocks may be the way to go. The chart shows that a buy signal was given based on the RSI 14 strategy shown below the Vote line on April 5th. With both indicators shown on the chart at overbought levels, one could wait for a correction before buying the share. The share is presently yielding 10.19% pa interest paid every month.

With uncertainty hitting the stock market as President Trump reverses on many promises he made during his election campaign, investing in the share market is creating many sleepless nights. With his latest statement that visitors to the White House will no longer be made public, his secrecy is troubling many investors. The answer of course is, "GO TO CASH", but for those who do not want to, Gold or Canadian Interest bearing stocks could be the answer.

Koos van der Merwe

Has been a technical analyst since 1969, and has worked as a futures and options trader with First Financial Futures in Johannesburg, South Africa.

Address:	3256 West 24th Ave
	Vancouver, BC
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E-mail address:	petroosp@gmail.com

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What Now Brown Cow?

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