Here's The Next Big Move...
The Dynamic Wealth Report
August 25, 2010
by Justin Bennett, Editor
We have a big move coming…
Unfortunately, I’m not talking about my dream of moving to Alaska.
You see, I’ve always wanted to Heli-ski the endless Alaskan backcountry. Swooshing through miles of fluffy powder puts a big smile on my face. And, every new run is just a short
helicopter trip to the top.
But the reality is…
My wife hates the cold. She would slap me upside the head for suggesting
such a crazy idea. She loves the warmth of the Arizona sun.
The big move I’m talking about is an indicator…
It’s an indicator I use extensively in my research to find stocks and
commodities setting up for big moves.
It’s called the ADX indicator. And it can dramatically improve your
trading results if you use it correctly.
Let me show you what I mean…
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Take a look at the blue circle at the bottom of the chart. Now see how
it corresponds to the consolidation pattern in the chart directly above.
Match these two market scenarios up and you have an explosive
combination. Notice how silver exploded higher from the consolidation
pattern. That’s what you call a low risk/high reward setup!
Take a look at another example…
Do you see the same setup in gold at the end of 2008?
Gold was trading around $800 an ounce. It was also forming a sweet
consolidation pattern. The ADX was at 10 and signaling an impending
move. The low ADX matched up directly beneath the consolidation pattern.
You could have grabbed a 15% move to the upside in gold shortly
thereafter.
Here’s how you can use the ADX indicator today…
The ADX indicator works for every market. All it shows is if a market
is trending or not. An ADX reading below 15 indicates a lack of trend. A
high reading means the market has a strong trend.
You want to be buying the market when the ADX is low. The lower the ADX
reading the better. It means the initial move out of a consolidation
pattern will be dramatic.
Now this is important…
The ADX indicator
does not tell you which way the market is going to
move. It only indicates a lack of trend. Watch the
price action in the
market to help you get on the right side of the trade.
The ADX works best on highly liquid markets… mid to large cap stocks for
example. The ADX is also great to use on commodities markets like gold
and silver.
Let me show you what I am seeing right now…
See anything familiar? Notice the ADX reading of 10 and a consolidation
pattern forming.
Silver is setting up for a big move, and I think it’s going higher…
A breakout above the $18.50 area may push silver through the 2010 highs
of $19.50. The 2008 highs at $21 would be the next target. After that, the
sky’s the limit!
On the other hand, a breakdown below the $17.50 level and we could see
silver drop to the $15.00 area.
This would be an excellent buying
opportunity.
Either way, keep a close eye on silver in coming days. It looks like a
big move is just around the corner.
• Gold (Over $1,225 an ounce)
The yellow metal is trading near the recent highs of $1,260 an ounce. An
important thing to notice in this recent surge higher is gold’s
correlation with the U.S. Dollar. Both have been moving higher in the
last two weeks. Gold is acting as a safe haven currency.
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