Precious Metals Are Oversold Again

PowerRatings are based on the relative strength or weakness of particular stocks or ETFs. The higher the rating, the greater the one week historical gain has been for stocks and ETFs with that rating. For best results, enter these trades with a limit order 3-7% below the previous day’s closing price. Higher % limit entries have historically shown a greater percentage of winning trades but higher % limit orders also reduce the chance of trade execution.

In the past, buying stocks with a rating of 9 on a 3% pullback the next day and selling five days later has been profitable 75% of the time. The average winner has gained 4.3%. Other entries and exits also show high winning percentages and large average gains.

Several economic reports showed that inflation is still low. This was confirmed with Thursday’s announcement that the Producer Price Index was up only 0.3% in the past year. Earlier in the week, the Consumer Price Index showed an increase of only 1.0%. Similar news has come out of Europe and Japan in the past few weeks. With low inflation, gold is less appealing to traders and the metal has sold off the past three days. Some leveraged ETFs with exposure to the metals markets have become potential buys with PowerRatings of 9.


Among the most appealing ETFs in this market is ProShares Ultra Gold (NYSE: UGL), an ETF that moves twice as much as the price of gold on a daily basis. With a PowerRatings of 9, it should be considered a potential buy below $42.88.

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All data is as of the end of day on 11/21/2013.