The Eurozone and natural gas explorers

Today we want to look at the performance of the stocks in the Eurozone. In particular we will look at the ETF EZU which is an ETF that tracks a composite of the indices in the Eurozone.


As always we will begin by looking at a weekly chart:

ETF EZU weekly

Figure 1. Performance of the ETF EZU which tracks the stock indices of the Eurozone. 50-week moving average is in blue and 100-week moving average is in white. Arbitrary descending lines are also white. Chart: FreeStockCharts

What we see here is that the medium-term trends are down. That is both true for the 50-week and the 100-week moving averages. Furthermore, we have a declining channel where prices are moving within and we are trying to go through it on the upside at this very moment. If we can get through this resistance we are set to go much higher, but if we don’t we will go lower.

We are then going to look at some of the companies that are involved in exploration of oil and gas in the United States. In particular we are going to look at the ETF FCG. This is what a weekly looks like:


Figure 2. Performance of the ETF FCG which tracks prices of the natural gas explorers in the US. 50-week moving average is in blue and 100-week moving average is in white. Arbitrary descending lines are also white. Chart: FreeStockCharts

What we see here is that we had a strong build-up of force for a number of years but that this force was released in 2014 when prices tumbled significantly. Since then we are slowly building a base that will allow us to go higher in due course, but we are not there yet. The 50-week moving average is about to flatten but it has only just begun and the 100-week moving average is still descending. What we need to see is a longer consolidation phase before we can move higher.

Technical analysis of WTI oil

Today we want to talk about technical analysis once again. However, we want to change our focus a little bit and concentrate on WTI oil instead of Brent oil.


This is what a daily chart looks like:

WTI daily

Figure 1. Daily chart of the XOILL.X index representing the price of WTI crude oil from late 2015 until now. 50-day moving average is represented in blue and 100-day MA is in white. An arbitrary straight trend line is in white. Chart: FreeStockCharts

What we can see in the chart is that prices are above their corresponding 50-day moving average, which is bullish. What we would prefer, in order to have a healthy chart, would be for prices to come down and kiss the trend line again and then move higher. What we probably will not see is an explosion to the upside from here. We therefore think that prices will come down slightly in the near-term to move higher in the mid-term.

To verify that this opinion holds we will take a look at a weekly chart:

WTI weekly

Figure 2. Weekly chart of the XOILL.X index representing the price of WTI crude oil from early 2014 until now. 50-week moving average is represented in blue and 100-week MA is in white. An arbitrary straight trend line is in white. Chart: FreeStockCharts

In this chart the uptrending chart that we saw previously is a lot less clear. What we see is that the 50-week moving average has just begun to flatten out and although prices are above it, the 100-week moving average is still trending down. What we would prefer in the medium-term would be for prices to come down and kiss the 50-week moving average but stay above it. If that plays out, then we would believe that the trend had established itself.

I am interested in investing but have no idea where to begin. What are some tips for people just starting out from those more experienced?

If you are interested in investing you should check the site Quora out. There anybody can ask whatever they want and you get insightful answers from qualified people. It’s a good way of getting more informed.

interested in investing

This is what the person is asking: “I’m interested in investing. I’m young, no debts, budget ~5k. I wanted to know whether I should opt for more low-risk options or go for day trading. Not really trying to get rich quick. I won’t need to spend any money for at least a few years, and I’m thinking more in terms of long-term, for retirement or house funds.”

First of all, forget about day trading. In order to a day trading operation successfully you need much bigger funds than those you have at your disposal. In a decent day traders world your whole budget is looked upon as small change and not anywhere near what you would need to be successful.

What I suggest that you do is to take a “value” approach where you honor the power of compound interest. What this means is that you will reinvest your dividends into the same stock and over time you will increase your wealth significantly. As an example, an interest rate of 10 per cent (which is not unthinkable in the stock market, price appreciation and dividends combined) will double your money in seven years.

What kind of stocks you invest in depends on your temperament. If you are so inclined you can look into small-cap stocks and find really cheap ones based on their recent earnings. Here it gets a little bit tricky because the free financial web pages only give out a momentary price to earnings (P/E) ratio – while what you are really looking for is consistency in earnings and cash flow. The only way to really figure this out is by going to the annual reports and write down the numbers either in a spreadsheet or in an old-fashioned notebook with a pen.

Otherwise I would stick to the bigger companies and make sure that I do not pay too much for what I get. The argument about the P/E ratio above also holds here. In order to make sure that the earnings of the company that you are interested in are consistent, you can go to your local library and pick up a recent edition of Value Line and figure this out.

Welcome to the exciting world of investing!

If you have read this whole text, we would be delighted if you liked us at facebook or twitter.

The performance of gold

Today we are again going to look at the performance of gold in recent days. We begin begin by looking at the ETF GLD which represents the price of gold. This is a daily chart:


Figure 1. Daily chart of the ETF GLD representing the price of gold. The 50-day moving average is represented in blue and the 100-day moving average is in white. Chart: FreeStockCharts

What we see in the chart is that the prices are below their corresponding moving averages. Furthermore, the 50-day moving average has changed its upward direction and is now moving downwards. We can also see that in the last few days the bleeding has stopped but that in the short-term the trend is down.

If we then take a look at a weekly chart we get a slightly different picture:


Figure 2. Weekly chart of the ETF GLD representing the price of gold from mid-2014 until now. The 50-week moving average is represented in blue and the 100-week moving average is in white. Chart: FreeStockCharts

Here we can see that even though the price fell sharply a few weeks ago, prices are still trading above their moving averages. Prices are getting into close contact with the rising 50-week moving average and is now just getting ready to “kiss” it. Furthermore, the 100-week moving average is only just beginning to rise after the long down draft that we saw between late 2011 and the First of January of this year.

To conclude: The mid-term trend of gold is still very much up. Therefore we would like to posit that the performance of gold is still intact.

Brent oil and its derivatives

Today we are again going to look at technical analysis of Brent oil. This is what a weekly chart looks like:

weekly chart of Brent oil

Figure 3. Weekly chart of the ETF BNO representing the price of Brent crude oil. 50-period moving average is in blue and 100-period moving average is in white. Chart: FreeStockCharts.

What we are seeing in the chart is that we have been in an uptrend ever since the beginning of the year. That is likely to continue for the foreseeable future (at least in the mid-term). We can also see that we have now managed to climb up above the 50-week moving average. This is a bullish sign that bodes well for higher oil prices, but is negative for your wallet.

If we then look at a daily chart we see this:


Figure 2. Daily chart of the ETF BNO representing the price of Brent crude oil. 50-period moving average is in blue and 100-period moving average is in white. Chart: FreeStockCharts.

Here we also see the rising trend line, but that we are significantly above it and we need to come down and touch it before we move higher. You can see that that has happened before, in early August and in mid-September. It is likely to happen again.


So to conclude: The short-term trend is down while the mid-term trend is up. Depending on your situation this may either be good or bad news.

Guide to value investing for beginners

In this guide we will lay out the basics of why you want to invest your money based on the value that you get from your investment and why an approach like Warren Buffet’s almost always outperform in the long run. We will talk about value investing in the broad sense as well as the traps you want to avoid. We will not get too deep into technicalities like return on equity and working capital although we will briefly mention them. We will especially talk about how you as an investor can manage your money for the better and how you can build your nest egg – slowly.



To invest your money is both easy and hard at the same time. If you just want to invest somewhere you can do that with the click of a button, but if you want to invest wisely it’s a little bit harder. To invest wisely you have to go through the financial statements that are found in the quarterly or annual reports of the companies that you are interested in. When that is done, you need a framework for telling if the stock is worth buying or not.

When we first started investing many years ago and then sold our holdings at a profit, we thought that we ruled the world. There was nothing stopping us from making a killing in the stock market. We bought shares like there was no tomorrow. The only question that was relevant to us was how much money we could possibly deploy for our next speculation.

But then something happened. The market fell.

When it did there was no bottom to our losses. Everything that we had gained during the previous years was now lost and then some.

Wise from our experiences we laid out another strategy, one that was based on value instead of spectacular growth. One where a steady cash flow was more important than spikes in earnings.

This is why we write this guide. To prevent others from making our mistakes and to teach them how to be prudent with their hard earned money. This is especially true if you like sleeping well at night without any financial worries.

We caution you to take a more prudent approach with your cash and do your due diligence before you buy or sell any security. Never buy securities without asking for advice from a qualified adviser. You should always ask yourself if the investment decision you are about to make is justified by the fundamentals. If it is then go ahead, if it’s not then wait until it is.

There are many examples of occasions where the market has been severely wrong. We see them almost every day. These occasions ultimately create good buying and selling points for every shrewd investor out there. But you have to remember being patient.

Chapter 1


Here we are going to talk about allocating your portfolio. What proportion of stocks to bonds you should keep and how to deal with the urge to speculate.

There is nothing giving you more thrill than seeing the ball fall at the right number when you’re at roulette table at the casino. This feeling of exhilaration is very strong and also very addictive. But it deceives you. The next time you will not be that lucky and when looking at it objectively, you have the odds stacked against you. After all, that is how the casinos around the world are making their money, by making sure that they will win more times than they will lose.

The same is true for investing. You can see a speculative stock go up two or three times in price over a short period of time. But to believe that you are consistently able to time the market so that you always buy low and sell high is just unrealistic. Sure you may be able to have a few quick wins, but they will almost invariably be accompanied with losses that exceed your gains.

You therefore have to have a system in place that prevents you from speculating. Keep a proportion of your portfolio – the smaller the better – aside for your speculation, but never mix money you gain from speculation with money for investment. What we suggest is keeping a proportion of 10 per cent or less aside for speculation. That way you can participate in the excitement, but you will never let it overtake your life.

Furthermore, there is a misconception out in the public that says that investing is like betting in the casino. We would like take a different view. Where betting is ultimately dependent on luck, the same cannot be said about investment. Investing is about putting money to work and getting a reasonable reward in return.

The safer this return is the better.

Regarding portfolio allocation it depends on the where in the market we are. In normal times the prices of bonds are the opposite of the prices of stocks. Therefore you should try to keep an equal balance between the two.

However, at times the prices of stocks are depressed while the prices of bonds are high. In such a situation it makes sense to increase the stock proportion in your portfolio. We suggest that you never exceed 90 per cent stocks when they are undervalued and that you don’t exceed 90 per cent bonds when stocks are overvalued. That way you will keep an even balance in your portfolio at all times.

Ultimately it depends on how high corporate- and treasury bond yields are compared to the average yield on stocks. As we write this interest rates are chillingly low. In fact they are so low that treasury bonds do not correspond to our of a good investment. Instead you have to look into the world of investment grade corporate bonds. These are rated by rating agencies according to how likely they are to continue paying out their return. An investment grade bond has at least a rating of BBB.

Chapter 2


Here we will discuss what to do when the market plummets and the need to resist any urge to sell good investments just because the market has been going down. Similarly, we will also discuss the psychological urge to buy more stock when prices have been going up.

When the market goes up it is very easy to buy more securities in the hope that they will continue to go up. That may very well happen for a while. But then reality sets in and the security that you bought for dear money will sense gravity and eventually fall to the ground.

The lesson learned over and over again is that there is always a fair price of the securities that you buy. This means that it is wrong to look at a rising price in the market as a vindication of having made the correct decisions regarding a security. If anything, a rising price signify that what you are about to buy has become more expensive and that you will get less value out of it in the long run.

In the same way, a falling price signify a cheaper security and gives you the opportunity to buy more of the stock than before. The only reason to buy or sell any security is if the fundamentals of that security have changed. If they have then, by all means, go ahead and buy or sell. If the fundamental situation does not change then you are better off holding onto your securities.

The financial media is to blame for much of the hype that has surrounded the stock market in recent years. Often media don’t reflect that investing in essence is a rather boring activity. This is especially true when we are talking about value stocks.

The average investor would actually be better off had the securities in his or her portfolio been unquoted. That way he or she would be sure not to fall into the mass hunt that has proliferated in the financial media. The media often portray the business of investing as a kind of safari where it is all about killing big animals.

The true business of investing is very different. It is not a question about winning against the pros, it is about beating yourself in your own game. If you take a long term view and buy stock at a regular basis and reinvest your dividends in a disciplined manner, you are almost certain to succeed.

That is not to say that you should forget about the ups and downs of the stock market all together. If you see that your stock plummets, you need to sit down and harshly once again check the fundamentals. Are the steady earnings constant or are they slipping? Has the company taken on more debt? Does it finance its dividends with borrowed money? If it does then the market is right and you have to sell, but if it isn’t then you should take advantage of the low prices and buy more stock.

This is why we recommend holding on to your stocks for at least 5 years. That way with the dividends reinvested you should see a real accretion of your wealth during this period.

To sum this up: the more the market falls, the more value you will get out of your securities. Do not fall into the trap of selling just because everybody else is selling.

Chapter 3


Here we will discuss the merits of mutual funds and index funds and how they can help the lay investor to grow his/her wealth.

One of the most common ways of investing is to leave the hassle of finding investment-worthy stocks to others. There were more than nine thousand different mutual funds in the US alone in 2014. As an aggregate they are almost perfect, but only just. Their biggest drawback is that they charge a hefty fee for the sake of looking after your money. You can pay anywhere from 0.25 percent all the way up 1.5 percent depending on what type of mutual fund it is.

This brings us to another aspect of stock picking which is that past performance almost never is a good guide for future rewards. A mutual fund may start out small, but inevitably, as the fund grows in size, it will attract more money. When the fund attracts more money it has a set of bad decisions to make:

  1. To buy more of the stocks that it already owns even though those stocks have become more expensive as a result of the increased shareprice. The shares therefore do not anymore represent the value that they once did.
  2. To buy the next stocks on the buying list, stocks that do not present the best value, but are liquid enough that they can be bought in large quantities.
  3. Waiting to invest the new money until a better buying opportunity present itself. The downside to this approach is that the return on cash is so low that the fund will inevitably be taking losses if there are big redemptions.

Thus, there simply are no good options for the money managers who manage big accounts. So what they tend to do is that they indulge in the process of “herding” which means that most mutual funds buy the same kinds of stocks and at similar proportions as everyone else.

Another thing that may affect the long-term performance of the fund is that a top stock picking manager may be recruited to a competing fund. Good managers with good track records are almost always sought after, which is another reason that these are paid so well.

Index funds

For the lay investor there is another possibility which is to buy an index fund. The upside to these is that management fees are low – it is not very complicated to buy equal amounts of the S&P 500, for instance. Another positive is that the fund will always follow the index – no worse or no better – which is good because it is fiendishly difficult to beat the index over time. Another plus is that you will always receive the aggregate dividend yield that the index pays. For somebody who is not very interested in stocks this is an almost ideal solution.

The downside is of course that they are boring. You will be able to look at the performance of the index to tell yourself how much money you have made recently. There will be no excitement when a stock finally takes off and you see that its price increases by the day. Likewise you will probably not see your stocks go down too much in value either. If you just want to participate in the stock market without doing the extra work it takes to analyze individual stocks, this may be the solution for you. As we shall see, the work of a financial analyst is very different.


Chapter 4


In this chapter we will look into what determines the value of a security. How the operational cash flow, the assets on the balance sheet and the debt ultimately decides what kind of return you will get from your security.

If you have ever seen an annual report you will see that it contains a lot of information. If it’s a retail company you will likely find sales volumes in different regions of the company, if it’s a mining company there are many pages about reserves and resources and if it is a technology company there are probably discussions about their recent technological advances.

But what we are interested in as investors are the financial statements. You will see that they are divided into three parts:

  1. The income statement
  2. The balance sheet
  3. The cash flow statement

The income statement is about how much money the company has made in the period (1) and how much money it has paid in taxes (2). When you subtract (2) from (1) you end up with the Earnings that the company has made in the period.

This Earnings number is then divided by the total number of shares to find the Earnings per share during the reporting period.

When you then look at the current price of the stock and divide it with the Earnings per share, you will get the price to earnings ratio or the P/E ratio. If you on the other hand are using last year’s P/E number you are in effect calculating the trailing P/E ratio and similarly if you are using an estimate of analysts expectations of next year’s earnings, you are determining the forward P/E ratio.

What this all boils down to is that it tells you something about about how much profits a share in the company will buy. A common share in a company is nothing but a stake in the profits.

There is a problem with P/E ratio however and that is that the number does not take into account the earnings over time. To do that we have to calculate an average over the past years’ earnings and adjust for inflation. Then we can use this average number just as we did when we calculated the real P/E-ratio. This is called Cyclically Adjusted Price to Earnings (CAPE) ratio and was introduced by the economist Robert Shiller in his book Irrational Exuberance from 2000.

The balance sheet is where the company is stating all its belongings and debts. The belongings are called Assets and are further divided into Current- and Non-current assets where the current assets are assets that can be sold over the next 12 months and the non-current assets cannot. On the one hand you have the assets (a) and on another you have the liabilities (b). Then you subtract the liabilities from the assets to end up with the Shareholder’s equity which is precisely defined as the Total assets minus the Total liabilities.

Then we prefer to divide the short-term liabilities, the long-term liabilities and the total liabilities with the shareholders equity to figure out if the debt is sustainable or not. If it is not then the company runs the risk of seeing the debt eat in to their earnings due to amortization. This will of course create a vicious circle.

When is the debt too much?

The debt levels vary significantly across different sectors. Some types of businesses are very capital intense and therefore highly leveraged (or running on borrowed money). Other businesses don’t need so much money, but can rather start to churn out money with a laptop computer from home. So it’s difficult to make a definitive statement about much debt is too much. For a mining company or a shipping company which are very capital intensive may see debt levels (i.e. total liabilities to shareholders’ equity) of more that two whereas a startup tech company may have very low debt levels.

The cash flow statement is where the cash that has goes in and goes out of the company during the reporting period is reported. The statement is divided into three different categories. These are usually divided into cash flow from Operational activities, Investment activities and Financing activities. The free cash flow is the money that the company can use for discretionary purposes, i.e. paying out dividends to shareholders.

The free cash-flow is defined by subtracting Investment in plants and equipment (CAPEX) under Investment activities from the Operational cash flow. The formula looks like this:

Another thing that is important is how much the company pays out in dividends, i.e. the dividend yield. You want to look for companies that pay a good dividend, but also has a history of increasing that dividend over time. Most companies that are doing well in this respect also has good cash flow coverage of their dividend. It makes sense, otherwise they would not be able to sustain their dividends.

A warning here is in place. Just because the company has a high dividend does not mean that the dividend is safe. For instance, the major oil companies nowadays almost exclusively has a high dividend yield, but that is more a reflection of the risk that you are running when investing in those companies. One way to check this is to make sure that the dividend is fully covered by the free cash flow.

The lower the P/E-ratio and the higher the dividend yield is, the more value you will get out of your investment. In mature companies this may be difficult, but in the small-cap space finding so-called “double-sevens” is most definitely feasible. A “double-seven” is a a company with a P/E ratio of 7 as well as a dividend yield of 7. The trouble here is that the cash flow is not as stable for a small-cap stock and may vary a little bit more than for more bigger companies, but anyway they are worth looking into.

We also want to mention the Return on equity or the ROE. The ROE is defined as the companies’ net income over the period divided by the shareholders’ equity. This is a measure of how much profit the company makes per dollar of shareholder investment. For a good profitable business  an ROE of at least 17 percent should be sought after.

The last thing that we want to mention is the net net working capital. The net net working capital has been popularized by legendary investor Benjamin Graham who figured out a good way of valuing stocks in the stock market. The method involves taking the Working capital (current assets less current liabilities) and then subtracting any additional debt.

We can then divide the net working capital with the total number of shares to end up with a number for the intrinsic value of the shares. In the 1920’s and 30’s these numbers were at times surprisingly close to the quoted value and extraordinary bargains could be found. In today’s stock market these extreme values are seldom found because, let’s face it, a stock that is priced for its net working capital is priced for liquidation. In today’s market liquidations are rare and the costs associated are huge. They also take a long time to unwind.

The upside of this is of course that if you buy a stock that is priced by its Net Working Capital you are protected by their assets value (like plants and buildings) which effectively puts a floor beneath the price.

To conclude we would like to emphasize that what matters is the consecutiveness of the earnings in relation to their price. We would therefore propose the following list when we select a stock:

  • P/E ratio lower than 7.
  • Dividend yield above 7.
  • Be prepared to hold on to the stock for more than five years.
  • Don’t pay attention to what other people do with their money. If you find a good stock with a low P/E and a high dividend it does not matter how high or low the general market is. Just go ahead and buy.

Chapter 5


This chapter will contain a few real life examples of what we are teaching. We will in particular look at some of the stocks that we picked out in our small-cap screen at the end of last year.

We will compare two small-cap stocks that trade on the New York Stock Echange: “The Buckle” (BKE), an apparel company and “Cummins Inc.”, a company that manufactures natural gas engines.

What we did here was that we used data from the annual reports, Yahoo and Morningstar to come up with this:




Figure 1. Financial data and key ratios of The Buckle (BKE). For illustration purposes we have limited ourselves to three years of data.

What is clear from the data is that the earnings are pretty constant over the three years. They are decreasing slightly, but not so much that it justifies the stock to go from 53.39 USD in December of 2014 to 24 USD on this Friday the third of October. That is a good sign.

If we then calculate the cyclical P/E ratio we see that the averaged earnings over the last three years puts cyclically adjusted price-to-earnings ratio (CAPE) at 7.32. We see that the dividend yield is OK and we have a good free cash flow to pay for the dividends.

In all, when we are analyzing the stock we conclude that the market has weighed too much importance to the decreased earnings in 2015. The prudent thing would therefore be to buy more of the stock rather than selling. Therefore our recommendation for this stock is BUY.

If we then look at Cummins Inc. instead we see this:



Figure 2. Financial data and key ratios of Cummins Inc (CMI). For illustration purposes we have limited ourselves to three years of data.

What we see here is that the earnings are increasing over the years, but are they increasing too much? We see that the price has gone from 89 USD to 128 USD over the last year while the earnings have increased from 3.70 USD per share to 4.5 USD per share. The increased earnings do not reflect such an explosive increase in the price and the cyclical P/E ratio is much higher today than at the beginning of the year.

Taken altogether we do not recommend buying this share at this point. It is simply too expensive. If you already own it, by all means keep it, and reinvest your dividends so that you will receive a higher dividend next time. Another possibility would be to take some profits so that you can invest in other companies. In the small-cap space there are plenty of stocks with sufficiently low P/E ratios at all times. Therefore, if you look at a sufficiently low P/E ratio and a good dividend yield, you will always be able to find good investment options in this field.


In this guide we have been trying lay out the basics of value investing. We have been trying to answer the questions of what a good investment is, what constitutes value in an investment and how to deal with your non-discretionary spending whilst investing them in the market.

Value investing is not something that will make you rich quickly, but rather a technique for the turtles. The power of it comes from the “compound interest” that you will experience when you reinvest your dividends in the same stock. If you have bought shares in a good value company with a steady earnings, you will see that your wealth increases exponentially with time.

To the questions of what to buy and when to buy we have given real life examples which makes it easier for you to follow along.














What does the pound say about the confidence in British politics?

Today we will be talking about British politics post Brexit and especially we will talk about the FX market’s confidence in British politics.

Britain Brexit

On Friday morning the Pound – US dollar cross fell 6 percentage points within a couple of minutes. This is what an hourly chart of GBP/USD looks like:


Figure 1. Hourly chart of the British pound – US Dollar cross. The 50-hour moving average is in blue and the 100-hour MA is in white. Chart by FreeStockCharts

What we see in the chart, apart from the sharp decline on Friday morning, is that the short-term trend is very much down sloping. To be looking at the longer term trend we need to look at a weekly chart:


Figure 2. Weekly chart of the British pound – US Dollar cross. The 50-week moving average is in blue and the 100-week MA is in white. The left green arrow indicates the Brexit vote on June 23’rd 2016. Chart by FreeStockCharts

As can be seen in the longer time frame chart, the moves before the Brexit vote were slow and steady while the moves after have been sharp and sudden.Moreover, the longer term trends are indisputably down where both the 50-week moving average and 100-week moving are declining.

A lot of the benefits that stem from a devalued currency (you can sell your products at a cheaper price) come when the moves are slow and are not characterized by the disorderly selling that we have seen in the FX market as of late. What we are seeing is in effect that the confidence in British politics, in wake of last week’s clarification of Britain’s negotiating stance ahead of Brexit, is slipping.

We wish Britain well in its efforts to keep inflation at bay and getting foreigners to fund its deficit.

If you have read this whole text we would like to ask you a favor. That is to leave your comments in the comments section down below.

Has gold lost its luster?

Today we are again going to talk about gold and ask ourselves “has gold lost its luster?”


Gold took a beating this week as illustrated in this daily chart:


Figure 1. Daily chart of the World Gold Index from late-2015 until now. The 50-period moving average is represented in blue and the 100-period moving average is in white. Chart: FreeStockCharts

The take home message from the chart is that we dropped below 100-day moving average that has been acting as support for the chart ever since the chart crossed the moving average in January. The direction of the 100-day moving average is however just flattening out, but because the chart is trading below in the short-term the trend is down.

On the other hand if we take a look at a weekly chart we see a different chart pattern:


Figure 2. Weekly chart of the World Gold Index from late 2012 until now. The 50-period moving average is represented in blue and the 100-period moving average is in white. Chart: FreeStockCharts

In the weekly chart we see the chart is above both the 50-week and the 100-week moving averages. Moreover, both moving averages are sloping upwards. What this means is that even if the short-term outlook for gold is down, the mid-term outlook looks very much intact. Do not get caught up in the speculation about an end to the bull market in gold.


Today we have asked ourselves “has gold lost its luster?” When looking at a daily chart we see a bearish chart pattern where gold lost 40 $ on Tuesday. But, on the other hand, if we pull up a weekly chart we see that the trend is still very much up or ascending.

Do not sell out on your gold just yet!

If you have read this whole text and you have liked what you have seen, please leave a comment down below. We will try to answer as soon as possible.





What do I do when my financial situation is strained? Do I limit my budget?

In today’s post I will try to answer the question above and flesh out the reasons why I don’t think it’s a good idea. Personally I never limit my budget.


One day you may find yourself in financial trouble. That’s just part of life. It can be that you have fallen ill and have expensive medical bills or that you have just lost your job. These are all circumstances that normally force you to look into your personal finances and take a hard look. In the end you may come to the conclusion that you don’t really need all those restaurant dinners or coffees at Starbucks.

To cut back on low-hanging fruit like that does not do you any harm – it may even be a positive for your economy – but I still seldom do. Why is that? It’s because I have made a budget that allows me to lead a certain lifestyle. That lifestyle is then non-negotiable which means that I simply don’t compromise on the things that I’m doing. For instance, I love biking in the nearby hills and even if I had been unemployed I would still enjoy doing that. Now you can say that going on a bike is not the most expensive of things, but even so it still costs a fair amount each month. So what do I do?

The answer to question may seem to obvious. When my resources are not enough for the month’s expenses I simply increase my income. That is what I suggest that you do too. An extra income will allow you to maintain your lifestyle so you don’t have to cut back on the things that you enjoy the most.


Today we have been talking about personal finance and what to do when there are unexpected expenses. Do I limit my budget? No. I try to increase the money coming in.

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Brazilian rhythms

Today we are going to talk about the Brazilian stock market and how it is faring amongst the political troubles that affect the country. What we will especially talk about are the Brazilian rhythms that jiggle the stock market.


If we begin by pulling up a weekly chart of the ETF EWZ representing the Bolsa we see that its long term trend is down:


Figure 1. Weekly chart of the ETF EWZ representing the Brazilian market from late 2008 until now. The 50-week moving average is represented in blue and the 100-week moving average is white. Linear trend lines are arbitrarily drawn. Chart: FreeStockCharts

In the long term the trend is down and until the trend changes we will not change our opinion. However, the chart is slowly approaching the upper band of the declining trend line which may mean that we about to see a shift in the trend, but we are not there yet.

We are not trading above the 50-week moving average which is a bullish sign, but we need to cross the declining trend line for us to change our opinion.

If we on the other hand look at the chart in a shorter time frame we will see quite a different pattern:


Figure 1. Daily chart of the ETF EWZ representing the Brazilian market from the beginning of the year. The 50-day moving average is represented in blue and the 100-day moving average is white. Linear trend lines are arbitrarily drawn. Chart: FreeStockCharts

Here we have both rising 50-day and 100-day moving averages where mostly the 100-day moving average has been acting as support since we broke the moving average in March. What this means is that the daily trend is up. It will therefore be very interesting to see what happens when the chart hits the descending upper trend line. Will it break through to change character of the overall market or will it continue in its downward slope. We will have to wait and see.


Today we have been talking about the Brazilian market from a technical standpoint. The overall weekly trend is clearly down while the daily trend is up. Somewhere in the very near future these two trends will meet and we will see spectacular things.

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