Nickel -Giga
Those of you that have been with me for awhile know that I love "bounce" trades! I developed a 3X leveraged ETF trading strategy based on oversold conditions ready for a bounce that has led to 18 straight profitable trades going back over 5 years! Nickel doesn't have a 3X ETF (that I'm aware of) but there are two thinly traded ETN's that are public.
Look at the chart below on JJN (Bloomberg Nickel Sub index) which is clearly getting oversold and is also RIGHT on support. This is a great area to accumulate nickel itself in my view. I expect technical support to surface very shortly and we'll at least see a bounce back toward $7. However, I still believe that we're looking at $10 plus nickel in 2020. There is no end in sight to deteriorating LME warehouse stocks, which are now below 3 weeks of market supply. Another wave lower, to below 50k tonnes from 65k tonnes currently, plus a bounce in nickel to plus $7 again, could ignite a whole new leg to this bull market.
JJN or JJNTF are both candidates to nibble on at their current prices with another chunk sitting in "stink bids", perhaps 5-10% below the current market. RSI under 30 is considered oversold, under 20 is very oversold, and in the mid teens means things are very extreme. We're at 19 ish now in nickel.
Obviously the even better way to play nickel is through our top junior pick, Giga Metals (GIGA/HNCKF). I am reiterating the stock as a strong buy under .42 CDN. The share price has held in well during this substantial nickel pullback from $8.40 per pound to $6.50 currently. GIGA has so many things going for it that an incredible 2020 could be setting up for us. We need $7 plus nickel for Giga's Turnagain project to be in play and the leverage to nickel is huge.
Now is exactly the time when nickel believers should be accumulating! Add the ETN indexes and/or Giga Metals (GIGA/HNCKF) under .42 CDN or in the low .30's on HNCKF. It's easy to buy in when things are running. The issue is that you're susceptible to sharp pullbacks, even in bull markets. Getting in the habit of buying into red/retracements is the best thing that we can do to increase the odds for successful investing.
Sincerely,
Eric Muschinski
It is easy to figure out what you believe. The difficulty lies in determining - is what you believe the truth.
