June 30 – Lessons

Friday is the last trading day before we enter ( in the U.S.) a 3 day weekend. Markets are closed in the U.S. on Monday, so please keep that in mind when deciding whether you want to buy, sell, or hold. Lets do a quick market review, and then I wanted to go through some lessons pertaining to our positions in Miners. 🙂 In the general markets, something that could turn out to be very bullish happened in the markets today.

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DJIA-  This was my chart from yesterday pointing out a possible shake out with the Brexit vote. I labeled this SPX, but it was DJIA.  They both had the same reaction.

 Notice what happened Thursday…

I think we have 3 white soldiers. This can be a strong bullish reversal sign.

We could possibly be preparing to break out to new highs, and if we do, after this almost 2 year sideways move, the run higher could move along nicely, since there would be no resistance.  Have you seen TASR and MBLY?  More in the weekend report.

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WTIC – Oil dropped over $1, but this isnt bearish looking.  I expected a DCL and pointed out that we may have seen it (green arrow) and it rolled over already.  Could the shaky Brexit action have put the dcl in a bit later at the magenta arrow?  I think so, so I want to be open to the possibility that OIL just did a shake out and our original target of $58 – $60 is still ahead.  Looking for a break out over $50.55

Energy stocks aren’t giving me a strong clue either way yet.

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GOLD – Bull Flag. This looks so Bullish to me

SILVER –  Silver began breaking out of the inverse H&S pattern that I pointed out this week. I have 2 short term targets.  One is this one using the wicks. It’s about $19.80 or so , lets say $20.

Slightly lower is when we cut the wicks. This would be roughly $19.50, but the way Silver often moves,  it could just blow away the $20 mark if the volume picks up.  I dont like the lower volumes.

EXK –  Some silver stocks already took off higher, and others are still consolidating.  I would expect them to break out higher in their own due time. The set ups remain bullish. Please read the chart.

Precious Metals have been acting quite bullishly, and as you know, some of the recent trades have just shot straight up out of their consolidations. I was asked if I sold TRX with the 25% push higher on Wednesday, and my answer was  “Not yet.”  Why?  Sometimes you’ll hear me say that I’m selling a partial on the way higher.  Then as it does keep climbing, I’ll say that I sold it all off.  Often, that is very near the top, or at least a temporary top as another consolidation. How do I time it? What do I look for?

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LESSONS: This will take time to read, maybe over the long weekend you can study it.  My weekend report wont be out until Monday most likely, so you may find time to review this again then.

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Honestly, there are probably over 100 different ways to look at price projections, extensions, Fib projections, Fib extensions, etc, when looking for an exit as a trader.  I cannot possibly cover all of the ways that I have taught myself to lighten up or exit a stock on the way up, but I can show you an effective way that I came up with to help me to to sell out on these explosive moves.  I try to avoid selling too early.  I used 2 similar methods on MUX and VGZ recently, so lets look at the way I often view things. 

** See the footnote too

VGZ – I zoomed in on VGZ in April. It ran out of a consolidation from $0.40 to $0.65. Time to sell?  No.  It is extended above the 10sma and it will often wait for the 10sma  to catch up, or it may dip down to meet it.  I wait for that. The second leg up can turn into an A-b = C-D move.

VGZ larger view. The orange box is what we saw above, but now you see what was really happening.

1. The consolidation in March leads to a strong run in APRIL, and it becomes extended into an a-b-c-d. Notice that ‘c’ is often on the 10sma.

2. The consolidation in April/May leads to another one that we caught. When that one really got extended above the 10sma in June, what did it do? Bull flagged to the 10sma and then a-b=c-d

3. Why did I sell my whole position at d? Because I also now might be seeing a 1-2-3-4-5 move completing.

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MUX was a bit different, but I use a similar method for selling.  It still involves watching the 10sma  ( or the 8 or 9 sma is fine).

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MUX – A bit different, but it also got a little extended in a ‘pop’ out of consolidation in April, and a POP out of consolidation in June.  Again, on the A-B-C-D moves,  ‘C’ is usually support at the 10sma, so I try to wait for the c-d move to start selling. In June I didn’t, I’ll explain.

Notice Golds ICL in late May was ‘A’. MUX felt very extended, but it just flagged over to the 10sma and started higher again.  I’ll tell you why I sold it all in a minute. First lets zoom in on the April pop.

MUX – Notice that also on this close up of APRIL, MUX ‘popped’ out of a consolidation and got a bit extended. It is well above the 10sma. ( Please read the chart). It starts to sell off, but thats ok, it is looking for the 10sma. This one just rode the 10sma more steadily until Gold dropped into an ICL in May.

MUX – This is why I sold MUX rather than wait for a tag of the 10sma. June 16 – I thought the 1-2-3-4-5 move was complete, but it has since gone sideways and tagged the 10sma 🙂  Elliot Wave foiled me again –  lol.

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So please understand that I use this along with CYCLE TIMING.  If we are in the 3rd daily cycle or 4th daily cycle,  I sell an extended move no questions asked.  If we are just coming out of an ICL, The move is usually stronger and holds up better.  The consolidation part usually happened as Gold sought out an ICL, then a POP is the A-B,  and after the dip to ‘c’ ( 10 sma) I expect another move higher  ( C-D) to start selling. Make sense:  Lets look at current trades…

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THM –  USING THAT ABOVE LESSON, this is what I see in my head as I enter a trade. Notice that ‘C’ in April was at the 10sma, followed by a 2nd leg higher . I am watching the 10sma now. I’m not selling though it looks extended, we may get a c-d move off of the 10sma  ( or 4-5 as shown).

THM – The BIG PICTURE in my head. THM did nothing today, but I’m ok with that, it may just be waiting for the 8sma.  (8 fit the prior runs better)

TRX –  I didn’t sell Wednesday, because TRX was on the 10sma in the morning, thus it wasn’t too extended Wednesday. TRX might stall Friday since it is extended well above the 8sma after the follow through.   Notice that the end of April was POP / Tag the 8sma, Pop too.  It isn’t always a clear a-b = c-d. The 8 or 10sma still acts as support during the run.

XRA –  Look at April here too. XRA had a 3 day pop, drop to the 8 sma, then a-b = c-d . That was followed by a consolidation into Golds ICL,  and we just Popped big time again. I drew what might happen, I’m watching the 8 sma for now. This is how ‘cup & high handles ‘ form.

And dont forget that in my mind, I also have these little delusions of grandeur and visions of splendor…

These are possibly the opportunities of a lifetime, right before our eyes. We are early enough in this intermediate cycle that I will sell partials on the way higher after a tag of the 10sma, but I may just ‘buy & hold’ the rest (adding to my Core positions).  The lessons in Miners like NEM, RGLD, CDE, AG, etc are that when a stock is rising within a Bull Market in a nice orderly fashion, there is no reason to sell it.  Huge pops can lead to scary drops, but some of these slow and steady runs are just working out perfectly.  Less flash and Glam, but profitable all the same.

RGLD – $20+ to $70+.  Buy & Hold worked well.

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Also, most here know that I was buying Miners at the end of May , early June. I’ve been bored with some of them, they hardly seem to move much daily. But take an honest look at them, and they are winners. 

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BTG – I’ve been bored, but from May to now it went from $1.75 to $2,50 and looks very bullish. THAT IS 45%! Shame on me, I must be getting impatient and spoiled. That 1st run was slow and steady too, up 400% 🙂

I hope that this lesson at least helped a little bit with when to hold and when to fold as a trader.  The a-b-c-d doesnt happen in every scenario, but basically if I get a huge pop from a base in a bull consolidation, I dont always sell. It’s a Bull after all. They charge and move forward from bases. I watch the 10sma rising as support and see if we can get some follow through after a little flag, pullback, dip down, etc.

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And the footnote-

**  In My Humble Opinion, this is the return of a bull market in Miners.  That said, I also think that a core of positions, ‘BUY & HOLD’ will do very well. Some people trade out of the moves to lock in gains or avoid draw-down on pull backs and consolidations,  but if you can stomach the waves, These Miners will be at old highs someday, and then after a pullback or sell off,  we’ll likely see a parabolic blow off sending the very much higher. Look at charts of CDE, AG, FSM, NEM, ABX, RGLD, etc. etc. etc . No need to over-trade if you are inexperienced and just want to ride the bull. It gets wavy and tricky, but long term rewarding.

Enjoy your long weekend and be safe!

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~ALEX