MAY 20 2020: STAYING FOCUSED – FUZZY LOGIC
Have you ever heard of ‘Fuzzy Logic’? I am no expert, but I feel that the so called contrary algorithms must use it in the markets, but that is just a guess. Fuzzy Logic is the concept of deciding the output on the basis of assumptions, and it works on the basis of sets. I think that it is accurate enough to say that Each set represents variable ideas (or data input) that can affect or define the possible state of the output. Predicting the unknown with relative accuracy?
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In the markets, we CANNOT say EXACTLY, Step – By – Step how things will play out, because the input changes day by day based on buying, selling, manipulation, or whatever you want to believe moves these markets. That said, by using chart patterns, my past 20+ years of history trading, experience , Math formulas and Fib Numbers, and a host of other ‘input’, we can get a number of solid ideas as to how things will play out. With so many variables, it is a moving target.
So why I am I mentioning this? Ever since the nice moves last Thursday & Friday started, I have people asking me and writing to me saying, ” I want to sell. I don’t want to give this back! When is the top? Should I sell now? I sold 1/2 of my positions, when is the Best time to sell the rest?” I get it! We have good gains growing here, and we don’t want to give it back, but we don’t want to miss more upside either, right? Today I am going to try to help us to understand where we are in the Precious Metals Markets.
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If you have No Idea what I am talking about, that is perfectly fine, but hopefully by the end of this report, you will know exactly what I am saying. It is, to me, Fuzzy Logic.
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GOLD – We focused on this triangle and loaded up as it formed. I see that it broke out and back tested the 10sma. Logically, this is not the time to sell, because a flag or triangle break out is actually ‘a buy signal’ to many technicians.
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SILVER also put in a flag and broke out, but look at Silver go! Time to sell? Well, I don’t think so. I am feeling that we should reach former highs at least. It is a ‘fuzzy’ picture how it will do that, because I can see a few various ways that this could happen. A bull flag could form right here for a while & then a run to those highs, or…
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SEVERAL SILVER POSSIBILITIES EXIST
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SILVER could just keep running and get there soon. Is that time to sell? Maybe, but when silver runs, it RUNS. When Silver drops, it DROPS, so I’d just use stops. Why not just sell everything? Things look so Bullish that Silver could bull flag up there as a dcl, crawling at the highs ( think Cup & Handle) and then go higher again for daily cycle #3. You would have a hard time getting back in.
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I LOVE FLAGS AND PENNANTS! These are my favorite ‘input’ in the equation. These consolidate a solid run higher, and then that run usually continues. So when GOLDS FLAG broke on daily cycle #2, it was not time for me to sell, we view it as time for another run. Raise stops under the flag.
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BACK TO SILVER – it is running away from its consolidation and it may get to the highs and flag as the 2nd dcl. Then the 3rd daily cycle could go even higher. We have to wait and see, because we don’t have all of the input yet, but so far this is very bullish and that flag is a possibility.
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NOW WE GET TO MINERS: DO YOU SEE A DIFFERENCE HERE?
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GDX doesn’t have long flags or consolidations. It runs, churns sideways with mini pennants, and then runs again and again. Do you remember when I called that DCL real time, based on the 2019 run? Look at that dip now. People wanted to sell and lock in gains then. Now where would they re-buy? The Bull is kicking, but she’s running strong too. Stops for GDX could be raised above that dcl now, under the 10sma if you want.
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THIS PART OF TODAYS REPORT IS AN IMPORTANT REMINDER. IT IS HISTORY FOR US TO LEARN FROM.
WHERE WAS THE ICL ( Absolute low) for GDX? IT WAS MID-MARCH, 2 months ago. Almost a once in a lifetime MAJOR SHAKE OUT LOW.
GDX 2016 – After a big January shake out, MID January started the famous 2016 ramp up higher. Where was the big dip 2 months later? 3 Months later? 4 Months later? That Blue Box was 4.5 months and the dip was an early ICL. That ICL only dipping to the 50sma and all daily cycles before it were fairly choppy , but mild. In fact, this Bull ran for 8 months. Again we are on month 2.
Is it Time to sell? With a bit of fuzzy logic, it doesn’t seem like a good time to sell, but it can get choppy.
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Here is some Fuzzy Logic for you 🙂 If this current rally followed the 2016 Rally ‘Time-Wise’, We’d have an 8 month rally that started in March with a Mild choppy ICL 5 month from March range. I’ll draw it on this chart of 2016. Could this happen? Yes. Will it? We don’t know, but we do know that it is possible. I think that an even longer run will unfold actually (Based on my big picture weekend reports). let’s take a closer look.
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GDX 2016- Marking that JAN low as our March low, you can see where we’d be now (here). Was that a good time to sell? GDX started to ramp higher.
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Now lets talk about MINERS and our current set ups. Some are extended and they may still continue higher, but they also may stall, flag, chop, or even pull back. Others are laggers and I want to discuss that briefly.
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NEM – It is hard for me to ‘recommend buying NEM at this point. It CAN run higher, so if I owned it I would continue to raise stops and ride it, but for those looking for NEW ENTRIES, I look for something closer to a major support…
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ASM & AUMN were buys Thursday , as a lagger acting bullishly in a Bullish sector. This was at the 50sma…
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Both ASM & AUMN have sprinted higher. This is why I look for laggers at support, they are starting to join the race after thier earnings release, etc.
CDE was a lagger too, and I posted a ton of CDE charts with Price bullishly crawling & waiting on the 50sma launch pad…
CDE of course exploded with Silver and is still flying. It COULD be bought at this 200sma with a stop under the 200, but again, it is hard to buy a stock that is up from $4 to $6 in 3 days ( that is a 50% gain in 3 days).
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NOTE: so I cannot ‘recommend’ buying CDE here now when it is up 50% in 3 days, but it may have been a good place to ‘add’ at the 200sma. That also doesn’t mean that it is a ‘Sell’. It CAN keep running, it could flag and go, etc. You may want to trail a stop, take a little off if you can’t sleep at night, or let it run, it is up to you.
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I used this chart to show that Long term, I think that CDE wants to go much higher in this bull run. ‘In at $4’ as a buy & hold position may even look pretty good a year from now if you can ride the choppiness.
So why don’t we look at a few laggers that may offer a better low risk entry…
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AND KEEP IN MIND THE BULLISH FLAGS AND PENNANTS
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AAU – Volume is increasing and we have a Bull Flag of sorts. AAU may be ready to play catch up if you have cash and need a lagger.
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EGO – How can I call EGO a lagger? That was an excellent run under $5 to $10! It is lagging a bit because it didn’t break out when Gold did, but this is a buy if you ask me. I expected a drop to the 50 & 200sma, but it is strong and looks to be trying to run again. This can go $8 to $15 or so next, and that is a great trade.
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EXK – I bought EXK as a lagger, because it didn’t run with the other Silver rockets. It should, right? And it has a solid base here, so I expect a break through the 200sma and a rally. I grabbed this chart for the live trading area (below each daily report) so it was at 11:12 am. It had Volume over 7 million again at the close and that is also very Bullish. I will add on a break of the 200sma.
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NG DAILY – Another great runner was Nova Gold, $5 to $12.50! Bull Flag consolidation, this is a buy.
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NG BIG PIC – A large bowl will form, I think that NG should get to $17 ish soon.
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AGI – I see a Bull Flag here too . $3.50 to $9 and hardly a pull back really. This is why selling these may make it hard to get back in.
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PLG – I Bought PLG as a real lagger that has great potential. It is trying to get above the 200sma. I like the set up, and…
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PLG BIG BASE – Upside potential is really something else if this does a bull Run in a bullish sector.
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So I don’t think that it is time to sell yet, if you think you want to sell and get back in much lower. That may not happen yet, and the above report explains my thinking on the matter. Sell if you are happy and want to lock in gains and sleep at night? Sure. That may fit your style. I also sell extended ones and buy laggers at times, but I am a trader by day, and that approach is not for everyone.
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CAN WE PULL BACK into a dcl? Yes, eventually we always do, but it could be mild like 2016. It could be choppy and difficult, we don’t know for sure yet, but looking at the 2016 run, and then the 2019 run in Miners, the risk of getting left behind and missing out on some great gains for months is what is at stake. It may be best to ride them out, raise stops, and see what you get.
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I really hope this helped. Enjoy your Wednesday trading!
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~ALEX
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Honestly, I planned for todays report to just be filled with 20-30 stock picks, but necessity came in the form of emails saying that some actually sold last Friday and want back in – others want to know “Should I sell now”. I thought that it was important, but I do have just a few picks to share for those trading other areas too.
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BYD – This is a bullish break out with volume and is a buy. I would imagine that GAMING should do good with quarantined residents at home looking for something to do.
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TWTR – Dropped below the red uptrend line, tagged the 50sma, and recovered in 2 days. This could prompt a run from $28 to $36+
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INTC – I was looking at JBL, INTC, MU, AMD, etc and for some reason I wrote JBL, BUT THIS IS INTC, and is a buy. I like AMD too.
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I still like AMD too. It was a buy here in April …
AMD looks like a cup & handle forming
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HTBX – Along with Corona treatment biotechs NVAX, DVAX, IBIO, VXRT, etc HTBX was a BUY in several reports recently. These are VERY tricky, but rewarding for experienced traders.
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HTBX – it Popped 30% yesterday and could run, flag, drop? So sell when you think you are happy, these are choppy and tough at times ( See a chart of NVAX)
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MITO – This is the same category, and I own it. Just small positions that can pay off for the short term trader.
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MITOs Big Picture was pretty interesting 🙂
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SGLB – Something is about to happen with SGLB. All the signs are there, it is a matter of time, as long as no bad news comes out.
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SVM – I sold my SVM (Love the company and made great gains in the 2019 run). I bough EXK, PLG, and will re-enter SVM if it regains the 200sma. I could actually recommend this as one of the laggers, but I want to see it recover first. So how about this….it is a BUY if it regains the 200sma – it almost did by the close.
