Some More Downside Needed
I took a bit of criticism after last weekend’s letter, especially on Monday with gold and silver rising. I was called arrogant and smug and worse and told to throw out the charts.
While gold and silver were up nicely on the day they remained in their bearish patterns and chopped around most of the week with large moves before finally breaking those bearish patterns on Friday.
Now we are ready for more downside.
When the perma-bulls come out calling me names, I know they are starting to get desperate. That means we are nearing a capitulation move lower. The perma-bulls are not happy campers this week, or this year, having taken it on the chin week after week and coming up with excuses every week why this is the bottom. It seems some of you, at least in your deriding emails, think I think I am right all the time. That is the further thing from the truth and I admit it readily.
Subscribers know that I post buy points and keep stops tight, limiting losses. You almost always know instantly if a trade will work or not. It will either blast away from the buy area and win, or it won’t and you get out near cost or with a small loss.
All I do is look for repeating patterns that have a high probability of working and then I give the buy point. It sounds so simple, but it’s the hardest job in the world.
Many people would think a trader has an easy job if they observed them during the day. I sit and wait most of the time doing nothing. Then when I see a good setup on any timeframe from 15 minute charts to monthly charts, I pounce.
Lately it’s only been a day-trading type of market for the most part and I can make a good sum in only minutes.
Most people have a hard time accepting that and can get jealous. The outside observer does not see the hours of work put in after the markets are closed though in order to make the market hours seem easy. Nor do they see the months of chop that can result in constant drawdowns in terms of capital and most importantly, mental capital. I’ll give you one of my most valuable lessons I learnt in my journey to trading successfully. Patience is the most important, or very near, trait of a successful investor.
Having the guts to stay in cash during choppy markets is the key to being very successful. Sometimes the chop can last months and you think the good times will never return, but they will. They will return, they always do.
There are only a few great times to be heavy into the markets and stocks each year and being able to identify those times and AVOID the other times will make you richer than your wildest dreams. That’s my main focus. Being there for the good times and avoiding the bad times for subscribers. Some people may get antsy with noting to do but I constantly reassure them it is the right thing to do.
If you are one of those who are stuck in your ways and want gold to rise daily and can’t accept the reality that it will rise and fall on it’s way to great heights then maybe it’s you, not me who is the problem.
Get mad. Sell your metals on this next spike lower if it comes. I may just be the one there to buy it from you before we begin the next up-leg. And I thank you dear sheeple for doing what you always do. You can buy back your gold from me near the top ;)) I am just a realist who says what I see in the charts. Sometimes I’m wrong, sometimes I’m right.
But please do continue to send me any type of email you’d like since I enjoy them regardless and it gives me a good sense of where we are in terms of sentiment.
I can always be reached at firstname.lastname@example.org
Some websites and gold aficionados won’t even publish my work unless it’s stark raving bullish. Personally I’d avoid those people. If you can’t see an argument on both sides then run. Nothing ever goes straight up....unless it’s got four wheels and powered by electricity! I’d also avoid coin dealers who are always saying it’s a good buy here. Especially the ones whom send out daily newsletters that are ONLY bullish.
Life is hard. Investing and trading is hard. It’s how you deal with the hardships that make life great. The good times are easy. The hard times are not, and they always come.
Be a realist. Be grateful for what you have NOW and much more will come. Enough of my ranting that will surely evoke a myriad of fun responses. Keep ‘em coming!
Gold fell only 0.29% on the week but did break it’s wedge Friday and is now looking for lower prices. I’m looking for the $1250 area next and if that breaks then $1180 is a real possibility. Early on in 2013 I wrote a weekend letter that contained longer-term views which were bearish and those views are playing out today. Charts do tell more of a story than any news item can. The news is always known beforehand and the prices action tells you what to expect.
As I’ve been saying for most of 2013, it’s best to focus on stocks who move predictably and very fast to make your money, not focusing on the precious metals yet.
Corrections simply take time. It’s a fact. The sooner this is understood, accepted and embraced the better. There will be a great buying opportunity to come and when it does we will be there and be ready but for now there are much better ways to make money, and keep all my hair!
Silver slid 2.59% this past week. I mentioned to subscribers Thursday evening that silver was getting very tight and looked much better than gold for a move. I thought it may move higher but the buy trigger was never hit and it broke down to trigger the sell signal.
I am not biased. I will trade up or down moves and hopefully make money both ways although I did not take this trade. Overnight risk is huge and as I say, there are much better ways to make money for the time being. We did have some nice up days in both gold and silver this past week but we remained in the bearish patterns all week and subscribers were cautioned on this as I said they were both an avoid until they moved out of those patterns.
Many people see a good move and just have to jump in only to lose. Big moves happen all the time within patterns but it’s not until a pattern breaks out that we see trends begin and real money is made. Controlling emotions and letting some get away is key. Waiting for the proper buy or sell points patiently is also key.
I can’t tell you how many times or how much money I’ve lost trying to get in early. I’d see a bullish or bearish pattern and try to outsmart the market only to see the pattern never work out and I’d take losses. I, nor anyone I know is smarter than the market and when I do go on good runs I am thankful and humbled by the gift the market has given me. Respect the market and be able to accept moves up and down or the market will take away all your cash.
Silver is now looking for a move under the $20 level I’ve been talking about needs to be hit here for so long now. If support can’t be found at $20 then we are going all the way back down to $15. Personally I’ll be loading the boat if that comes as that would take many of you back to the break-even area or worse and that always causes investors to cash out in extreme duress.
This is all a game. It rhymes often and works in cycles and plays off emotions. Learning these takes so much time and effort but is rewarding beyond your wildest dreams. Learn to play the
market game, and maybe skip a few steps with my help, and you’ll be shocked. In a good way. Platinum rose 2.68% on the week and showed a failed breakout. Had you taken the long trade as it broke the $1,525 buy area you just have to accept that the trade was wrong and get out as it moved back below that buy point. Keeping stops at cost or a tad below would have you none for the worse but if it had run you’d be a happy camper.
It’s a marathon, not a sprint and taking many trades that go nowhere is fine and leaves you no worse off really but then the ones that do run make up for the small losses by a long shot.
I have been tweeting many trades during this period of day-trading and one I called out Thursday afternoon turned into a near 10 bagger in the opening minutes of Friday morning after having well more than doubled already Thursday in the couple hours after I took the trade.
I peeled off another 25% into early strength and then more as the stock continued higher. This is not to brag. 10 baggers are not common, but much fun when they come. I wish I was smart enough to hold my full position and exit at the top but I’m not. I locked in gains into strength along the way and only ended up getting the full 10 bagger on a few options but still, the whole trade was highly successful. A trade like that can move your portfolio up over 50% with a small initial outlay. Trading is the hardest job you could ever do in my opinion. From the study, nightly homework, idle sitting and watching to managing trades it’s just demanding in every way possible.
And then throw on top of that the uncertainty of it all and it’s a recipe for stress. Managing your account is a key to avoiding the stress. I wish I had the space here to talk more in depth but I give tidbits to subscribers all the time when I see a situation where it fits to talk about something. The fact is, this is a game and it’s the hardest game in the world, but also the most rewarding.
Palladium rose 1.02% for the week and is getting tighter and tighter here. It’s a sell if it breaks the uptrend line and a buy if the horizontal resistance level is broken. The $780 area is the next resistance level.
Sorry about the length of this weekend letter, I just have to get some stuff off my chest the odd time. Hopefully you can find some wisdom in my words that can help you along your journey as I continue mine.
Be real and accept you’re not always going to be right or have the best markets and you’ll be off to a good start.
Enjoy your weekend and week ahead.
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