All joking aside, this pullback in the metals and their miners has been quick and sharp, and we looked to be resuming the upside just before another drop back to the most recent lows. What does it all mean? Probably not much, and here is why. First, we are now in the Chinese Golden Week holiday, and since the Chinese are big players in the gold market and not going back to work until October 9, gold more often than not pulls back or goes nowhere until they return. Second, Monday was the 3rd quarter end, so there is some degree of ¨painting the tape¨ for shareholders of mutual funds and other investment vehicles. After these items pass, it’s back to business as usual. For example, the stock market held up and could not get much downside traction before they closed the books for the third quarter, but just today (Wednesday), the general stock market etfs in the US closed down 2%. Maybe it’s a turn to last for awhile, I don’t know, but nevertheless these things do affect markets in near term. I typically don´t try to sidestep these tendencies because there is always another one around the corner and trying to do so would require constant in and out trading that is very costly over time, especially if it causes one to lose focus of the big trade they are pursuing.

Let’s go to the charts. If we step back a little further than our usual timeframes, we can better see long term support and resistance zones. Here is GDXJ, the junior miner gold stock etf.

In the above charts we see both of the biggest gold mining etfs have come down to areas that might provide support, and should do so, if we continue to be in a bull market. I read all over the internet lately that short term ¨traders¨ have booked profits and are waiting for even deeper pullbacks that what I suggest might occur above, before jumping back in with both feet. Further, many are now entertaining the short side of these stocks, which is where I think they go terribly wrong. It’s not just the money they might lose being they are counter trend trading, but they will lose sight of the big picture and even if they can switch back to the long side and trend, will they be able to buy with conviction so that they can load the boat. In my experience it is very difficult to do, but don’t take my work for it, just look at the big fish and how often they jump in and out. I’ll save you some time, they don’t do it very often. Mostly because the big money is made by identifying emerging monster trends early, buying a good amount near the lows, then when they have confirmation they might be correct, they add heavily into the pullbacks like we are seeing now. So what am I doing, well I have nibbled here and there over the last week, but since I am very heavily invested already and sitting on big unrealized gains (albeit not as big as 2 weeks ago), I will wait until either we have violent down days to buy into, or the Chinese Golden Week passes. The third quarter close is already behind us, so I am only looking for places to buy down here, and anybody looking to ring the register on gains has already missed that window, in my opinion. It is time to buy, or sit tight, but definitely not sell if one thinks this is a bull trend that remains intact.

And what about my SILJ? Let’s take a look…

Second, let’s look at the weekly chart like we did with GDX nad GDXJ above.

While SILJ is not as clear about its trend on the weekly charts, if you compare it first to GDXJ, then to GDX, you can see it is very similar, just late. Both GDX and GDXJ have already turned their long term weekly moving averages to the upside, and GDX has already made it’s ¨golden cross¨ where the 50 MA crosses above the 200 MA. These are not only in uptrends that remain intact, so far, there are relatively early in that bull trend. These are markets where one wants to buy or add into pullbacks, not focus on selling rallies yet, if they wish to make and keep the big money.

All in all, while I agree we might go lower for awhile, from here the downside should be contained. We might not rocket higher just yet, but that is not important, what is important is that we are on for the ride when it occurs, and we have more shares than at any other time in the trade. Check!

It appears the bull market in precious metals and their miners is back on track, after a short correction of a few weeks, in which I did add to positions, albeit lightly as I’m already very heavily invested. SILJ in particular is very close to it’s bull market highs, and even GDX is not too far away from breaking out again.

Today and yesterday were notable in that silver was up 5% yesterday, then after opening lower by 1.5%, closed the today about unchanged. Miners had similar action, though not as pronounced. This is typical bull market behavior, bucking people off after sprinting higher, only to finish strongly again. I like where I sit, and continue to press the long side, realizing it will get more volatile as the bull matures. I am keeping an eye out for my technicals to flash a sell signal and when they do, I will sell with no questions asked. There are great fundamental arguments to stay in the trade, like QE4 around the bend, repo markets freezing up last week needing Fed bailout, even the stock market seems to be finally weakening, which should help gold and silver miners. Every time the media whispers about a trade deal, the stock market bounced, until the last few days where I have noticed good news is being ignored. In fact, today was the first weak day (-1.3% on the QQQ’s) that closed near the lows in many weeks, and during the weakest time of year historically.

Also of note, Bitcoin got smacked for a 15% loss. MJ is the marijuana etf, it continues to break into new yearly lows, dropping another 4.5% today, and even oil can’t hold that war premium it gained from the Saudi oil refiner attack, it lost another 3% today and the OIH oil services etf is not far from making new multi year lows again. In short, metals and miners were the only green (UP) group today, and that despite a very weak start, they remain the only game in town, unless somebody wants to buy a negative yielding bond, which I do not! See the charts below…

To sum up, my biggest concern right now is that my signals get me out of this mining trade too soon, because everything else is firing on all cylinders and they clearly want to go higher. I’ve learned to ignore the noise and day to day news items as far as investing, but I don’t ever ignore my signals. I will keep you posted when I make any changes, or have something else to share.

The 50 day MA for SLV is at $15.92 today, about 60 cents away from the current price. At typical sharp pullback, like the one that occurred in May 2016 (in the middle or a rip-roaring rally in metals and miners), saw SLV go 11.7% lower before it turned up again. In today’s prices, that same pullback would put SLV at around $16.20, so only 30 cents away, and I would be fine buying there. It’s important to know that after the correction of almost 12%, the next month of June 2016, SLV rallied 17%, dna gained again the month after, bringing the total gain to 27% after the correction, well worth trying to catch. The past is no guarantee, but nothing in trading and investing is truly guaranteed, it´s all just making wise bets based on probabilities.

I don’t know when or from where my miners will turn higher again, but I am confident that they will.

Just a day later, and everything that was bouncing not only closed on the lows yesterday, but made new lows for the pullback today! I am worried? No. Do I like it? No, except that I took the opportunity to add a little to my positions this morning, and will put in larger orders to buy if GDX gets down to the $26.20 area. That seems as good a place as any to start taking shares off the hands of capitulating bulls. Let’s take a look at the charts…

While these charts suggest there could be more short term weakness, it should be bought, as the miners are clearly in an uptrend. To quote well-known commodities investor Rick Rule, ¨this bull is more typical of bull markets, and we should expect to keep grinding higher¨. It is when we see blowoff type moves that go vertical, that signals we are near the end of the bull. For now, expect two steps forward, one step back, hopefully for several years to come.

Also of note, I see the TLT 20 yr treasury bond etf is down 5.5% this week, a rather large move for bonds. I wonder what the Fed is thinking before their meeting next Wednesday? See the weekly chart below…

Just a quick post as I have been expecting the short term selloff to slow down in miners, then turn higher once again. We are at that point today, as I type this morning gold is up $21 and silver is up 30 cents so far (2%). I was asked how high and fast I think miners will bounce, but my answer is always the same, I have no idea and we will assess it as it comes. It’s possible the rally is so sharp that my monthly charts tell me to sell in several weeks, though that is not a high probability. It’s also possible we get a very weak bounce that rolls over quickly so miners can head lower and seek out an intermediate cycle low, but again this is not very high probability. If we are in the stage of the metals bull market I think we are in, we should get a decent bounce, then some more grinding sideways or a little lower, before grinding higher once again. The important thing is to remain invested until we get our signal to exit, and not leave the table any sooner or later just because emotions are leaning on us. I will keep you posted to changes, but so far all I have done is add some small portions more to our SILJ and MUX, with the hopes we saw lower prices to make more substantial buys. In any case, we have more shares than ever for the next move up, which looks to be starting now.

While I might very well be early buying because the WEEKLY charts are not yet into oversold territory, the daily charts have reached oversold. If one believes this is a true bull market, then the thing to do is buy into these sharp drops, as timing mistakes will be corrected in a bull market, and who knows, we might just get the bottom. My plan is to add bigger positions as the mining etfs get into the oversold zone on the WEEKLY charts. It’s not the signal or the indicator that is the secret to making money, that part is actually quite easy, it’s the discipline to stay focused on the bigger picture (bull market), while making decisions in the short term from what the indicators are telling us to do.

I am aware that many gurus are suggesting miners are headed lower for a month or two, in fact most of them are doing this. I would not buy more on this contrarian thought alone, but it’s good to be invested with the big, long term trend, an especially when it is against the short term consensus. I like where my portfolios stand.

What do you know, just after I finally get around to writing about the blast higher in silver, a day or two later it’s pulled back 8.1%! Bull markets can correct quickly, sharply, and painfully. While I won’t pretend to know if just a two day smashing is enough and that SLV will head higher from here, I can say that the enormous volume suggests we are closer to finding the bottom than not. I might look to add some long term LEAP options on SLV n the next few trading days, maybe as early as Monday. One reason is the volume, but the other is that the last time SLV was in such a strong uptrend was back in 2016, when the metals and miners screamed higher, but even then there was a sharp correction in the month of May 2016. For SLV, it meant a retreat of 11.7% if I recall correctly, and it took place over a couple weeks. If anything similar occurs, we are nearing another chance to add to positions, or take on new ones like the SLV LEAP options, or maybe some more silver miners. As always, the account statements don’t lie, so you will know what trades I decided to make.

One last note, it wasn’t just SLV with monster volume, but speculative trading vehicles like JDST, the short gold miners triple leveraged etf has also had a record breaking volume day yesterday. This fund is used for short term traders, and they are often trading on emotions more than anything else. Again, this is another sign we are closer to the bottom of the correction than not. Perhaps we see another couple days lower next week, but I will be looking to add to my positions into the weakness. If they are not weak, I will wait for a bounce that peters out and pulls back again, before adding. If miners and metals just open higher and run straight out of the gate on Monday (not my prediction), I will not chase prices, instead just keep all my positions are they are. See the chart below…

While it may appear that gold is getting overbought on the monthly chart, I caution against taking profits too early. Yes, stochastics are overbought, and yes, we are up 5 months in a row now, but one cannot have any idea how far a strong bull can run. It is not a prediction, but GLD could double the move it has already made from here, and do it in very short order. That still would not even put it into new all time highs, which becomes more of a certainty with each passing day. The point is to stay in your trade until whatever system you used to get you in, is now telling you to get out. My indicators are extended but that does not mean I exit because they can stay that way for long periods of time, like another 5 months for example of similar action. Again, my emotions tell me to book profits soon, but I will stick with my plan regardless of how I feel, and for now the discipline tells me to stay on the bull.

Do I risk giving some profits back? Yes, but that is part of the game. Play big, or go home, because hopping in and out for dinky gains and losses gets a trader nowhere. We need conviction in everything we do, and that doesn’t mean stay in a trade forever, it means have the conviction to stick to your rules no matter what comes your way.

First, a quick note on the GDX mining etf. Today it closed at a new high, eclipsing the 2016 high, and confirming that 2016 was the beginning of new bull which is now back in full swing. I have lots to cover here because I haven’t been posting much with all the action in the markets staying healthy in the gym, etc. Suffice to say, I haven’t added or sold anything since the last post which asked if that was a pullback to buy. We now know it was. It think putting the next few days or week aside, it is very significant that gold and miners are making new highs and it suggests more is to come on the upside. Let’s get to the charts…

Week after week the precious metals and miners take turns leading the run into new high territory. This is a move not to be missed. I would not be buying into this sharp up movement, but if I were not fully invested and on sizable margin, I would be buying into dips that bring miners into oversold stochastics on the daily charts, or for those more conservative, on the weekly charts, which might occur in the next month or two. Until then, bulls stuck on the sidelines will find it painful to watch this rally work higher. To verify my trading claims, please see the account statements to back it up. I haven’t sold a share yet, but will let readers know when I do.

If some weakness can creep back into the general stock market, I suspect the afterburners will kick in on all the above and anything related. The gale force winds are at gold’s back, so don’t make the error of selling too early!

Just a quick note as I need to prepare for action today, after not having to do much the last few weeks. It looks like this is going to be another rough day for my accounts, but in that there is opportunity and that is where I will focus. I need to review the exact levels at which I want to add, but they are around the 50 day MA’s and or the 50% retracement fib levels. I recall this weekend they didn’t match up exactly, with around a half dollar difference between the two on several of the silver miner etfs, for example, so in between those two figures is good enough for me.
SIL is a bit tougher bc the 50 MA is up at $27.14, but the 50% retracement is down near $26, and the old highs are in the $27 to $27.50 level, so this once had a big range where it could find a bottom, tough to narrow it down as it looks to open near the 50 MA this morning, already traded at $27.19 If the other etfs can get into the same areas near the fib and 50 MA, then I will take it as time to add more heavily since I don’t believe the bull is done.

I am using SIL as a an example this morning because it is the largest of all the silver miner etfs. If I get time I will post the SILJ chart, since that is likely where I will be doing my buying this week. It is always best when several different but related vehicles are confirming the same thing, thus my examination of SIL this morning.

Long story short, as we can see in the chart we are coming down to levels that will not only work off the overbought levels and sentiments, but also might offer support. These become areas to buy or add, as long as one still has conviction in the bull market, that is all we have to ask ourselves, is it still on? I think it is. For those tab, my accounts are still nicely higher with a big cushion of unrealized gains which allow me to be aggressive and push for more. Let’s see how it works out, but for now I am on record as I will be adding this week, likely today (Monday) and maybe a few more days as well. I will keep readers posted, and as always, the statements never lie so everything can be verified! Why don’t all advisors, newsletter writers, etc just post their statements, not excel spreadsheets they fill in, I’m talking actual statements?