I haven’t sold anything yet, I don’t like to sell just because we’ve had a nice rally or other thoughts creep into my head that are hard to gauge. For example, we all agree 20% in a month is a great return, and not typical, so its easy to rationalize booking such a gain. However, if one took the first 20% they made in 2016, they would have felt good for about a week at most, then been kicking themselves the next 7 months. No doubt that was an outlier, but all monster markets are outliers, and they also happen to be where the big money is made so I try to stay on the ride until whatever signals got me into the trade are now telling me to exit. I will admit there are many times this method has me riding a modest gain back to nothing or even a small loss, but this way also keeps me in for the big ones that come along every now and then. I believe it is these big bulls that make all the difference over time. I am in no way a permabull though many will think that bc they choose to sell earlier vs press for more. One nice thing about this approach is days like last week’s FOMC and the day after where the volatility seems unbearable, I was nowhere close to getting a sell signal for the same things I used to get into the trade, so by definition I had to stay in the trade, which we now know with hindsight was a good thing. In fact I added small amounts here and there when the selling brought several of my positions down to levels I had wanted to add before anyway, I only wish I had placed bigger orders since they ripped higher so soon after, but those trades are just fun while really being negligible to the results overall. So I remain heavily long on margin, haven’t done anything but buy to add here and there small amounts to current positions. My indicators are nothing special, everybody uses the same ones or even better ones, the only difference I see is I refuse to cash out for any other reason than those same indicators telling me to do so. I might get bashed pretty hard again in this bull, probably and maybe soon, but it I don’t get the sell signal then I remain confident there will be higher prices in the future, and at a minimum, and the bull will let me out at better prices than if I sell into weakness in an overall bull market. That is the only way to lose money in a bull. The swings are huge both ways in P+L, and often all I have to hang my hat on is that I am being disciplined because it looks like a reversal, or bad news, or whatever new information comes out, so it can be uncomfortable at times, but its given me the best results over time.

This was just a quick post to catch up, and say I will be posting more frequently as the volatility tones down. There have been many things to write about, the FOMC’s first interest rate cut in 11 years, the spike lower in miners which I did some buying, adding to current holdings with some “stink bids”, shake-outs I have managed to avoid, etc. I intend to post very soon after I make changes in my accounts, or see other ideas setting up, but the writing game is new to me, and to be honest, not my favorite thing in the world. I love investing and trading successfully more than any other endeavor, but will do my best to make posting here a habit. Look for more material this week, I have several topics to cover as well as some potential trades setting up, as we are now seeing the general stock market show weakness for the first time since late 2018. Also, because so many people tell us how great they did, after the fact, offering no proof of their success, I plan to post my account statements on this site so that anybody can easily verify the moves I’ve made and the results they have yielded. I am not yet sure how I want to do this because I really do cherish my privacy, its one big reason I chose this career, success does not have to bring fame, which I like since I want nothing to do with fame. In fact, I have debated using my real name here, or not, and think it is unnecessary, if I am posting actual brokerage statements from an account or two that I manage for friends and family. Keep in mind, as I have stated in earlier posts, I am no longer a registered investment advisor so these reports would be from accounts of friends, family, or possibly my own, after I block out the names for privacy. Another idea is to keep the statements aside in my possession, and only email them to people that are serious enough to take the time and write an email to me requesting them, rather than let them out there for every clown in the world to do what they want with them. I will let you know when I decide, but rest assured that what I say here is what I do, and I will never lie or distort the truth. Dealing in numbers makes that easy, they don’t lie! It amazes me how many advisors with self-proclaimed awesome returns, never have any proof whatsoever. How could anybody know if they were real or not? This is why I feel it’s necessary not just to tell readers or post spreadsheets they have made themselves, but to show them actual statements from their brokers. Stay tuned!

Forgive my chart not showing the down-trend line from the mid June high until last Friday, my chart service wouldn’t allow me to save the annotated chart, but it’s easy enough to identify on the above chart. You might ask why I post a chart of the silver etf SLV? Some have been concerned in the recent metals rally that silver has not kept up with gold, and this is true for the moment. Then days like to today start to occur and silver outpaces gold, and with the trendline break higher, it can bring in more buyers that were waiting for confirmation before getting involved.

The break higher doesn’t mean we can’t pull back in the near term, but it does mean that would be a buying opportunity if it occurred. We still have the overbought daily stochastics in miners to contend with, trying to pull them lower to correct, but I am happy with how the leading GDX and GDXJ etfs hang right up by their 52 weeks highs. There don’t seem to be many sellers, so once we stop the train and let a few nervous bulls off, it looks like the miners are building steam for the next push higher. I remain all long and on margin in SILJ, MUX, WPM, NVO.V, IRVRF and others, looking to add into corrections when they occur.

Too often I see traders and investors running from one indicator to another, or marking up their charts with twenty different technical measures, thinking it gives them the edge. After all, more is better, correct? Actually, no, it not only becomes difficult to follow, the more indicators and advisors one listens to, the more likely to receive conflicting signals and advice.

Why do I mention this today? Well, I find myself in a good trade right now with the precious metals mining stocks, and after a good run there are naturally many people looking for reasons to sell. Using sentiment can be very useful, but we need to remember in what environment the data occurred, for example, extreme negative sentiment is a good buy signal usually, but even more so if occurring in an overall bull market for the group. Applied to my current positions, I like the overall setup and everything seems to be falling into place, except for a couple negatives that are popping up. Suffice to say, I am NOT changing my positions by selling out, but I want to show you some crosscurrents and things that could easily shake a trader out, especially after nice unrealized gains have been made. It is too easy to find reasons to ring the register, nobody wants to see unrealized gains vaporize. This week’s negatives are the COT report (Commitment of Traders at the COMEX exchange), and some long time bulls are now calling for a substantial correction before the bull resumes it’s trek higher. These long time bulls still think miners go much higher, but they have decided to sell some or all of their miners, int the hopes of buying them back cheaper at a later date. Guys like Adam Hamilton from Zeal llc come to mind. I respect his in depth analysis, so this is not meant to pick on him as I find his work well worth reading, however we all have to make our own decisions and we must know that nobody gets it 100% right all of the time.

If we are truly in a bull market of for gold and silver, then it is not only just getting started, but we have a long way higher to go. To me, the risk is in being left behind, so while I agree with Adam Hamilton that a pull back could come at any time, I will not try to dodge it because it might not come, or it might not occur until we are already at much higher prices. The point is I don’t want to get too fancy and trick myself out of positions, since I think we see much higher prices over time. If Adam can get out, then back in again at much lower prices, his returns will be far better than mine. However, he has a big decision in when to buy back in. What does he do if miners pull back only 5% before heading up again, where does he buy, and even that is only known in hindsight that the correction was 5%. What if the miners go 10% higher next week, then start the correction? At what level will he know to buy back in, after a 5%, or a 10%, or 15% correction? What does he do if the group just keeps marching higher slowly, gaining 2-3% per week, after he has cashed out a month or two ago? To me, the risk of being out of positions on a good call is just too large to handle. Ringing the register feels good, as if you have “locked in” gains, but you don’t really know that until you discover at what prices you bought back in. Only then can the trader know if he made more money by hopping in and out.

Two quick points to wrap it up. First, if you want to be “big time” you have to think like the guys in the big leagues, and you have to make decisions like they make. I can assure you that most of the whales in the markets did not make their money hopping in and out, for proof just know that the markets couldn’t possibly digest their order sizes without pushing prices around to their detriment. The whales will always tell you that they need to get in and out when the markets let them, they need significant retail order flow to dump their huge positions. Warren Buffett is an ultra-long term investor so maybe not the best example here, but we can agree he is immensely successful and among the best investors, and he for sure does not sell a stock at every whim, just because he is already up 20% in an idea. He fully realizes that what goes up goes down some too, but he is willing to ride the move lower in order to wait for the next push to higher highs. Contrast Buffett’s trading behavior with any free investing forum online, where the little fish, at home day traders are talking all day about every wiggle in their favorite stock, counting the dimes made and lost by the minute. It will quickly become clear which is the better approach, jumping in and out, or riding a bull fully that you were “lucky” enough to identify early.

The second point to make is that I will follow my own rules to get me into and out of positions. If we constantly remind ourselves of this, it becomes easier to read unsettling opinions or predictions that are opposite of our own. I realize I know as much, or almost as much as anybody in the markets, and that is good enough to rely on. If I used the long term monthly stochastic to give me the buy signal on the miners, then I will rely on the same technical indicator to tell me when to exit. I let whatever indicators that got me into a trade tell me when it’s time to sell, it’s simple and refreshing because I don’t have to second guess my decisions. Yes, I see a good argument for the move higher to pause or even reverse for awhile, but I do not see a clear way to guarantee I am back to fully invested and on margin if I cash out my gains today, and since my indicators suggest we will see higher prices for miners in the future, all I need to do is stay invested!

I will try to post more frequently, but I hate to write just for the sake of putting up material, it’s a waste of everybody’s time. Perhaps in the future I will write about the many other aspects of life that are just as important as trading, and in fact influence my trading to a large degree. Things like exercise, keeping fit, eating habits, etc. are all considerations that affect all aspects of life, including our mental strength and ability to stay focused on the plan. Others might find these insights of use and adopt them for themselves.

Since this was intended to just be a quick update, let’s get right to the charts. The two most commonly traded mining etfs are GDX and GDXJ. I mentioned yesterday how I liked the setup, and was adding to my winning positions while they were pulling back. Today gives us the confirmation that miners indeed want to head higher, and they did with force. Many of the leaders broke into new 52 week highs, suggesting the group will follow, and that the upside is not nearly finished. We won’t know where they top out until we get there and we start to get conflicting signals, but a good place to start looking for the exit will be when the long term monthly charts start getting to overbought stochastics. For now and the foreseeable future, stay long and add on dips. Stay focused on the plan, and don’t let the wiggles scare you out of position.

Before I forget, let’s take a quick look at MUX, which I was adding to yesterday while it was down and near the lows. I got lucky here, as it was one of the better performers today, after being one of the weaker ones yesterday. It managed to tack on close to 7% today. That´s nice, but I am not tempted to take small gains, when I am looking at a setup from the long term monthly charts that got me into the trade. The precious metals miners still have lots more potential upside!

On this pullback, I will be adding to my mining stocks. Specifically, I will add to the SILJ etf for silver miners, and also stocks like McEwen Mining (MUX), as it has pulled back substantially from recent highs, 13.5% to be exact.

Ideally, I prefer to buy SILJ when the stochastics get oversold, but with a down open this morning, it is close enough. I like how it stays above it’s 200 MA lately, a good sign, but even if it drops below like MUX, I still want to own it as the trend in miners and gold are now up. We are adding to winning positions into their corrections, just how we want it.

Let’s step back and take a look at the longer term picture to see how miners look. Above is the monthly GDX chart, and it’s almost ideal, in my opinion. Not only have the moving averages turned higher, we see the stochastics are now back on the upswing. We will hold our miners until these stochastics are overbought, at the absolute minimum, so this trade has many months to go, if not longer. Let the trade take us out when it is ready, no sooner, no later.

Likewise, the SILJ is now sporting similar characteristics, and while not quite as strong as the GDX at the moment, SILJ could have much greater potential upside over time. SILJ’s moving averages just crossed to the upside this month, and we see that a parabolic time price signal (also called a PSAR signal on many platforms) is about to trigger after many, many months of a downtrend. Once that diamond prints below the stock price, this indicates we will see many months, maybe even years of upside for SILJ, but let’s not get ahead of ourselves. Review the GDX chart above, it’s now printed 8 diamonds already in this uptrend, and there is still no end in sight. These charts tell us to stay long for now, so that is what we will do.

While not a critical part of my analysis, it doesn’t hurt to know what other vehicles that affect metals are doing, and how their charts are looking. The US dollar etf is the UUP, and here we see it’s 2 month and 5 month moving averages also have just crossed, but this time to the downside after a long uptrend. More likely than not, the UUP will see lower prices over time, is what this chart suggests.

So all in all, everything is shaping up as expected and we will continue to ride the trade for what it is worth. If the above holds true, and combined with such things like a weak stock market, political turmoil, or economic weakness, this trade/investment should pay out well. We already have the movement our direction, and there are plenty of catalysts to really kick this into high gear. The hardest part is always just sitting on your hands, and not meddling with things at every little turn. Chart analysis is second to maintaining clear thought and discipline.

The bounce has arrived, and so far, so good. It has been a sharp one, taking the strongest miners of the last 9 months back up to their recent highs, some making new post-2016 highs in just a few trading days. So, is this something that will fizzle out in a week or two, or a resumption in trend to the upside that started last October? It’s too soon to know for sure, but to me the force with which this bounce took place is telling us a lot. The miners want to go higher, but might still be held back by the typically weak summer when few people get involved. I will stay invested because a month or two wait, if that is what it takes, is the price to be paid for making the big gains that this group can serve up, for those that can stay invested. There are also precedents, like 2016, where the miners went up all year long straight into August, I’m not betting on this, but the point is that it can happen, and that was the best year for miners since 2011.

I also note that the general stock market, like the QQQ etf, bounced with equal force in these last several days. However, I’ve been looking for their upside to peter out, and a day like today where they opened strong (up 1% or so), but closed negative on the day. If the stock market can weaken again in the near term, that should support the precious metals and their miners. In any case, I am heavily long, and also added another stock today by the symbol MUX at $1.40 per share. See the chart above.

Much of the strength in metals can be attributed to the weakness in stock markets, which is also reflected in the industrial commodities and oil, which has taken a severe beating lately, so bad that the OIH etf is now at lows not seen in a long time (at least since 2006 or more, if I recall correctly). We are seeing that the stock market, once being bought up at every opportunity and closing positive every day for months on end, now doing the opposite. While we look short term oversold by technical measures, and a bounce could ensue at any time, it seems that all rallies are being sold into, and many days the market starts positive, it still finishes the day weak and often near the lows. “Sell in May, and go away” seems to be in full force this year. Note the SPY is sitting close to its 200 day MA, but that the MACD indicator sports a wide open “mouth”, suggesting more downside, which if the SPY cuts right through it’s 200 MA like a hot knife through butter, will renew fears of a bear market on the horizon. My precious metals miners should benefit with higher gold, in a flight to quality. There simply aren’t too many attractive options to compete with at the moment, which could possibly cause the metals to really ignite and accelerate to the upside. This is not a prediction, as nobody can know, but the probabilities suggest more upside and I will be there for the ride if it only goes a little, or a long way higher. One step at a time, sit and let things continue to fall into place. I will sell at overbought levels on the longer term charts, but we have no idea how high the prices will be at that time. I will not exit anything based on price alone.

A wise investor is always looking down the road for new setups and catalysts. With that in mind, I will keep and eye on other commodity stocks, specifically oils (OIH), copper stocks as well (COPX), and even Uranium stocks (URA). I think it is too soon to get involved in those just yet, so will sit and watch for a long term bottom to be put in place. Why the focus on commodity stocks? Simply, The US dollar has been on a tear higher and could be turning the corner lower, and commodities vs the S&P are way undervalued on a historical basis. These type observations have nothing to do wtih short term trading or timing, they are just things to know as we look for other technical signs of a bottom being formed. I will also keep an eye on past leading groups in the stock market, as they often rebound the hardest once a turn comes. In that area, I will watch the XBI biotechs and the MJ marijuana stocks, but so far they have been in a very strong downtrend, again too early for me to want to invest. I want them to wash out so hard that nobody wants to hear those symbols mentioned ever again!

No doubt these stocks are due for a bounce, as they are all well oversold on most technical measures, but I will stand aside and not try to play the long side in these. It is HOW THEY BOUNCE (strongly, or barely at all) that I am interested in, and if I was looking to do a short term trade, considering the lower highs and lower lows (downtrends), I would instead look to possibly sell short into the rallies if they are weak. This is similar to being long miners as they often move opposite the stock markets. So, a weak bounce in these groups that rolls over quickly, will have me pushing aggressively long on my mining positions rather than trimming or taking profits into a bounce.

Of course, we cannot know how strong the move will be, but it appears the turn high in miners that I have been stalking is finally here. Starting on Thursday, May 30, 2019 and following through very strongly and on huge volume Friday. I was adding here and there over the last several weeks, patiently waiting for miners to resume their uptrend. Further, the GDX also closed up over it’s 50 day moving average in an explosive move, the GDXJ fought back above it´s 200 day moving average, and almost all the precious metals etfs triggered PSAR buy signals (the pink diamonds on the charts), suggesting the trend has changed. See GDX and GDXJ below.

And gold itself looks positively splendid, jumping on big volume and turning the trading pattern back into an uptrend (higher highs, and higher lows). A lot of this has to do with what is happening in other markets, like the US dollar and stock markets, as well as oil, which I will cover in the next post. For now, suffice to say it’s good to see the downtrend halted in its tracks and miners turn higher, it just remains to be seen how far they can run, but I suspect it will surprise on the upside. I am already heavily invested (see how accounts I manage are invested on the paid portion of this site), but will be looking to add to positions carefully over the next few days and weeks. I will not run out and pay up on Monday, but will look for oversold signals on the 30 minute bar charts to take advantage of small pullbacks to add. Still, an investor should already be mostly invested, now is the time to just add some extra leverage, but never chase prices higher when buying large positions.

Let’s check in where we last left off, I am still in the process of accumulating the SILJ silver miners etf, and taking a good-sized drawdown. Perhaps it is best this site project started with a loser out of the gate, after all, one must manager losing trades properly, above all else, if they are to stay in the game. So why did I choose today to write an update? Well, besides taking a beating, I see several big things happening under the surface that will be things to look out for as opportunities, as well as possible catalysts to get my current trades kicking in gear. By the way, I mention the SILJ position as it’s my largest and my focus, but viewers can see from the my managed accounts that I have several other positions, and I can’t always mention them all, but one is a standout that deserves attention at the moment. I will address it in another post another time, but Irving Resources is a gold explorer in Japan, and this one just happened to play out correctly from the starting gate. On my first purchase, accounts are up over 150%, and when the markets took the stock down in a real swoon, I about doubled my position, and the second purchase is not up 60 to 70% as well, been in this one 6 months or so. I will let the chart do the talking, so we can get onto other business.

Back to miners, I expect to see them stabilize in here and then get working higher. Why? Not only have they sold off sharply, with the HUI down about 17% is just 2 months, we are starting to see weakness creep back into the general stock markets, and in the case of China it’s getting hammered lower. There might be some opportunity there to pick up cheap shares in the future, but I still feel it’s too early. Maybe I am wrong, but the back and forth between China and the US on the trade war does not seem to be subsiding, instead it’s escalating. If anything, China holds the cards on this issue, in my opinion, so its surprising to see US stocks right up at all time highs while China gets clobbered. Take a look at the KWEB or MCHI china etfs.

One can only guess if this is winding down so markets can resume going up forever like they have done, but if that is not the case, then in might just be getting started, and that is why I will patiently wait on the sidelines for longer term charts, like the monthly’s (not shown) to give a hint they are done going down. At the moment, they suggest this might have a long way to go, so even if I take a long side trade in the China shares, it will be a short term hold, and with smaller position size, thus relatively inconsequential. Anybody that knows me, knows that I like to get outsized positions on something I really have conviction on, rather than dabble in and out for a few percent here and there. It can work for some, but I find it takes about as much energy as a setup where one can really go in for the kill. I prefer, and will wait for those type setups far more often that taking a stab here and there just because I feel something has moved too far, too fast.

Before I forget, here is that chart of Irving Resources mentioned above. Not sure why WordPress wouldn’t let me add it above, but I’m just getting used to the software. This is a beautiful chart, and while volatile, appears that it could have lots more upside, so I am in no hurry to ring the register on this one. I will let you know when I’ve sold it, but for now I am more interested in waiting for another window to add to the position.

And now we come to SILJ, the etf putting my ass to the fire. Let’s take a peek. That is one ugly chart, unless one is looking to buy and add. Still, it suggests that even if I can get near the bottom prices, it might take awhile to work out for any sizable gains on the upside. Silver miners have underperformed gold miners by quite a margin lately, with some big name silver’s like HL, PAAS, and CDE making multi-year lows. This is the type of trade I refer to when I say going for the kill. While momentum is against the silver miners, commodities be their very nature turn at some point, for example as silver miners start to put less economical projects on the back burner until higher prices. This reduces supply, and eventually the market has to price silver higher to replenish supply, even meet new demand that can be created by low prices. In any case, these are longer term trades and many will get bored out of positions before they realize any gains. I like these setups the best because the allow one to get into big size positions as virtually nobody wants to be involved with something so horrendous, and these are where the biggest gains are made when one is correct. The richest most successful people in the investing world make big, concentrated bets when they see risk vs reward far in their favor. That does not mean they always win, it just means they win much more when they are correct, than they lose when they are wrong. I will explain more about the psychology of the trade as it matures, and why the vast majority of people tend to focus on short term trades even as they learn the big money is made in the big winners, not the day to day in and out, cut losses at 10 cents a share type stuff. The only “people” making money from the very short term trading these days are the “quants” that write programs acting in nanoseconds, and often breaking the law as well by strategies such as “front-running” and spoof orders (fake orders put out to influence market participants with no intention of ever being filled). I feel sorry for human daytraders with pipe dreams, those days are past and they will lose their money over time, if not very quickly. The facts are that even most brokerage houses trade against their clients, it’s just how the business works now, and the soon one accepts it, the sooner they can adapt their trading and investing style to minimize the odds of being pickpocketed.

Since I am trying to stay in this one for what I see as a longer term opportunity, I should include the weekly chart going back several years as well. Note the 2016 high up near $20, I expect this to get visited at some point, and I expect to be still in it when it does.

So while SILJ is oversold by many measures, we can’t know when it will turn higher with conviction. All we can know is ourselves, and what it takes to get us through the difficult part of the trade, then keep us in it for the ride higher once it starts. The trade is easy, managing one’s thoughts, emotions, and subsequent actions that result from emotions, is the difficult part.