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$GLD

This tag is associated with 5 posts
bigwinner2

breakdown of a big winner

Last week I closed out the last half of my biggest winner of the year.  Let’s take a closer look to see what lessons and tactics we can take from it and use going forward.

As I’ve mentioned before, I had a lot of success trading precious metals miners from 2008 to 2011 which, understandably, caused me to grow fond of them.  Unfortunately, this fondness had me “going back to the well” more often than was warranted, resulting in unnecessary losses.  The lesson here is to not become so enamored with a particular investment that you are ignoring or discounting the pitiful technicals.  In other words, don’t fall in love with something that can’t love you back unless you enjoy losing money!

Having gotten burned several times, I was initially skeptical of the rally when gold shot up at the beginning of the year.  Unfortunately, by the time it was apparent that this move was different and appeared to have legs, I didn’t see a safe way to get involved.  The key was to be patient and wait for a low risk buying opportunity.  The signal I was waiting for arrived on March 29th in the form of an 821x buy signal in GLD which I tweeted out.

821x buy signal

821x buy signal with obvious place for stop around $116

Seeing this, I went through my watchlist of miners looking for a good setup.  The one that looked best to me was Pretium Resources (PVG).

PVG consolidating around the 200dma

PVG consolidating around the 200dma

I entered a limit order for $5.30 a share which was the closing price on the day PVG first flashed an 821x buy signal, and got filled the next day.  After a week of consolidation, it broke out of it’s wedge formation and was up over 50% in little over a month!  Shortly thereafter, it had a sharp pullback to the 21 day ema where it put in a pivot with a low of $7.43.  When I saw that the pivot wasn’t going to hold a few days later, I sold half of my position at $7.33 locking in a nice gain of 38% on that piece.

sold half here with the pivot broken and the moving averages curling down

sold half here with the pivot broken and the moving averages curling down

A few days later, PVG gave an official 821x sell signal.  Having already locked in gains on half of the position, I felt comfortable giving it one more day to see if the closing low of $7.04 would hold.  If PVG had closed even one penny below that low I was prepared to close the rest of the position.  Fortunately, it held and proceeded to give an 821x buy signal a week later!  In hindsight, I can see that it would’ve made sense to go back to full size at this point.

PVG held $7.04 and the 50dma and then gave an 821x buy signal

PVG held $7.04 and the 50dma then gave buy signal number 2

The second move was even more explosive than the first, putting my remaining half position up well over 100% by mid July!  Then last week, it finally gave another 821x sell signal.

second 821x sell signal of this trade

second 821x sell signal of this trade

Again, because I had already locked in profits on half of the trade I felt comfortable giving it one more day to see if the closing low of $10.61 would hold.  Unfortunately, this time it didn’t, so I closed out the balance of my position at $9.71 for a gain of 83%.

all good things come to and end...

all good things must come to an end…

Putting the two halves together, I netted a gain of 61% on this trade making it my best trade of the year so far.  For reference and comparison, my biggest loser of the year was WYNN for a loss of only 6%.  Letting your winners run and cutting your losers short is the key to successfully growing your savings in the stock market.

I hope that reviewing this trade demonstrates one way the 821x trading system can be used in practice.  If you have any questions about this trade or the 821x trading system in general, don’t hesitate to ask!

PRIM

821x sell: XLU / buy: PRIM

(watch video for market recap and trade details)

XLU – sell at market

PRIM – buy with a limit price of $23.43 (be aware that earnings are on 5/5/16

Other ideas:

IRIX –  buy with a limit price of $10.32
GLRE –  buy with a limit price of $21.69
GLD – buy with a limit price of $119.42
GFI – buy with a limit price of $4.16
GPRO – buy with a limit price of $13.56

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goldwatch

time to watch gold

I made a lot of money on gold’s massive run from 2008 to 2011.  Unfortunately, I unnecessarily gave much of it back because I had not yet been introduced to technical analysis.   Technical analysis of price action allows you to identify and trade along with trends.  Without this knowledge, you are essentially trading blind.  You might as well be gambling.

Gold peaked in 2011, went sideways in 2012 and started heading lower in 2013.  It’s been trending down ever since, going from a high of nearly $1,900 an ounce in late 2012 to a low of  $1,045 in December of last year.

There is no compelling reason to buy (or even own) something in a downtrend if you are trying to make money.  Sure, you could happen to buy in at the exact bottom by pure luck, but do you really want the success of your trades to be reliant on luck?  Trying to pick exact bottoms and tops is a fool’s game.

It’s much smarter to put the odds in your favor BEFORE risking your hard-earned money.  If buyers are gaining control of an asset over sellers we WILL see it in the price action.  That’s our cue to start paying closer attention.  Don’t worry, there’s usually plenty of meat in the middle of a move for us to profit on.

We are starting to see signs that the down trend in gold is possibly coming to an end.  Gold is up 16% year to date, breaking the down trend line of lower highs for the last two years.  Price is well above the 50 week and 200 day moving averages, both of which are starting to turn up.

gold is breaking the down trend line in place for the last two years

gold is breaking the down trend line that’s been in place for the last two years

Gold is currently extended to the upside.  With the possible exception of buying physical coins as “insurance”, I would not chase it here.  However, I believe consolidations above the 200 day moving average are buyable for a trade.  Watch $GLD, $GDX and $GDXJ for low risk 821x buy signals.

It may finally be time to take gold out of the penalty box and start keeping a closer eye on it.

XLU

821x buy: XLU

(watch video for market recap and trade details)

ALL IDEAS HAVE HEIGHTENED RISK IN CURRENT MARKET ENVIRONMENT.

XLU – Buy with a limit price of $43.50

Other ideas:

GLD –  Buy with a limit price of $104.67
CORN –  Buy with a limit price of $21.66

AWF

821x sell: VNQ / buy: AWF

(watch video for market commentary and trade details)

VNQ – Sell at market
AWF – Buy with a limit price of $10.99

Other ideas:

TLT –  Buy with a limit price of $122.81
VBTX –  Buy with a limit price of $16.73

COUNTER TREND GOLD MINER IDEAS:

AUY – Buy with a limit price of $8.47
NGD – Buy with a limit price $14.25
PAAS – Buy with a limit price of $8.47
RGLD – Buy with a limit price $14.25