- The metals have been a very frustrating trade these last three years.
- Sentiment seems to have soured in the complex.
- We have another break out set up in place.
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The last three years have been extremely difficult for metals enthusiasts. If you speak with them, you would assume that gold has been going down for the last three years. Well, at least that is the impression you would get based upon their “sentiment.”
But, in fact, all gold has been doing for the last three years is move sideways. In other words, it has been consolidating. Yet, during that consolidation, sentiment among investors has soured to where it is akin to a bear market.
Moreover, over the last three years, we have had three different break out set ups in the complex. Yet, each time, the market has failed to capitalize on those set ups. And as I write this article, gold has another break out set up developing. Will it follow through on this one? This I cannot tell you with certainty.
My job as an analyst is to highlight opportunities within the markets I follow, and provide parameters to those opportunities. We base our analysis on probabilities, and for this reason, I am unable to tell you that something will certainly happen. But, as long as you follow the parameters, you can maximize profits and minimize losses. That is the ideal perspective one can take when approaching the market.
Unfortunately, too many market participants view the market as black and white, whereas financial markets are non-linear environments wherein certainty is an impossibility. Yet, some of you take issue with the manner in which I analyze the market. But, for anyone who has any experience in the market, and who also understands risk management, you know how important it is to understand where your primary expectation becomes a higher probability, as well as the point at which it becomes a lower probability, or even completely invalidated.
In my last update, I outlined that if GLD can provide us with a 5th wave higher, it would be a strong indication that the tide is turning in sentiment. And we got that 5th wave. At this point in time, as long as GLD holds over 122, and then rallies strongly over 127.25, that could open the door to a major rally in gold that points us to at least the 138 region quite quickly. The 129.50 region is the next intermediate resistance region over 127.25. And, through that strongly, it should be a fast move to 138.
And, of course, as the market rallies, we will continue to move up our supports for our stops. Remember, risk management should be a very important part of portfolio management. Otherwise, you are relying on the most destructive four letter word in the investment world: HOPE.
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Disclosure: I am/we are long PHYSICAL METALS AND VARIOUS MINING STOCKS. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: I have a hedge in place for a potential short term pullback . . but will stop out on a break out.
No association between Pinball Wizard and IGRG.