Me figuring out what to trade today.
I really do have a dart board in my office but this is not how I trade, though it may seem this way sometimes. I really put a lot of time into what I am doing. One of my joys is that my wife likes doing this as well so it gives us something to talk about. That said, you have these times as a trader when nothing is working. It was only two weeks ago we were all feeling like geniuses but that seems like it was a long time ago. (I really do have a dart board in my office)
Times like this become mentally taxing. It becomes draining. Exasperating. I began looking at the Moore's hypothetical trades for January last night and thought to myself, why not just trade every trade that Moore's suggests. Hypothetically speaking, if you took every trade Moore's suggests for January, the average profit would be around $30,285. All of Moore's trades are hypothetical of course.
So last night.......feeling frustrated that my method was not working, I thought to myself "what if I threw out all my analysis out the window and instead just took the Moore's trade recommendations...... every one of them". $30,000 a month is $360,000 a year, right? Not so fast.
The data is not available yet for 2019 as positions are still in play, but if you took all of the Moore's hypothetical seasonal trades for 2019, you would have lost over $100,000.
The best peforming group were the meats which worked 60% of the time, and the worst performing group believe it or not were the stock market indices, only working 25% of the time.
Here is a chart which reflects these combined numbers as the year went on. Moore's trades never made money last year.
There are no tools I use that work every time. If there were such a thing, everybody would be using this method and the market makers would then be sure none of the tools would work. This information Moore's provides is good to know, but it is also good to know we need to look at the bigger picture.
For example, Moore's is suggesting that we short Natural Gas in two days.....January 24. Looking at this chart, I would have to say you are crazy to buy NG now. In fact, I did recommend buying NG. We may not get rich off the trade, but you will not get rich selling NG by shorting it as Moore's data suggests. This is just common sense.
But, Moore's does recommend shorting sugar on January 26. Here, the chart matches well for a potential short that I will probably recommend.
So as frustrating as our trading has seemed this past week, you have to stick with it. Frustration and exasperation is just part of trading. It is not all euphoria. I say it all the time, and sometimes we forget, but trading is hard. Nothing easy about it.
One last thing I want to say about Moore's. I really like Moore's. I find their information invaluable, just as I find the information I get from Likes Money Cycle Trading and Sentiment Trader invaluable. Moore's does haved a good track record over the long haul. 2018 was one of their worst but most years Moore's will help our trading.
Gold looks poised to break out of the flag it has traded in the past two weeks and begin the next leg higher. There is some minor resistance dating back to September 4 that gold needs to break above, but all the other important metrics point to a daily cycle low happening on January 14. The 10 day average did turn down and today gold closed above it for the first time since January 13. We are now on the 4th day of a new daily cycle which will likely last through the end of next month.
If you had any inclinations at all to add to your positions, you should be making your plan now. Once the price moves above that resistance area, the price can get away from you very fast. This next chart goes back in time to the all time gold high ln 2011. This chart has two areas of resistance which I have labeled. The first area is where we are today. As I have stated, once gold passes through 1572, we will be off to the races. There really is no resistance until price reaches the second resistance zone at 1800.
A 200 point move at $100 per point would be worth $20,000 per contract. We are only 4 days into the second daily cycle, so there should be a lot of energy to get through the first resistance zone. If you wish to wait until we get the breakout, I understand but quickly adding to your positions will pay handsomely. Be making your plan now so it won't be an emotional decision to make.
I know you are wondering about the metals trade, and really that is all that looks tradeable to me. I am still very bullish the metals and think we will be making another leg up soon. Usually the price needs to consolidate before this happens, so I am not trying to rush.
I have a range to buy should the price move lower or should the price move higher. If the price drops enough to reach oversold on the 3 day RSI, then I think we will be low enough to begin a position. If the price begins moving on up without a prolonged consolidation, then we should probably begin a position when we get a swing low at 1562.4. If we get the drop first, then we could add a second position once we get the swing low. Either way we will be starting into a position for a move that will probably take gold to 1700. At $100 per point, one position will make a lot of money. You might also consider buying silver at these points along the way.
Be preparing to trade this now. I want this to be something you think about in advance so that this is a well thought out decision and not an emotional decision. Have a plan in your mind how many positions you would like to trade and if you also want the silver. If this is creating difficulty for you, then just buy one. I am giving you enough time to think about it so we won't be in a panic once the time comes.
Since I posted a couple days ago, it feels like a couple weeks have past. This trading into trade wars, missile attacks, tweet storms, impeachment proceedings, etc. has really gotten old. The counter attack by the Iranians last night turned out to be nothing but it cost us some trading capital. This is not normal. We either need to quit trading or assume this is behind us. In between all the chaos most of us have actually made s lot of money.
A couple nights ago, I posted how I felt about gold. If you have forgotten, then you should go back and re-read because we are back in the same place we were when I wrote it. The price of gold (POG) and the 10 DMA are converging just as I thought that it would. We need to be thinking about buying once this happens.
Don't forget that Moore's has a buy date of January 7 to buy gold. Moore's says that gold purchased January 7 and held to February 1 has been successful 13 of the last 15 years.
I had mentioned to a couple people that I thought we would be able to trade some oil an gasoline soon. This is based on some impressive dates by Moore's Research to buy in mid January and hold through late March.
Despite these impressive dates, I just don't believe that this is a good time to buy energy commodities. They are still technically overbought. I think it may take several weeks for this to correct to the point where I will feel comfortable recommending it.
I just cannot bring myself to recommend buying stocks right now, and because stocks are so strong I cannot recommend buying bonds right now either. Oil and gasoline are still too high. Don't be surprised if Friday or Monday you are getting a buy recommendation over WhatsApp.
Whoah! What a ride that was! I meant to publish this yesterday but spent much of the day in bed with some of this crud that has been going around. Back to work today though.
So the party was over way too soon, but we did the right thing leaving the party before it was too late! How overbought did this get? The RSI readings were near record levels. Like the market was last summer, I don't think the RSI will have much of an opportunity to reset back to oversold conditions for a few more months.
I don't expect we will be on the sidelines very long. I would like to see the price of gold (POG) consolidate the rest of the week to allow the 10 day moving average to catch up to price. That may be the extent of a correction.
I think we still have a couple months left of this run. Technically speaking, we are in the timing band for a daily cycle low, but moves such as this tend to distort the cycles. The price action of gold last summer probably provides the best model to follow for how to trade this market.
We may get in early. That could mean another nerve wrecking period of a few weeks like we went through just before gold exploded to the upside. I would rather endure that grind and capture most of the move higher than have to chase and capture only a small part of the move. We will get involved with Silver when the time comes as well.
We have enjoyed tremendous success the past few weeks as assets of all types are finally breaking out after weeks of consolidation. Stocks in particular have had a tremendous run for months now, but we are now seeing money flow into commodities. The rally with gold has been even stronger than I could have anticipated. The destination for gold has been the same but the speed by which we are getting there has been a lot faster than I projected.
I first learned about cycle trading from a guy named Gary Savage who runs a website called the Smart Money Tracker. Over half of what I know about cycle trading and human behavior around the markets came from him. That said, the biggest trading mistake by far I ever made I can attribute to him. I won't go into that now and I don't blame him as I accept responsibility for all my trades but the lessons I learned from him, either good or bad have made me a better trader today and this has helped me as I try to help my customers. This was Gary and I a few years ago.
Gary produced an excellent video today that I think is worth a few minutes watching. He masterfully explains the market psychology of a beginning trader and how beginner traders think. I see these things happening right now with some of my customers.
As a cycle trader, I am better at picking market bottoms than tops. I think gold is approaching a spot where we will want to exit our positions very soon. It is becoming time to manage our greed. The best time to exit a trade is when you believe you have made enough and that is different for every trader.
The Speculation page is used for educational purposes and to talk about our opinion on trades and what is going on in the market. All trade recommendations are made in "The Pit". This is also a blog page where you can ask questions, post your thoughts, or ask for help. Be sure to use an anonymous name. If you have any questions feel free to reach out to us via email.