Time To Step In?

Metals

I said in the last post that there were likely two options for trading the metals market.   The option that I preferred was to see some sort of drop that could be a sentiment clearing event.  The second option was for gold to push through the 1750 area which has served as resistance for weeks.  Gold closed just above the resistance area Friday.  

​Gold is not out of the woods yet.  Gold has broken above the multi week resistance of 1750.  There are many more resistance levels to pass through however before gold is out of the woods.  If you are wanting to bite now, I suggest something small.  No more than one position, and maybe a micro at that.  Allow the position size to increase as we pass through every other resistance level.

Silver also may be breaking out as well.  

Even in the stock market, the gold miners ETF GDX is showing signs of breaking out.

I am going to begin a starter position (again) this evening for myself.  If you would prefer to wait to see if gold passes through R2, R3, or even R5 I can understand.  You need to understand however that it gets riskier and harder to manage the risk the longer you wait.  This is why I suggest at least a starter position with micro contracts.

Stocks

I am still uncomfortable with stocks.  Stocks usually surge out of half cycle lows if they are going to right translate.  Stocks look weak out of this HCL to me.  

Not all the indexes look this ominous.  The Nikkei actually looks good but this is really how I would prefer to see the S&P.  I think the S&P is a better barometer for how the general stock market is doing.  

So for now, I am going to be sitting on the sidelines as far as the stock market goes.  Not that I don't appreciate your trading, but with the leverage we are using we really need to be right.  The next DCL is just a couple weeks away.  I think we need to wait for the DCL before we try a stock index trade.

Gary Savage from the Smart Money Tracker just posted a video explaining cycle translations and how he uses this to set an expectation for stocks.