As there have been numerous posts and trade ideas in the gold & silver mining stocks on the site since the sector bottomed back on June 26th, I just wanted to clarify some things, especially for those new to the site. The trade ideas posted on Right Side of the Chart vary from swing trade ideas, with expected holding periods typically measured in weeks, all the way out to long-term swing trades, trend trades & investment trade ideas, with typically holding periods measured in months, sometimes over a year. RSOTC is not a day trading site, although occasionally a trade will hit a profit target the same day that the entry is triggered, as breakouts can often lead to explosive moves.
The trade ideas here reflect my own trading style, which is somewhat flexible and adaptive. For example, if I expected the market to move in a sideways, range-bound consolidation area I may lean towards a hit-n-run trading style (get in, take quick profits, and get out) while moving back towards a more traditional swing trading style once it is likely that the market will begin trending. In additional to being a relatively active swing trader, I am also an investor. I trade more actively in my trading account while focusing on longer term trades, such as those that appear in the Long-Term Trades category, in my IRAs & Coverdell ESAs.
The current GDX and other mining stock trade ideas on the site are a good example of this. GDX has been list an Active Trade for a while now, with a total of four profits targets on the daily time frame. Shortly before the close on Aug 15th, as GDX was just shy of T2 on the daily chart, I posted that I was booking profits on the last of my mining stocks and shorting GDX with this follow-up statement the following morning: GDX remains an Active Long Trade for now as the longer-term charts remain constructive. Any short trade, as a counter-trend trade should only be considered by aggressive & experienced traders. The main point that I was trying to impress yesterday upon stating that I had booked profits and reversed the trade was that both GDX & SIL were approaching very significant resistance levels while extremely overbought in the short term. These stocks are still just recently coming off extreme oversold levels on the longer-term (daily, weekly, & monthly) time frames and as such, could very well continue to move higher from here. However, my take is that these stocks will likely need to consolidate around these current resistance levels for at least a few days/weeks before building the energy to make a sustained breakout and continue to move higher.
I am not trying to jump on one market/sector call that just happened to play out well but rather I want to clarify, or avoid any confusion, between what may may appear to be conflicting updates on the same trade. All along, I have reiterated that the miners still looked constructive longer-term and as such, would remain listed as Active Long Trades. I know from talking to a lot of you that a good percentage of those who follow RSOTC are not full-time traders and as such, don’t have the ability or inclination to move in an out of these stocks to try and catch all the major turns, as I often attempt to. Essentially, as in the case of GDX lately, there are almost separate trades going on with the same stock or etf at once. Longer-term traders may or may not have booked some profits on GDX when it hit T2 and/or may or may not have added some more exposure when GDX was most recently posted as a new long entry or add-on a week ago today. However, more active traders, like myself, who scaled into GDX over the last week, might have taken advantage of yesterday’s powerful surge in the mining stocks to book some quick profits, hence the reasoning for listing some relative shallow targets on the 60 minute chart.
I do have some mixed thoughts on the intermediate to longer-term outlook on gold and the mining sector which I will probably discuss soon in video format. However, upon reviewing the charts last night, I have decided to leave the original GDX targets, as they have been posted on the last several GDX daily charts, as is for now. In other words, the former T1 (now defined as a target zone) will be the first target (for those who entered or added to an existing trade last week/early this week) & the remaining targets as previous posted (T2, T3 & T4). I do expect considerable resistance if & when prices make it back to T2 and I also have my concerns that gold, along with the mining stocks, may be close to making a plunge to new lows soon and therefore, this trade may be removed early. However, the charts look fine for now as GDX managed to hold my support level and mount a very impulsive bounce that has no doubt caught a lot of shorts off-guard and left a lot of gold bugs who were recently shaken out wanting back in. As we are at the bottom of that T1 zone (daily chart above), a reaction (pullback or consolidation) is likely so aggressively adding exposure to the sector at this point doesn’t look very objective. I realize this is quite the lengthy post but hopefully this helps to clear up any confusion that might come about when posting various price targets and entries on the same trade. More updates on the sector and some individual mining stock setups and updates to follow soon.