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Just about the only sector I've been touting as bullishly-oriented has been energy, and I'm pleased to see this is panning out. A lot of battered stocks I've mentioned (KEG, SM, etc.) have been rallying, and USO is up over 3% as I'm typing this.
My hunch is that nailing the 50% retracement (circled below) is almost a given, but don't be surprised to see selling at that point.
Long time no see Slopers! Coming into 2012, I thought I had 2 trades for donators that were great for long-term investments and thus stopped checking the markets everyday. Unfortunately one of those trades got stopped out in May and thus had to come out of retirement.
The trade that failed was shorting the 30yr Treasuries…which went BUST as of May 2012 as it broke a 30yr resistance line which coincided with a resistance hit of the NYSE Composite(note:I am long bonds now instead of short)
Silver is no doubt a fairly speculative trade, but because I’m trading it with a tight stop-loss that makes sense (i.e. below a critical support level) I’m willing to take a stab at this trade with a stop-loss at $25.40.
Commodities have, no doubt, been weak of late, and the triple bottom that is trying to form is what creates the basis of my trade. If it doesn’t work out, I lose roughly 1% of my trade value, while on the other hand if the trade succeeds, I envision it playing out to the tune of 5-10%. With that kind of risk/reward one can be right far below 50% and still make a decent living trading the market.
After posting this trade, Springheel Jack (@SHJackCharts on Twitter) noted though that Silver has a confirmed rising support trend-line from 2008 low Friday by bouncing there. But today it is dropping below it. Different perspectives on trades are useful and reinforces the belief today, that I shouldn’t give this trade to large of a leash if it doesn’t play out according to my original thesis.
Here’s the SLV Trade Setup.
