Waiting On The “Clumps”

November 6, 2016

We started the week with stocks acting poorly. Consequently, the poor action morphed into some solid weakness as the S&P500 nears its major support level at the 200-day moving average. Needless to say we are into very oversold territory. And although a bounce is possibly coming very soon, I’d like to see a little more selling to the 200-day average before that bounce begins.

That would time perfectly with the election Tuesday of one Donal Trump or Hillary Clinton…or the “Clumps” as many now refer to them. I have no clue if the election results will stoke or stumble the markets. However, I am happy to be in an all cash position for now.

As for the metals, they perked up very nicely early in the week. Since mining stocks were the only sector showing strength, I bought a few nice positions, which worked really well up until Wednesday when I had to lock in some gains and one small loss. Easy come,..easy go.  Since the miners were acting so well, it’s a shame to see weakness set in. It happens.

In a choppy market like we have, you just never know and often sectors of strength don’t last. I’ll try solid looking trades in choppy markets sometimes…but always using tight stops to keep me from getting chopped up.

Gold gained 2.17% - and does look pretty solid still. Gold looks to go higher with $1,310 the current buy level. However, PM miners are acting poorly. And although they usually lead the metals, the election is sure to wreak havoc one way or another. Consequently, I just don’t know if we can rely on chart analysis until the election outcome is digested.

I sure would love to see a Brexit type of crash, where we can pile in near the lows again. However, only time will tell. Caution is warranted all around. Furthermore, I do not think I will do anything until mid-week at the earliest.

Capital preservation is the only way to survive in the trading game. To be sure this week is about as unclear as we ever get in terms of potential for a move either way. Therefore, I’ll react, not predict, as always. It is prudent to remember that cash is a position.

Silver gained 3.23% - and has a nice little bull flag pattern here. Nonetheless as I stated above, it’s really hard to commit to a trade until after the election.

Come Wednesday chances of a gap much higher or lower are nearly 100%. However, to try to guess which way that gap will occur is not my cup of tea.

Platinum rose 2.35% and is trying to lead us higher once again. Platinum is breaking above this little triangle and above the $1,000 buy level. Let’s just see what plays out. In any case platinum is telling me metals will continue to move higher.

Palladium moved up my 1.37% this past week - and has based well at the 200-day moving average area. I’d look at $640 as the buy level now. However, I have no clue what will occur post-election. Therefore, I’m taking a wait and see approach unless something really stands out to me - and right now nothing stands out at all.

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Warren Bevan is a renowned trader who’s honed his craft over the years learning the styles and techniques of Jesse Livermore, William O’Neil and Dan Zanger and forming his own unique style. He focuses on making money and going hard when the right markets present themselves and during the rest of the time focuses on capital preservation.  He focuses on the leading fast moving stocks during the good times.  He is a proud Canadian, traveler, explorer, and consummate market geek who tells it as he sees it. Warren’s website is www.wizzentrading.com and his email address is warren@wizzentrading.com

A gold nugget can be worth three to four times the value of the gold it contains because they are so rare.