OK, so here it goes. As this is somewhat a diary and not a trade recommendation site, I’m simply going to spell out what has happened and what I could have done better to manage my trades.
Silver is again getting crushed this AM and the dollar is strong. Looks like the 3-year cycle low is in on the dollar.
What went right….
First, I am out of all of my positions in metals and miners. The point at where I entered long ago still provided nice gains. Nearly 100% in some like AGQ. We recognized the patterns in the dollar and the metals and rode a nice C-wave to the top.
What went wrong……
Well, a lot. It’s been a practice of the CFTC for many years to increase margin requirements on commodities when they get extended too far. Call it what you will, but it does seem out of the ordinary for margins to be hiked 5 times in a week. But regardless, that was the catalyst to send silver down in quick fashion.
My mistake was not taking any of this into account and bailing immediately. The cycles were due for a quick pullback and final push higher, but they failed. A lesson learned – when anything is just too overbought and too many “pros” are talking about the run, chances are good that something is about to change.
So what now?
So the parabolic move that we expected in the Springtime came and went before the plan could be wrapped up nice and neatly. No surprise but still a big disappointment. We sold out and now look for the next move. That’s not perfectly clear yet, but what will most likely happen now is a corrective phase in metals and miners that will start the cycles all over.
The A wave can be extremely profitable too – on the downside. If we in fact are in the next phase, we should see some pain in miners, with tests of recent lows to confirm that.
This is an idea I will be watching closely in the days/weeks to come. I expect there to be some push and pull around the 53.35 area and an eventual failure with a lot of room below before any support is found.
A snapback to the 50-day needs to take place soon or we will have our first clue as to what’s coming.
So keep your heads up, keep capital intact as best you (or I) can and be looking for the next opportunity. We are just beginning to see the extreme levels unwind and I will be on the lookout for the plays that take advantage of that.
Trade well and trade the extremes!