"Professionals Focus On Risk, Amateurs Focus On Reward"
"Professionals focus on risk, amateurs focus on reward." I don't know who this quote is attributed to, but, it's so true.
From reading 90%+ of the gold/silver writers on the free sites it's very obvious what category most gold/silver writers fall into. Most are not only amateurs, but rank amateurs. They tend to focus heavily on reward and little if at all on risk. TERRIBLE advice given how volatile the precious metals sector is.
The number one rule of trading and investing is to STAY IN THE GAME (focus on risk), especially if you're trading or investing in very volatile stocks/commodities.
The precious metals sector is very volatile, ESPECIALLY on the downside. When the huge HUI/XAU/gold spike move since 8-16-07 turns down (must read http://tradethecycles.blogspot.com/2007/11/huixaus-wave-1-cyclical-bull-market.html), it'll probably do so with a vengeance. Gold will probably have -$20 to -$30 down days and HUI/XAU will probably have -5%+ down days. Some small cap precious metals stocks will have -10%+ and maybe even -20%+ down days. This might happen next week.
Last week NEM's good earnings report, which led to a huge +10%ish move in NEM and a very sharp rebound in HUI/XAU after it looked like they had entered a correction, plus the Fed's humongous $41 Billion credit injection on punch spiking Thursday, see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE, kept the HUI/XAU/gold party going, but, this week there's a good chance that severe weakness will set in.
Cycle trendlines/channels used in concert with Elliott Wave patterns and gaps are the basis/crux of "Trade the Cycles." "Gaps action" is very important.
If one decides to trade volatile stocks/ETFs obviously paper trade for a while or trade very modest positions at first.
As a long term multi-year investor in any stock, commodity, etc. you want to buy near the primary multi-year Secular Bull Market/very long term upcycle trendline. Gold's primary multi-year Secular Bull Market/very long term upcycle trendline is at $475ish right now, so, gold would be a great buy in the $475-500 range. When the vast majority of gold writers say it's a great time to buy or are bullish, as they almost always are, it's rarely a good time for long term investors to buy.
HUI/XAU's Wave 2 Cyclical Bear Market basically began 5-11-06, see charts 7 and 9 at http://www.joefrocks.com/GoldStockCharts.html. The primary Secular Bull Market trendlines since late 2000 are at 210-230 for HUI and at 90-95 for the XAU. Those are the targets for where the Cyclical Bear Market will bottom. NEM's Wave 2 Cyclical Bear Market began on 1-31-06. ....... http://www.JoeFRocks.com/ .
HUI NEM XAU
From reading 90%+ of the gold/silver writers on the free sites it's very obvious what category most gold/silver writers fall into. Most are not only amateurs, but rank amateurs. They tend to focus heavily on reward and little if at all on risk. TERRIBLE advice given how volatile the precious metals sector is.
The number one rule of trading and investing is to STAY IN THE GAME (focus on risk), especially if you're trading or investing in very volatile stocks/commodities.
The precious metals sector is very volatile, ESPECIALLY on the downside. When the huge HUI/XAU/gold spike move since 8-16-07 turns down (must read http://tradethecycles.blogspot.com/2007/11/huixaus-wave-1-cyclical-bull-market.html), it'll probably do so with a vengeance. Gold will probably have -$20 to -$30 down days and HUI/XAU will probably have -5%+ down days. Some small cap precious metals stocks will have -10%+ and maybe even -20%+ down days. This might happen next week.
Last week NEM's good earnings report, which led to a huge +10%ish move in NEM and a very sharp rebound in HUI/XAU after it looked like they had entered a correction, plus the Fed's humongous $41 Billion credit injection on punch spiking Thursday, see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE, kept the HUI/XAU/gold party going, but, this week there's a good chance that severe weakness will set in.
Cycle trendlines/channels used in concert with Elliott Wave patterns and gaps are the basis/crux of "Trade the Cycles." "Gaps action" is very important.
If one decides to trade volatile stocks/ETFs obviously paper trade for a while or trade very modest positions at first.
As a long term multi-year investor in any stock, commodity, etc. you want to buy near the primary multi-year Secular Bull Market/very long term upcycle trendline. Gold's primary multi-year Secular Bull Market/very long term upcycle trendline is at $475ish right now, so, gold would be a great buy in the $475-500 range. When the vast majority of gold writers say it's a great time to buy or are bullish, as they almost always are, it's rarely a good time for long term investors to buy.
HUI/XAU's Wave 2 Cyclical Bear Market basically began 5-11-06, see charts 7 and 9 at http://www.joefrocks.com/GoldStockCharts.html. The primary Secular Bull Market trendlines since late 2000 are at 210-230 for HUI and at 90-95 for the XAU. Those are the targets for where the Cyclical Bear Market will bottom. NEM's Wave 2 Cyclical Bear Market began on 1-31-06. ....... http://www.JoeFRocks.com/ .
HUI NEM XAU
Labels: Gold, Gold Stocks, HUI, NEM, Silver, Silver Stocks, SPX, XAU
posted by Joe Ferrazzano at
1:35 PM
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