Silver is one asset class I do not cover very often, but have been largely bullish on since $6 an ounce many years ago.  It can be considered “poor man’s Gold” as they say.  I believe Silver is about to stage a pretty large advance based loosely on the Elliott Wave pattern I see unfolding after a 9 odd month consolidation. (Obviously, there are also fundamental fiat currency/debt events worldwide that give it the underlying bull chart pattern).  Since the average person can’t run out and buy an ounce of Gold for $1,240 tomorrow, as the unfolding of the fiat crises continues to enter the public psyche, you will see a strong populace movement into buying silver, silver coins, etc.  To wit, many silver stocks are moving up strongly of late, signally an imminent breakout of this precious and industrial metal.

The triangle pattern has taken nearly 9 months so far, and a move over $19.50 could start a multi-month run targeting $26-$29 per ounce for starters before a broad pullback.  A few silver stocks worth looking at include SLW (Silver Wheaton, which purchases future silver mine production in advance at a discount), a long-time favorite of mine and Fortuna Silver, a growing producer and explorer favored by some of the brightest minds in the business.  I do not own shares in either, so I have no inherent bias to mention them other than they are worth your time to review sooner than later. TMTF does not offer stock or trading advice, so please do your own research and consult a professional if need be.  We do offer specific trading advice at activetradingpartners.com however.

I post the Silver chart below and my outline shows my views of a multi month 5 wave bullish triangle pattern on a weekly chart.  Silver needs to bust through $19.50 per ounce to confirm, but I suspect we will see this fairly soon. If you enjoy our forecast and articles, consider becoming a charter subscriber.  Check us out at www.markettrendforecast.com

In the case of ETF trading, we often work with 3x Bull or Bear ETF’s like BGZ, ERY, ERX, TZA, TNA and so forth.  Using a combination of Fibonacci re-tracements and Elliott Wave theory, we look for high probability set-ups and extreme overbought or oversold situations to trigger a trade recommendation.  A most recent example with ETF’s was a short position we took against the rising energy stock index, the XLE.  This index had become incredibly overbought in just a few weeks, and looking at prior topping indicators and fibonacci trading day cycles, we felt it was a “Low Risk” bet to short the rally.  We recommended ERY at $45.40 as the XLE headed over $56 and was becoming overbought.  Within 7 days we had a 15% plus gain by going against the crowd.  I saw a 13 fibonacci day trading rally at extremes, so we used the XLE chart below, to identify the timing to enter into ERY.

We use the same approach when it comes to trading individual stocks.  We look for “Waterfall decline” reversal patterns, which are somewhat proprietary for ATP and our methodology.  This method reduces our entry risk because we are buying stocks that have already taken a recent short term multi-day or even multi-week hit as investors have exited the stock.  Recent examples include buying DCTH, a former high flier that fell from $16 down to $5.80 when ATP advised purchase.  Within days the stock bottomed and ran to as high as $9 within a few weeks for a 50% move.  Another example is OREX, who took a hit in concert with VVUS several weeks ago.  We felt the sell-off was overdone and recommended the stock at $4.01, after it dropped from $6.  The stock ran back to $5.30 within 10 days for a 30% plus gain.

Trading in a volatile market means you need to be patient, discerning, and wait sometimes for an oversold or overbought condition before you act.  Sometimes acting early can cause you to get spooked out of positions that end up being profitable, but only after you panic sell out at a loss. At ATP, we use a “tranche buying” methodology which tries to help with the emotional side of entering or exiting a trade.  We recommend 1/3 or 1/2 positions at a time, even if we are really confident in our entry point.  This way just in case you mis-timed the bottom of your target by one or two days, which often happens, you reserve some powder to add additional capital into the trade to work your way in over several days.  We also advise that our partners enter  into these tranches over 24 hours of trading time, perhaps buying 3-4 times into our position especially on minor pullbacks.  How many times have you bought into a trade entry at say $5.00 a share, and two days later the position bottomed at $4.50, you close it for a loss, and then it runs to $6?  Using a tranche buying methodology keeps your emotions in check and you actually look for a bit further dip as a benefit, not a detriment to your trading.

We also adjust our stops as the stock or ETF moves after we have completed our entry.  The main goal as a trader or investor is to book profits and limit losses when you are wrong.   Since our ego is often our worst enemy, adjusting your stops as the trade moves in your favored direction keeps you from gettting too giddy and letting a profit slip away.  In addition, a reasonable stop prevents you from being over-confident and letting a small loss turn into a larger one.  Another recent sample at ATP was buying into VITA, which was very oversold at $1.76-$1.80 ranges.  We also though advised our partners take profits at $1.92-$1.97, with a nice and tidy 6-10% gain over 7-8 days of hold period.  The stock then fell hard just a few days later to $1.64.  Not taking profits would have meant wiping out all of your hard work and watching your paper profits turn into a “hoping for a rebound” position.

In volatile markets, don’t get off your game plan and try to keep your ego in check.  Enter into your trades no matter how confident you are, slowly and over 24 -48 hours of trade time.  Adjust your stops and prevent yourself from getting too greedy or giving away profits.  Take your time, wait for set-ups, and also take a break every now and then…nobody needs to trade everyday.

Come check us out at www.ActiveTradingPartner.com and join us and/or sign up for our free weekly reports!

There are a few ways to reduce your trading risks and we employ those at ActiveTradingPartners.com.

1.  We use a “Scale in and Scale out” method for entering and exiting our trades.  This means we look to buy in tranches of about 1/3 of an intended $$ position at a time.  We look for Fibonacci pivots and oversold indicators to begin working into a position, but never all at one time.

2. We look for “Waterfall declines”.  That is right, we like to buy when everyone else likes to cry.  This means we prefer to enter trade set ups when it appears the vast majority of the downside risk has been “wrung out” as it were.  Recent example was our entering OREX at 4.01-4.12 after it had waterfall declined from $6 at it’s high.  The stock rose over 18% within 72 hours.

3.  We like Waterfall patterns in ETF’s as well, trading the opposite pair off the baseline ETF.  For example, if I think the SP 500 index is in the process of topping out, then we take positions in the Bear ETF such as BGZ to take advantage of the upside exhaustion and corrective reversal.  We enter into the BGZ trade 1/3 tranche at a time, carefully watching for Fibonacci pivots, Elliott Wave patterns, and exhaustion signals.

If you would like to improve your risk adjusted trading results, minimize your losers and maximize your winners, please give us a try.  Click HERE to subscribe you’ll be up and running in no time!

Samples are our recent trade into BGZ, which is 3x short the Russell 1000 Index.  The Elliott Patterns we interpreted said the market rally would wane as we hit 1071/1074, 1085, and 1092.  As those areas were hit on the SP 500, we would purchase 1/3 positions into BGZ, inevitably profiting from the overbought reversal to the downside in the markets.  This reversal happened on cue on Friday last week, July 16th.  Our BGZ position rose 8.5% in just one day of trade, allowing us to enter into a “green” profitable territory on our scaled in position.

Scaling in eliminates the traders desire to let the ego over-take their emotions.  By this, we mean your trading system is useless if your emotions can’t be kept in check both on the downside and the upside.  At ATP, we try to combat that by scaling into and out of positions, forcing ourselves to buy while others cry… and sell when they yell.  It is extremely difficult to go counter-trend against the noise of the markets, but certainly if you plan to do so you must have a plan of action.  Trading with emotion is a sure-fire way to lose money in the markets.  Taking your time and being methodical with scale in entry points into a trade, reduces your risk of entry and allows for a much greater probability of profits, as well as greatly reduced losses on the trades in which you are wrong.

Never dive “all in” into a trade position, no matter how confident you are of the entry timing, chart, and price.  Always scale in methodically.  Worst case the position takes off to the upside for you and you didn’t buy a full position, but that is so much better than going all in one one trade and mis-timing your entry, costing your trading account major dollars.

Dave Banister

ActiveTradingPartners.com

TheMarketTrendForecast.com

Some are saying the market just bottomed at 1011 at the 38% re-tracement area, but the elliott wave patterns that I rely on do not appear to me to be complete. I could still be wrong and we keep on climbing here and I get egg on my face, certainly possible. However, you don’t normally get a straight 8 of 9 days down pattern to 1011 like we just saw and then end a correction there as a C wave in an A B C pattern. C waves are made up of either 3 or 5 waves within, and that was one clear wave down. These happen in fast moving markets and lead to a rare correction pattern called a “running” correction.

In the video below, I educate and illustrate on how these look and apply it to the current state of the Market. I’m looking for the following MAX topping areas for all three indices. Dow 10450, Nasdaq 2295, and SP 500 1104-1115. We are within 1-2 % here of a nice reversal to the downside that can be played via shorting. The ultimate target remains 942 on the SP 500 index, and of course those are the 50% fibonacci downside levels of the 13 month rally, and would fit neatly into the first 180 point SP 500 drop from 1220-1040. This means 1130 is the recent major B wave top, and 180 points from there is about 950 to complete the correction pattern in this bull market.

Please review to get updated. This current rally has hit 1099 on the SP 500, past the 1092 area I saw a gap on, but below the 78% re-tracement area as well, this 7 day rally is getting long in the tooth. Options expiry week makes it even harder, reminds me of my Mid April top call in fact…

View the Video to find out what I think is next and how to trade it:

Taken from TheMarketTrendForecast.com

Let me first start by saying I’ve been a long term “Gold Bull” since the fall of 2001, based both on economic factors as well as Elliott Wave patterns that I think are clear on Gold’s Bull rise. As we are now almost in a Fibonacci 21 months of Gold rally off the October 2008 bottom, I think this pattern is getting long in the tooth.

Gold has risen from $681 at the nadir of the fall of 2008 to $1265 so far, with potential to run to about $1300-$1325 an ounce on this final leg up. It stands to reason, as with any Bull Market that the Bull gets tired and at some point has to hibernate. This wave pattern is clearly 5 waves since the October 2008 lows, and we are in the final stages of the 5th wave of this pattern in my opinion. That means we can have a blow-off top, or we truncate here and start correcting hard.

Bull patterns tend to peak when most are not expecting it, and I forecasted a market top in Mid January and again in Mid April this year in the SP 500 index just prior to huge drops. These forecasts were based on sentiment and Elliott Wave patterns. I am now viewing the $681 to $1,265 rally in Gold as a 5 wave bullish structure that is in the final stages of ascent. Fifth waves are notoriously difficult to predict, but taking some off the table here for intermediate traders is probably a wise decision. Correcting 38% or 50% of the $600 rally would take Gold back to $1030 to $965 area plus or minus, and not invalidate a larger bull structure.

JAZZ- This is the 3rd time I have recommended this stock in 8 months. First time 60% gain within days, second time we got stopped out for no gain and it ran up 80% later on (Stopped out in early Feb).

3rd time now is at 7.75 with recent heavy insider buy at $8.30 in a new secondary offering at $8.30. The same Director/Insider has bought in the past at major pivot bottoms, and this time he took up $7 million worth of the secondary offering. Insider Buy LINK

WBB Initiates coverage with Buy on May 17th- $15 Target

JAZZ has has two drugs on the market, and they are estimating 60-80 cents in adjusted EPS this year, and 30-40% revenue growth. They have a Fibromyalgia drug pending FDA approval in November, with a panel advisory in late summer early fall. Approval there will push the stock way up. The stock has pulled way back from 14 to 7.75. JAZZ is paying down 1/2 their debt with this offering, and the debt is at 15%.

Further, JAZZ likely to be added to the Russell 2000 index with news tonight due on that, and the date is June 25th. Index funds must have the stock in their portfolio by that closing day.

1/3 position, max $8, but try to buy 7.90 or lower. Stop loss at$7.34 for a 5-6% max downside on a 1/3 initial position:

All of this is explained in this 5 minute video and everyone should watch it. In the video I mention the Hedge fund taking up the entire offering, that is incorrect, they took up $7 million of the offering

The SP 500 gapped up and ran higher today on the back of good economic news out of China.  Recall around May 18th I forecasted a near term bottom in the Shanghai Chinese Index here on TMTF for our subscribers.  The theory was it would bottom before the US markets, and that an A B C correction was completing or in the final stages of completing.

What we have now is a series of choppy and overlapping A B C patterns in the US indices which must be reviewed now.  I see two scenarios, and the bull scenario is a move over 111 decisively on the SPY ETF is very bullish and starts to portend the 2010 lows are in for the indices.  The Bear scenario is we take the SPY up to 111 and reverse down to new lows.

These are updated in the sub 5 minute video below, and it may be interesting to see how these lay out.  31% Fibonacci re-tracement of the 2009-2010 bull move has already occured as mentioned on TMTF recently.  However, the amount of time is rather short to complete a correction… review the video to see where we stand.