The metals remain about as ugly as it gets, the patterns are weak and there is no volume. This morning we have reversed Gold to the short side joining Silver, that we trade, and Platinum, which we don’t (due to lack of liquidity. Gold continues to rotate around the mean and has traded low enough to reverse.
The real problem in all markets is the lack of volume, volatility, and real liquidity. The action itself is no surprise considering market conditions and Yom Kippur on Wednesday and Thursday. Equity markets tend to drift higher during dull markets while commodities tend to drift lower. The patterns we are in now are known as the dull drift.
The recent action suggests that Gold and Silver are in danger of testing or trading through the recent flash crash lows. Platinum has already violated those levels, Gold and Silver are in position to threaten those levels. The slow conditions are the only thing that can save the metals markets now. There is lack of conviction in either direction; any acceleration from here should be lower.
In all markets price action determines what will happen in the next day, week or months. Keep the two strategies separate, the worst trade anyone can make is turning a trade into an investment hoping for a way out. Traders must learn to take their losses and move on to the next trade.
Patience, discipline, and money management always win the day. Let the map of the markets show you the way.
Todd Horwitz Chief Strategist BubbaTrading.com
Stop being a prophet and make profits
Here is the Recording of our Monday Night Strategy Call: