The metals markets have been as ugly as they can get without breaking down. For the last week or two major support levels have been holding, but the pattern could be changing which could lead to a big sell off. We have not reversed and remain long, but understand that the risk to the downside has increased.

Gold is back at 1700 this morning based on the June futures, looks like a little short covering. However, the big picture shows us either a forced liquidation or margin selling. Almost everyday a big seller shows up for a few minutes, hammers Gold and then goes away till the next day. That is a major concern, but the buyers have defended support which brings the question, who will win this battle?

Silver and Platinum look almost identical, both turning in bearish action with just enough buyers to defend the support line. Silver and Platinum are in an ugly pattern which has a high probability of breaking down. However, we will stay long until the pattern confirms a reversal.

The bottom line is simple, our algorithms are long which is all we care about. When trading anything, emotions should not be a part of the decision-making process unless you like being on the wrong side of the market. All trading decisions should be made on a mechanical basis with no regard for news or opinions.

Todd Horwitz Chief Strategist
Stop being a prophet and make profits

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