Knights and ladies it is time to get serious here

For a group operating in 3X PM ETFs maybe recommending caution is something destined to fall on deaf ears, but here goes anyways. We are in the middle of a mine field one should watch out. I don’t see the proper air of cautiousness out there for the risk that I see. The GDX has a 41% rally and many out there have gotten all lathered up and have thrown caution to the wind and jumped into this thing whole hog. Thats why I posted this last Thursday just off the highs:

BMR vs Bull Market -Take some chips off the table

Knights, we have had 3 prior BMRs so far and this is either the 4th or its a new bull market. We have matched the strongest BMR so far in this bear. The set up we are in did NOT appear to have the juice to keep running past whatever limited the prior 3 from continuing. Lets take a look at this daily chart:

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If you go back and review my bear market anatomy series it shows the importance of the 25/50DMA relationship. If the 25 DMA remains under the 50 you can expect a severe pull back when the retracement off the lows begins. Guess what that is just what we got. About an 80% one. Once the rally resumed it hit the 200 DMA as if it was an I-beam. Then it had a short upside transit to suck in more lathered up bulls. In all it spent a grand total of 2 closes above the 200DMA…its below it now. Note also how late in the game the 25/50 DMA has finally crossed upside. The 50 DMA still remains under the 200 DMA and the 200 DMA is still slanting downward slightly. The price action must bend the 200 DMA upward before we can really start talking about a new bull market . So more basing action is needed. Bottom line is this is where we would expect this BMR to flame out given these series of indicators and for the BMR to be finished or we need to start doing some serious consolidation here before it resumes its upward move.

Next lets look at the weekly. Same chart as last weeks-just updated. In this bear market the weekly Stochastics have had a history of turning down immediately after exceeding 80. That’s rarified air, it does’t hang around up there. So when it starts bending over up there I would move my finger close to the sell button. Well take a look it has now exceeded 80 and just crossed over. Also the OBV and RSI is confirming this action. Don’t miss the lack of volume in the second advance of this move compared to the first advance off the lows on November. Its anemic, no wonder it torched out at the 200 DMA.

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Now onto the four horseman. Note the interplay with the 200DMA on GDX and particularly GDM. GDXJ’s 200 DMA is still well above the price action. The tweekers have all crossed over, while the main indicators are at the cusp of a cross. Below is a view of my PWMI indicator which shows an M developing and the Renko painting its first red box. Both negative.

 

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Now a strong day could put a different tint to these charts, but my point is this is a very bright flashing caution light for any who is long here.

Plungers take: OK knights, here comes the lecture. Now I understand ones trades are his only and this includes Rambus’. I am responsible for my own and I am NOT directing criticism towards anyone else’s trades, but I am going to say this: This is NOT the place to be buying thinly traded junior mining stocks for a trade or a flip… period. Anyone who is doing that I really think should do a self examination and ask oneself what am I trying to accomplish here. Knights, odds are we are still in a bear market. These stocks as trading vehicles are death in a bear market. Maybe we all should to go back and review when all the past 3 BMRs flamed out right here Sherlock ! Take a look at what happened next. Now I obviously am not saying we go straight down from here, we could go higher, but the number one rule in investing is Don’t Lose Money. You know the #2 rule….refer to number one. The big money is made in long term position holds. I own some juniors here, but not for trades. Use the liquid stocks if you are going to be trading the direction of the market. I have my buy list at the ready to buy and hold and I can’t wait for the day, but I don’t think it is here yet.