Gold Breaks Out (Again!)

Trading is rarely easy.

This week was no exception.

Every trader in the world is waiting to see what will happen in the markets as coronavirus restrictions ease around the country.

Patience is required! We are trying our best to remain patient with the shutdowns, just as we’re staying patient with the market’s stair-step action.

Yes, the S&P 500 gave back its May gains. But it’s holding 2,800 super support on a weekly basis for now. We can use this pause as an opportunity to dig into the charts and find some potentially profitable new trades.

Meanwhile, after finishing my market work inside, I got my hands dirty in the real world over the weekend.

The same snowplow that took out my mailbox this winter also mangled my lawn. So I bought 40-foot seed strips that should help fill in the bare spots.

ALTTAG

Bringing my lake house lawn back to life…

Of course, I had to till the dirt and will need to water and monitor the seed as it germinates. Once again, patience is required!

I’m also planning to plant tomatoes and herbs bought at the local greenhouse after the last frost early this week. Well, hopefully the last frost. I don’t rush my trades, so I won’t be rushing my spring veggies into the ground, either…

I’ll keep you posted on their progress as warmer weather approaches.

Keep it In the Money,

Alan Knuckman

Alan Knuckman
Editor, In-The-Money

Chart of the Day: Gold’s Next Leg Higher

Greg GuenthnerPrecious metals are on the move!

Gold began to emerge from its orderly consolidation late last week, retaking $1,750 and setting up for further upside this week and beyond.

As we’ve discussed before, the strength in the precious metals market is finally bringing some momentum to the gold miner trade. The miners suffered alongside the broad market when stocks broke down in March. Yet after bottoming out on March 16, the VanEck Vectors Gold Miners ETF (NYSE:GDX) exploded higher, breaking out to multi-year highs earlier this week after posting a clean double off its lows.

GDX now appears ready to extend its gains after breaking above $35…

GDX chart

GDX’s gains of almost 4% last week are setting the table for another nice rip in these volatile stocks.

Once again, I don’t think the gold trade is going away. Trading opportunities in the bigger players and even the speculative miners will give you plenty of chances to book serious gains in the weeks and months ahead.

Trading Tip of the Day

Practice Risk Management.

Here’s a common scenario: You make four trades. Three of them are winners, and you book $250 each for a total of $750. But you broke your rules on your fourth trade. And you ended up losing big. It cost you $1,000. Even though you profited from 3 out of your 4 trades, you ended up booking losses totaling $250.

Bad risk management leads to bad returns, even when your winning percentage is high. This is one of the biggest threats to your profits during a strong market. You see stocks screaming higher every day, so you’re more likely to override your stops and try to allow a losing trade room to improve.

I have little doubt you’ll find plenty of opportunities to book trading gains over weeks and months to come. The key to keeping (and growing) these gains lies in properly managing your risk so you can hang onto more of your hard-earned profits.

— Greg Guenthner

You May Also Be Interested In:

Alan Knuckman

Alan hails from the home of options trading in Chicago, where he began working as a clerk on the floor of the Chicago Board of Trade (CBOT). Beginning with his days on the floor, Alan’s worked with all aspects of the options markets for the past 25+ years.

Transitioning from a clerk to a floor...

View More By Alan Knuckman