Gold & Precious Metals

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You cannot expect to do well in the market if you look at investing in a normal way. By definition, being average is doing what most other people do and since investing is largely a psychological game, doing what other people do is only natural. Average results come from normal people acting in normal ways.
To beat the market, you have to be different.
Not necessarily in a straight jacket bouncing off padded walls different, just a little off.
Here are 10 things that may help you be a better investor, some ways to think differently from the crowd in that pursuit to achieve market dominance.
1. Do not think about making money, think about losing money – the first step toward success is accepting that losing is part of trading. You will not be right all of the time, you cannot always trade your way out of a bad situation. There will be times when you simply have to walk away with a loss. The key is to keeping the losses small and manageable. When the market proves you wrong, take the loss.
2. Do not think you can average down to win – it is a logical idea, add more to a losing position with the expectation that the market must eventually go your way. Many times this strategy will work but, when it does not work, the loss may be insurmountable. The market does not eventually have to go your way.
3. Do not think that your success is entitled – you may make a great trade, pick a really great stock and have a feeling like you really have the market figured out. Forget your gloating, no one ever has the market figured out. We must always remember that we have to work as smart for the next trade as we did for the last.
4. Do not think that talent is required – making money in any trading endeavor is a small part technical skill and a big part emotional management. Learn to limit losses, let winners run and be selective with what you trade. Emotional mastery is more important than stock picking skill.
5. Do not think that you can tell the market what to do – the market does not care about you, it does not know that you want to make a profit. You are the slave, the market is your master. Be obedient and do what the market tells you to.
6. Do not think you are competing against other traders – trading success comes to those who overcome themselves, it is you and your persistent desire to break trading rules that is the ultimate adversary. What others are doing is of little consequence, only you can react to the market and achieve your success.
7. Do not think that Fear and Greed can ever be positive – in life, fear can keep us from harm, greed can give us the motivation to work hard. In the market, these two emotional forces will lead to losses. If your decisions are governed by either or both you will most certainly find that your money escapes you.
8. Do not think you will remember everything you learn – every trade provides a lesson, some valuable education on what to do and what not to do. However, it is likely that your lessons will contradict one another and lead you to forget many of them. Write down the knowledge that you accumulate, return to this trading journal so that you can retain some value from the lessons taught by the market. Remember, the market is cruel, it gives the test first and the lesson after.
9. Do not think that being right will lead to profits – you may be exactly right about what the fundamentals are and what they are worth. However, timing is everything, if your expectations for the future are ill timed, you may find yourself losing more than you can tolerate. Remember, the market can be wrong longer than you can be liquid.
10. Do not think you can overcome the laws of probability – traders tend to be gamblers when they face a loss and risk averse when the have a potential for gain. They would rather lock in a sure profit and gamble against a probable loss even if the expected value of doing so is irrational. Trading is a probability game, each decision should be made on the basis of the best expected value and not what feels best.

The market ended the week in wait and see mode. With the US markets closed on Monday for the Memorial Day holiday, trading action on Friday was light. Traders want to see what happens with Europe, and specifically Greece, before making a commitment with capital.
This overhang for potential breakdown is hanging over the market, increasing the action in the VIX. Trade set ups on the VXX have been working well lately and I think it is the place to play next week. Ironically, the VIX has gone in to a narrow range without a lot of volatility. However, with the trend up, the potential for a break to the upside on the VIX is significant. Watch the VXX ETF next week for a break from this low volatility pattern. A break to the upside indicates fear is increasing again and we could see a good trend to the upside.
I am not comfortable owning stocks right now, it is best to wait for the market to show an opinion. Right now, investors are cautious about what is happening in Greece. Until the world gets some visibility, it is best to only short term trade stocks that are trading abnormally, moving on their own story. Last week we had a number of Biotech stocks making those kind of moves, watch this area as well.
1. VXX
The VXX is in a very narrow range, a break from this range should telegraph where it goes and tell us a lot about what is happening in Greece. An up break is a sign of weakness for the market. A down break means the market is finding some stability and likely to recover from the recent selling pressure.
References
- Get the Stockscore on any of over 20,000 North American stocks.
- Background on the theories used by Stockscores.
- Strategies that can help you find new opportunities.
- Scan the market using extensive filter criteria.
- Build a portfolio of stocks and view a slide show of their charts.
- See which sectors are leading the market, and their components.
Disclaimer
This is not an investment advisory, and should not be used to make investment decisions. Information in Stockscores Perspectives is often opinionated and should be considered for information purposes only. No stock exchange anywhere has approved or disapproved of the information contained herein. There is no express or implied solicitation to buy or sell securities. The writers and editors of Perspectives may have positions in the stocks discussed above and may trade in the stocks mentioned. Don’t consider buying or selling any stock without conducting your own due diligence.

Most of the boom in North America’s tight oil production so far has come from the Bakken formation in North Dakota. But Texas, the biggest producer in The Union, is experiencing a huge increase—in fact, a 230-fold increase in tight oil crude output over the past three years. And it’s just getting started.
Two new tight oil plays in south Texas are attracting a lot of investor and industry attention—the Eagle Ford and the Eaglebine.
THE EAGLE FORD
The Eagle Ford has gone from obscurity in 2008 to now being the #3 play in all the United States (based on number of rigs drilling), after the Permian Basin in southwest Texas and the Bakken.
Pioneer Natural Resources (PXD-NYSE) says they get a 70% pre-tax rate of return at Eagle Ford. EOG Resources (EOG-NYSE) says it’s 80% for them.
Marathon Oil (MRO-NYSE) says it’s over 100% for them on some condensate wells (condensate is a Natural Gas Liquid that’s really more like a very light oil and often gets a better price than oil).
The formation is 400 miles long and 50 miles wide with an average thickness of 250 feet—thicker than the North Dakota Bakken. It is estimated that the Eagle Ford formation has a total recoverable resource of roughly 3 billion barrels of liquids (that’s oil and some NGLs) with a potential output of 420,000 barrels a day (bopd).
In the western part of Eagle Ford, oil is dominant with about 78% oil, 11% natural gas liquids and 11% dry gas, while the eastern part has a higher percentage of dry gas.
This high oil and liquids content (think propane that goes in your BBQ, or butane that goes into a cigarette lighter) make the Eagle Ford a very profitable play.
…read more HERE, including the list of Energy Companies operating in the Eagle Ford/Eablebine

Over the last couple of weeks, we’ve seen plenty of action, fortunately following right along with my forecasts. So let’s take a quick look at the charts.
This will be a bit of an abbreviated video today because it is a holiday, but I still want to show you the charts of the main markets.
Let’s start with gold. As you can see here on this chart of gold, gold has indeed slid quite sharply down to around the $1,526 level, testing the low from late December 2011, and it is finding some technical support there.
We should see a bounce, bringing it back up to say $1,600, $1,610. But I do believe, based on all of my indicators, that we will see a break below $1,500 down to around the $1,440 level in the coming weeks. So I remain bearish on gold.
Now let’s also take a look at silver. Silver has been following gold quite closely and is falling actually even sharper than gold, which is to be expected.
Silver’s finding some technical support in here, but I do expect silver to break through the $26.60, $27 support level and move lower still.
All of my indicators remain bearish in silver.
Let’s take a quick look at the U.S. Dollar Index as a proxy for the U.S. dollar. Indeed, in the last video update I did for you, I did indicate that I expected the dollar to break this resistance line here, mid-channel, and move above the 81, 82 level.
That’s precisely what happened. I wouldn’t be surprised to see a little pullback then a further rally up to 84. This is largely being driven by the meltdown in Europe and the European sovereign-debt crisis, which in the short term is bullish for the U.S. dollar.
Now let’s take a look at the Dow Industrials. We have begun to see a rather sharp sell-off here. However, we’re coming into some very important support levels in the Dow. More specifically around 12,250.
As long as that level holds, we should probably trade back up to the 12,900 level. And we’ll have to see what happens at that point. If 12,250 gives way on a closing basis, we could see further losses in the Dow — down to about 11,800 or maybe even 11,500. It’s a little too early to say.
Right now I want you to enjoy your holiday. We’ve got a lot of action-packed markets that will probably continue right after the holiday as they open tomorrow morning and heading into June. I see lots of volatility and lots of trading opportunities.
So stay tuned. This is Larry. Again, have a nice holiday today and a good week.
Larry Edelson has over 34 years of investing experience with a focus in the precious metals and natural resources markets. His Real Wealth Report (a monthly publication) and Power Portfolio provide a continuing education on natural resource investments, with recommendations aiming for both profit and risk management.
For more information on Real Wealth Report, click here.
For more information on Power Portfolio, click here.

On this Memorial Day Long Weekend Richard Russell has declared a Dow Theory Non-Confirmation and a Primary Bear Market. He notes that the D-J industrial Average high of 13,279.32 on May 1, 2012 was not confirmed by the Transports, then when the two averages turned down and broke below their April lows “This action confirmed that a primary bear market is in progress — it was a textbook bear signal.”
Russell further thinks that the Bear Signal indicates that Greece will leave the Euro, then Spain, then whole Eurozone will likely crumble. Also that although Gold will probably be under pressure or awhile, a major bull market/move is to follow.
