Precious Metals and Stocks poised to ramp higher in 2013

David Banister-  Jan 22 2013

It’s been a long drawn out corrective affair with the precious metals since the August-September 2011 top that seems so long ago right now. During that last spike period where Gold rallied to just over $1900 per ounce, we had mentioned many times in articles and to our subscribers that GOLD was likely peaking in a wave 3 of excitement and high powered bullish sentiment. The “tells” were the articles, the CNBC mentions, the daily “CNBC GOLD” ticker at the top of their screen, and the cover of a major magazine.

Since that time, we believe GOLD has been consolidating in what we term a “wave 4” correction, which is a milder version than some others.  This is part and parcel of a 5 wave rally pattern and wave 4 is necessary to cool the engines of overbought sentiment and public love of the metals.  These wave 4 patterns can take many forms and shapes, but this one appears to be an irregular ABC Version which we have outlined below on the weekly chart views.  The length of period of time is nearing 18 months in total, but the lows in the 1550’s were already marking price bottom territories, and now it seems more of a matter of time before we see wave 5 up really take off.

This means that Gold and Silver Exploration stocks are very cheap as well, because the senior producers are seeing their stockpiles whittled away while their grades deteriorate at the same time. Once GOLD pops over $1750 per ounce we should see a rally in all the Gold Stocks, but especially in the exploration plays, which are historically undervalued here.  Take a look at our GDJX Junior Exploration Stocks chart at the bottom of this article as well. It will need some help to break the downtrend, but again we think the odds are in the savvy investors favor to speculate on a select few in this sector.


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Trading the ABC Sentiment Shifts Ahead Of The Crowd-VVUS

Spotting the 3 day rest B wave for profits

VVUS-Dec 20th Updates:  We sold 1/2 at 13.25 for 11-12% gains, and held 1/2 long.  The stock is hitting 14.90 now up 25% for ATP since our original alert and we are holding long the remainder still

One of the most obvious keys to successful trading or investing is buying low and selling high. The problem being if it was that easy to pinpoint those low and high points then all traders would be batting 1000%.  What we use at my ATP service is a combination of fundamental analysis and catalyst spotting inter-twined with charting techniques.  Most of our work revolves around buying substantial dips in a strong stock, 3x ETF’s, or reversal patterns. 3x ETF’s are great for short term swings as they function almost exclusively on crowd behavioral patterns, but it also applies to individual stocks.

In all cases what traders really need to spot ahead of the masses of investors is a subtle shift in sentiment. That key pivot point where the negative sentiment whether it be short term or long term is about to run out of gas, and the bullish sentiment is going to take over and reverse the stock or ETF higher or break the position out of a base pattern.

One of the most common patterns amongst many that we use as trigger points is the ABC pattern. This is a situation where the stock or ETF recently had a strong run.  That run produced a flurry of over-optimistic sentiment and is reflected in the high spike in the stock from the prior base. We call this the “A Wave High” pivot point.  This is where many of the traders who chase short term performance come in with a bang, right near the top.

The next key component is obviously then the “B Wave” pattern.  There are many different formations for B Wave patterns, the one we will look at today is the “3 day rest” pattern.

B waves simply serve to work off the overbought sentiment of the crowd and remove the chasers who came into the trade high, at a loss. As the stock pulls back hard initially in the B Wave, stop losses are triggered by those with discipline.  However, many traders continue to buy more of the position a bit early during this crucial B Wave pattern and then later they also get stopped out.  Finally, Margin Calls are common and more stops are triggered and the B wave winds down and sentiment is horrible.

At that strategic bottoming area of the B Wave correction is where you want to start scaling long into the position for the ensuing reversal to the upside. Sometimes these are very short term trades as in 48 hours or so, and sometimes they are several weeks long depending.  Many of the B waves on daily charts are what we term a “3 Day Rest” pattern, spotting these is very profitable.

Below we have a very recent sample 3 day rest B Wave pattern in a stock my firm recommended prior to a 15% one day move a few days after we alerted it, this  being Vivus (VVUS).  This produced an 11% net gain inside of 4 trading days after a 15% one day pop C wave rally. The two charts below show the 10 day chart with the 3 day rest pattern which we scaled into, and then the C wave to the upside. Also shown is a longer term chart where you can see the pattern as well. We traded this same pattern in ANR recently for 9-11% gains inside of 48 hours as well.

Dec 20th Updates:  We sold 1/2 at 13.25 for 11-12% gains, and held 1/2 long.  The stock is hitting 14.90 now up 25% for ATP since our original alert and we are holding long the remainder still


If you’d like to learn more about trading sentiment and catalysts for profitable Swing Trading, then join us at ATP. Go to and subscribe by using coupon code AD499ATP in the coupon code field at the bottom of the sign up form. Sign up for quarterly and the discount will be applied at checkout, and you will get The Market Trend Forecast for free as well.

David Banister