I had the opportunity to catch up once again with The Next Bull Market Move to discuss the recent rally in the uranium sector and the potential for a new bull market. We also discussed the gold sector and what I consider my most important lesson learned for 2016.
This week I caught up with Justin from the next big trade.com, who always has a great take on the markets and how to stay the course when investing in bull markets. Enjoy!
Hi Justin, many thanks for taking the time to join us at The Next Bull Market Move again. Last time we spoke, one of the sectors we talked about was Uranium and your latest video now asks if the bear market in Uranium could be over, so from a stage analysis point of view, is Uranium breaking out or is it still too early to tell?
I think what we are seeing so far is constructive action in the Uranium stocks but it’s too early to tell if this is a real breakout or not. The Uranium stocks seem to be signalling a potential bottom in the price of Uranium, but that doesn’t mean Uranium will turn around and start moving higher immediately.
It could move sideways in a Stage 1 base for a while before that happens.
I’m going to be watching closely what happens to uranium and the Uranium miners as 2017 starts and trading volume comes back into the markets.
Right now trading volumes are thin over the holidays but that will change dramatically once the new year starts. If we see big volume continue to come into Uranium miners then it will be very likely this long bear market is over.
If on the other hand the rally fizzles out and volume doesn’t continue to come in then it might take longer for the final bottom to be put in. Either way the Uranium sector will be on my radar since it is a beat down sector that could easily transition into an explosive bull market at any time.
So if Uranium is back in a bull market, what do you think investors should expect for the stocks going forward?
I expect big gains for the Uranium miners when they transition into a new bull market. This would be yet another example of market cycles in action and the system I use to trade market cycles is called Stage Analysis.
You can find a detailed description of the system on my website at www.nextbigtrade.com. Basically what happens in Stage Analysis is after a Stage 4 bear market, the market eventually finds a bottom where enough buyers finally come in to create a Stage 1 base.
This is the phase where most people have given up, and interest in the market evaporates because it has been dealing out losses for a long period of time. But since there is so little interest in the market all it takes is a little buying pressure to ignite a new Stage 2 uptrend.
If you look at a lot of charts of the Uranium miners right now, and compare them to the Stage Analysis chart on my website you will see that it looks like we are right on the cusp of the explosive Stage 2 stage for Uranium. We just need to see what happens as next year starts, because sometimes rallies fizzle out, and we need to wait longer for the real breakout. That’s actually what happened for multiple years in the gold market until we got this year’s awesome rally.
Your current thoughts on gold, silver and the mining stocks?
Last time we spoke gold and the mining stocks were in a pullback but they were still above the 30-week moving average. However since that time the downtrend in the gold sector has continued and now the entire sector is in a Stage 4 bear market once again. I know this was surprising for a lot of people, myself included, but if you trade markets for a while you know anything can happen and you should plan for that.
Most of the weakness in the gold sector is due to the renewed Stage 2 bull market in the U.S. dollar. If I had to guess I would think that gold will either continue to move lower, or maybe find a bottom but not start a new rally until this uptrend in the dollar ends.
So if you’re trading using Stage Analysis you have to avoid the gold sector for now since it is in a Stage 4 bear market. Once gold gets in position to move into Stage 2 again, which could be next year or maybe further down the road, I’d be more interested in the sector.
And as the year draws to a close, what would you say is the most important thing you learned in 2016, in regards to investing and the markets?
Let the market tell you what to do, and don’t impose your will on the markets and expect it to do what you want it to do. I think most people take the latter approach, they form an opinion on the markets, and they try to trade it. If the market goes against them and they can’t change their opinion they take big losses.
Using Stage Analysis I was able to successfully trade a wide array of sectors this year including gold, copper, semiconductors, iron ore, and cannabis stocks to name a few.
The reason I was able to do that was because I used my trend following system to identify new trends in those markets, and then trade them according to my rules. I didn’t have an opinion on any of those markets and simply observed a potential opportunity as it arose, and then traded it accordingly.
If I continue to do that next year in 2017 and let the market tell me what to do and follow my trading system then I think I can have another successful year.