The 38.2%, Retrace

The last update contained the following statement:

“Such a shallow retrace is rare. More typical is at least a 38.2%, level being tested before price reverses and heads lower. “

Back in the days of my engineering work (see About), when making a statement or conclusion, other engineers (or science professionals) would immediately expect some kind of proof or supporting documentation.

It’s just the way their brains worked; it’s somewhat an implied (unspoken) requirement of the industry and a good thing as well.

A good engineering team (along with technicians) functioned more like a select military unit than a civilian office.

Very heady stuff; especially if you’re on a major project like aircraft flight test and certification.

So, after observing and working thirty-plus years of price action, the empirical observation of 38.2%, retrace being more common than 23.6%, had become my own mental note. Filed away with the other mental notes of price action.

That note’s easily supported … even on the fly as we’ll see below.

We have three charts of equities in the silver/gold mining sector that are currently all in a retrace.

Two of those went straight to 38.2%, while one of them hit 23.6%, first and then went on to 38.2%.

Agnico Eagle Mines (AEM) retraces to 38.2% and stalls.

Seabridge Gold (SA) retraces to 38.2% and stalls.

Wheaton Precious Metals (WPM) retraces first to 23.6%, and then moves on to 38.2% … and stalls.

Reading price action is partially an art-form and partially a science. The one thing that can’t (ever) be leap-frogged is experience.

Dr. Elder said it himself when he said ‘trading is an old man’s game’.

If you don’t have (but want) the experience, it’s best to get started now. Start racking up the hours … days … weeks and years.

Market Summary:

Steven Van Meter in this update (time stamp 1:39) shows the Rydex Bull/Bear ratio (courtesy of northmantrader.com). That indicator, along with what seems like everything else, is at a never before extreme.

Margin debt too, is literally off the charts.

To end on a more sober note, this link supports the prior statement about how many have received so-called ‘speck’ protection.

This video hints at what may be a likely outcome.

More from the source itself.

Stay Tuned

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.