I dumped the gold and silver stocks I was holding. You’ve just got to respect that red wide range bar on the XAU daily, and 60 minute charts. What had me bullish was the uptrending 20 day moving average, which I thought might start pulling the 50dma out of it’s flatline posture. There was recent 60-day highs in stocks AU, and SSRI.

Without a bounce in the XAU today though, it would leave too much portential for more downside. Preservation of my capital is most important, and with a few of the winning trades from yesterday, turning into losers, I felt no need to compound the situation. I lost around 4R. We’ll see how the XAU handles 135, if it gets there, or the daily 20dma. My guess is churning and possibly day trades will be the only action in the sector. Nice XAU selloff into the close, didn’t help the bulls much either.

I’ve been discussing gold and oil stocks, so will continue with that theme tonight. U.S. oil inventory levels data provided the catalyst to take the OIH to an area not seen since May 2006. Gold stocks regained their bullish posture with a reversal bar on the XAU daily. As I mentioned yesterday, I thought they would reverse here. Here’s a trade in AU I took today, posturing myself for a move higher.

The buy signal came on a move above 45.97. I decided to use the pivot low as a stop, which gave R a risk of .15. My plan was to sell half at 2R and hold the rest as a swing trade, or get stopped at break even. As you can see, I ended up holding some AU. I also entered some MDG, and SSRI held on too.

I don’t hear much talk about gold stocks, even though gold is acting bully. It’s either because I’ve got CNBC on mute too much, or the news of the day is the Dow hitting 13k. Fine with me.