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If you’ve been following any of my trades in the past few months, I’ve been very loud about the bull trend in gold, and by extension, precious metal stocks.

One of my favorite names in the space that I continue to own is AngloGold Ashanti (AU). I started buying this stock in late-February, and then in early-March, I issued a “Back up the Truck” alert.

The stock has been on a tear all year - it’s up over 60% year-to-date, while the S&P is only up around 16%.

But this week, I finally decided to “Park the Truck” on this trade - here’s what I mean…

Trading on Cruise Control
 

While it’s true that time in the market matters more than timing the market, timing the market is where one can generate the most alpha. Some people love to disparage the idea of market-timing, mainly because they aren’t very good at it. I’ll be level with you - it takes a lot of time and dedication, but once you have a system down, the rewards only compound from there.

Let me walk you through how we timed the entry in AU. Check out its daily chart below.

If you’ve been reading Sector Bullseye long enough, you know that I’m a fan of cycle theory. But I don’t just use it on its own - we have to combine the indicator with price.

At the end of February, I identified a rare diamond formation. I began to initiate buys as prices emerged from the diamond and decided a couple days later that a “Back up the Truck” position was a good idea.

A “Back up the Truck” trade is simply a bigger position in an account. It means I allocate 15% to the trade instead of just 5-10% of my account like I normally would.

I had a target of 31.00 on AU, which was satisfied this week. By this time, the stock had grown to nearly 23% of my account value - a sizeable position.

You see, selling and capturing gains is part of managing risk in markets. I was able to sell 1/3 of my position for an excellent profit, and tighten up stops further to protect the remaining principle.

I still think there’s more upside in this stock, but now I’ve recovered most of my principle on the initial trade. 

The truth is, the biggest gains to be had in the market come from holding, but getting in at the right time is how you can outperform the market in the long run.

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