As you may recall from this August 26 blog post, iShares Silver Trust ($SLV) was recently in the process of following through on a "bull flag" chart pattern. However, the bull flag breakout failed, causing $SLV to break down below support of its 20-day exponential moving average on September 12.

When $SLV sliced through near-term support on September 12, it caused our swing trade in $AGQ (a leveraged silver ETF) to hit its protective stop, so we quickly cut the loss. Nevertheless, we continued stalking the silver ETF for possible buy re-entry (stay tuned for the mini-lesson on the psychology of re-entering losing trades near the end of this post).

Back With A Vengeance!

Precious Metals ETFs made a massive move yesterday, as the SPDR Gold Trust ($GLD) and iShares Silver Trust ($SLV) jumped 4.4% and 6.4% respectively. Considering both silver and gold were trading substantially lower until late afternoon, the closing price gains were even more impressive.

Yesterday, $SLV "undercut" key support of its 50-day moving average on an intraday basis, but reversed sharply higher after doing so. Volume also surged to 300% its average daily level. This tells us the impressive bullish reversal was confirmed by institutional buying (banks, mutual funds, hedge funds, etc.):



From the peak of its August 27 high, down to the intraday low of September 18, $SLV made a Fibonacci retracement of 61.8% of the last wave up (August 7-27). Since this is considered the last line of defense on a pullback, yesterday's bullish reversal came just in time.

Stand By For Re-Entry

Because of the very convincing bullish reversal off the 50-day moving average (especially with the massive volume), we are now planning to re-enter the silver ETF trade because we expect the price to follow through to the upside over the next few weeks.

As for a potential upside target, let's take a look at the longer-term weekly chart below:



Since $SLV is a shorter-term trend reversal trade (as opposed to a breakout to new highs), we are not looking for a multi-wave advance because there simply is too much overhead resistance.

As such, our target is a rally to near the declining 40-week moving average (nearly the same as the 200-day moving average).

Check Your Ego At The Door

When I was a new trader, I psychologically had a difficult time re-entering a trade that I had recently taken a loss in.

This was particularly true if I was re-entering the trade at a higher price than where I recently sold it.

It's that damn emotion we all must face on a daily basis...ego. It's simply hard for most humans to admit when they're wrong.

However, I quickly realized that my ego was costing me a lot of money and my overall mentality was faulty because stocks and ETFs have no memory; they don't know and couldn't care less whether or not I previously entered a trade.

Rather, I eventually figured out that each new trade entry objectively stands on its own merit, without regard to any previous gains or losses.

Furthermore, I discovered that some of my most profitable trades were those in which the timing of my first entry was wrong, but I subsequently re-entered the trade when momentum turned back in my favor (don't confuse this with "revenge trading").

The reason such trade re-entries are quite profitable is because most other traders and investors sell their positions near the lows (point of maximum pain), thereby absorbing overhead supply.

This, in turn, makes it much easier for a stock/ETF to surge to new highs when it starts heading back up again.

Since the silver ETF trade setup is back in play, subscribing members of our nightly swing trade report should now note our exact entry, stop, and target prices for ProShares Ultra Silver ($AGQ) in the "watchlist" section of today's newsletter (we will buy $AGQ, but prefer to do our chart analysis in $SLV).

What Else Is Shaking?

As for the existing open ETF positions in our swing trading newsletter, both US Oil Fund ($USO) and Guggenheim Solar ETF ($TAN) rallied at least 2.5% higher on increased volume yesterday.

$TAN is now showing an unrealized price gain of 28% since our July 2 entry, and is poised to make another leg up.

The iShares DJ Oil & Gas ETF ($IEO) and First Trust Natural Gas Index ($FCG) also added to their recent breakout gains, and both ETFs are now trading at fresh 52-week highs. We will continue to trail a stop higher to lock in gains.

Finally, yesterday's buy setup in S&P Biotech SPDR ($XBI) triggered for breakout entry and we are now long.

The individual stock side of our model portfolio is rocking as well. Fully 100% of our stock trades (11 out of 11 positions) in The Wagner Daily newsletter are now "in the money."

The highlight of these is $YELP, which is now showing an unrealized gain of 36.4% since our August 21 buy entry(review our analysis of $YELP at original time of entry here).

Since the extremely bullish price action in $YELP has not yet given us a reason to sell, we continue to let the gains ride.

Deron Wagner is the Founder and Head Trader of both Morpheus Capital LP, a U.S. hedge fund, and MorpheusTrading.com, a trader education firm.