Wednesday, September 30, 2009
Here are the results of the Silver trade I suggested the other day, how I did it. We are now having a bounce up today, which should setup another short entry any day now, perhaps tomorrow.
My entry was right where I indicated it should be at 16.82 below the low of that day on the chart I posted the day before it. I work with exit targets, so when we got down close to it and started to bounce without my number being hit, I went to the market to take profits. It wound up right at 4K per contract as I have indicated on the chart.
This is a perfect example of a fundamentally setup market combined with a valid short term entry and exit. It is the correct way to trade in my view, and I have tried just about every approach that has ever been thought up or written about over the years.
One big picture thought for the time at hand. The markets always have a way of trapping the most people looking the wrong way at the wrong time. This is not necessarily true of just regular every day activity, but more so at critical junctures.
It is my opinion now that the move that would trap the most people looking the wrong way is a huge dollar rally and huge stock decline, accompanied by a big rally in bonds and drop in Gold. Of course they are all linked so if any one of them happens so will the others. The danger now is that I don't feel from just the general vibe of things, that very many people now are worried about a stock market drop anymore.
The other anecdotal evidence, is the ads in the paper to buy your gold items for cash, urgently. That is akin to a front page wall street journal article about how you can't lose buying real estate for an investment in 2005. Certain things just jump out at you as very odd and signs of a top. This for me is one of them, especially when I combine it with the fundamental setup at hand for Gold. We also do have that sell signal from Friday in stocks based on commercial selling in the indexes. There is also a lunar/astological cycle in play here. I am far from an expert in this area, but I cannot dispute how accurate some of these darn things have been historically. Larry Pesavento who is one of the kings of this approach stated on a radio show I heard the other day that he thought Monday was the high based on this.
I would not usually pay attention to that, but when it comes at a time when all the other things I watch are in place, I think we got some trouble here. Time to exit longs or be short depending on how aggressive you are. I shorted the SP futures this am.
Just in case anyone is not sure what to do here is the summary
Sunday, September 27, 2009
1) I hope anyone who is a short term trader took that Silver trade entry from a few days ago.
2) The final numbers from the COT report do support the Friday post with one exception, the sentiment was not as bullish. However, the sharp spike down in the Commercials position is confirmed, hence this sell setup is in place.
Here is a market that seems setup to fall, the Australian Dollar.
Notice in the graph with the red line the huge commercial selling we are getting and have been for the last few months. Combine this with what is now a very heavy long position by the large specs, the black line in the same graph. Notice how they are now at the same amount of longs as they were when the high was made last year and how much lower the price is. Also, the commercials are at the same level of shorts that they were at that same peak.
Neither of these positions are at historical high or low levels yet so it is possible more room to run could be at hand. It is typical for comms to fade trends as they are hedgers by nature. As a result, you can not just go out and sell the minute you see something like this. Had you done that a couple of month back you would have been clobberred.
What this does tell you is too look for entry patterns now that support this fundamental setup. It certainly would be better if we had this picture without as large of a rally as we have had, but you can't always have everything perfect. In face my experience has been when everything is perfect, I lose money on the trades!
Friday, September 25, 2009
The last commentary on this, I had exited my short for a small loss recognizing we were heading higher. We have gone higher since that time as I thought we would. However, we now once again have some interesting things developing. The Blue line on the top chart is the price of the 30 yr bonds. You can see from the olive lines on the top chart that the bond market had been rallying sharply prior to the lows being made. This is a known bullish pattern, and it worked, the market rallied strongly out of those lows. That was one reason of many that I posted late Feb that I thought a rally was coming.
Now we have the opposite situation, bonds declining with stocks rallying, a known bearish pattern. Timing this is another matter, this is a big picture fundamental situation that can take weeks to reverse the price direction as it did at the lows. It is just something to be generally aware of as a backdrop in your analysis.
In the sub graphs, you see the red arrows. These final weekly positions are not in stone yet because the COT report has not been released. These are projections, so they could change. If they were to stay here, we have sentiment back in the bullish camp( bearish ) and my hybrid COT index in the bearish camp ( bearish ). There is also a technical indicator at the bottom that is too complex to explain here, but that is a sell pattern in it.
So, we have a fundamental bearish interest rate situation, with three shorter term bearish indications. As a result, once again I am looking for sell entries. This is not a sell at the market situation, it is a now look for whatever patterns you use to get in and out of things with, and take the sells not the buys.
Wednesday, September 23, 2009
If yesterdays low were to go today, we would have a valid short entry, indicated on the chart. This may look like a basic 1-2-3 pattern, and I suppose it is technically. However, with a 1 -2 - 3 you really want the first leg to break a trend line and this has not done that.
This market is setup fundamentally, seasonally, and now we have a chart pattern. As a result this is a trade that has to be done win, lose or draw. We never know from trade to trade which ones will turn out to be the gems and which will be coal. I spend alot of my waking hours trying to pre-determine this to no avail.
As to the Gold Bugs that I have argued with recently, there is no way of knowing if this will just be a trade or a major decline. However, the fundamentals say a large decline. Time will tell. I still maintain that if you are someone who has had the foresight to have bought Gold or Silver in bullion or coins, you have had a tremendous run.
Don't get greedy
Sunday, September 20, 2009
IS THIS A GOLDEN MOMENT?
To the left is a cash Gold weekly chart. You will have to click on it to enlarge it, there is alot going on here. Below price the first pane is the commercials positions, then next below that is the small speculators gross position in number of contracts held.
There has been an overwheliming media blitz on this market and why it should go to 1500, 2500, I even heard 10,000 from Joe Battalia( he was quoting someone else ). The question is, is this the time to get heavily invested in GOLD? Who knows maybe it will reach these lofty numbers.
If you look at who has been buying this market on this recent runup, it is Small Speculators in record numbers, basically me and you. While at the same time, the Commercials ( the large players with the most money ) have been selling it. It is not shown here, but the Commercials have their largest short position ever in this market right now. They clearly are in a bearish mode. Notice what has happened each time historically when this combination has been in place, where the Speculators net long position was at the level it is now ( horizontal line in third pane ), and the commercials have been heavy sellers. The red arrows mark these instances. We have had substantial declines in this market when this combination has been present.
Anecdotally, I literally do not know of a single person other than me that thinks this is a fantastic shorting opportunity. Maybe I am the village idiot, but I am a trader, and this is a very good setup for a decline. On a shorter term basis, a few things I look at shorter term are very close to lining up for a short entry and it could happen this week. Whether or not the commercials will be big buyers on a decline, will determine whether or not I am bullish on any decline.
I do not think with this combination in place, it is a good time for someone who is contemplating a long term investment here, to commit money to this. It is clearly a time for a trader to look for a short entry. Seasonally we have also tended to decline, make a top in October, so we are close there as well.
I have commented that this is now a bubble, now you can see why I think this graphically. The small money is driving this last move not the big.
Tuesday, September 15, 2009
Well after reviewing just on a preliminary basis and as well as reading one of the COT gurus takes on the new COT report, my preliminary conclusion is that the game is being rigged further. They are keeping some things the same but the added items are the ones that concern me.
If you think about the 2008 Crude runup and how that was perpetuated by the CFTC and their mis-classifying CIT funds as commercials, basically allowing speculators unlimited position sizes. Then combine that with that idiot or liar depending on how you look at it, Gensler who feigned outrage and vowed action. You have to conclude that this whole thing is just one rigged outcome.
It appears to me now that in the new report, the PPT may now be allowed hedgers position sizes and also have it be obscured to the point where we will not know, it makes me think that any meaningful decline could be off the board for quite some time. This is going to allow them to basically permanently rig the uptrend if I am right about this. I still need to read the other gurus review of this to see if he has different insights, but that is my preliminary take on this.
In the face of a record number of lies being told by the new administration, is the greatest one of all, the pledge for more transparency. This could not be more opposite of that. If I was not actually living through this period in politics I would simply never have believed this type of thing could occur in the US.
It appears to me that what has been decided behind closed doors is that they government is going to take over the stock market and make sure it does not go down. The reality of it is, this benefits alot of people but what I think will happen is that it will stay flat. In most socialist historical examples, things just kind of stay the same, the big swings are taken out. So, they are taking out the downside, but also likely the upside.
I will come back with more once I have reviewed this further.
Sunday, September 13, 2009
Here we once again have a megaphone pattern on the daily E mini SP 500 chart. You can see the night session so far on Sunday is very weak. The trigger for this pattern is a close below the prior days low, so we could see it on Monday. The PPT will be lurking and will not like this action when they wake up in the morning if it stays here, so we will have to see if they will allow this. When the volume is this light they can push the market around very easily.
I will not play this entry as my main pattern I look for is not there and there is not enough confirmation on this trade for me. However, we know a correction is coming at some point and now that is likely to be at a time nobody expects. This setup for tommorrow probably qualifies for that. They have now made another new high so many may feel very comfortable we are off and running again.
This can potentially be a classic trap pattern where a new high gets made then is immediately reversed. These can be very powerful moves in the opposite direction when they occur.
Thursday, September 10, 2009
Referring back to my last two posts on the Stock Market, August 29 then the one following where I said the mood had changed, it is time to admit to being wrong. I pitched my SH short position 2 days ago and took a small loss. As a trader there is a time to admit when you are wrong, and quickly head to the sidelines. This is how you survive.
The last minute rally before the holiday on the futures buy program by what appeared to be the PPT was my first alarm. I actually added at the close that day in case it was not the PPT. The very next trading day it was proven to be them by the price action. At this point also if you look at the chart, Sentiment has gotten pretty negative, a bullish sign. Also, my hybrid indicator of the COT report has moved back into bullish mode. Also, we have had yet another sell indication, the red vertical line fail.
When you get failed sell signals it is simply telling us not to sell, kind of obvious right? In all seriousness, when a series of sell signals fail, that is a buy signal in my view. I am still of the view that this market is being almost completely held up by the US government right now, which makes me fearful of a downside air pocket at any time. Since it is being done for political reasons surrounding the health care debate, they could let it drop any time to make a point if the bill appears to be going down.
This is overall as a result, just a treacherous environment to trade in, one of the most difficult I have ever seen. I will still be looking to see if another sell signal shows up, but will be very demanding of it at this point. We are almost at the point where the last trade trigger I use is going to turn up, which will eliminate sells entirely for awhile. It has not done so yet but will in a few days if we do not get a decline.
Net Net, I am now flat, and if yesterdays low gets taken today I will likely re-enter a short side position. Barring that is it time to be on the sidelines here.
Wednesday, September 09, 2009
Here is my nemesis market for this year, I have been wrong one time after another here. Although I am going to blame one of my mentors for this who has been bullish all year and just been way off.
Ultimately it falls upon us as individuals to be responsible for what we do, although the trend in society is certainly to blame everyone else and not yourself. I am a throw back, so I admit to being just awful here and I should have seen my errors on my own before now.
How did I blow this? Mostly as you can see there was heavy commercial buying all the way down here during this cliff dive. I know that in general that is bullish, but also that commercials hedge quite a bit, so when you see it in a strong downtrend, it does not mean nearly as much as when it is in an uptrend. This is where my error was made. Once the pivots were taken out, the uptrend was over and I should have been looking for commercial selling for shorts.
As you can see, we have gotten that in the last two weeks, and bingo a big decline. If the dollar does not stabilize here, the whole deflation scenario goes out the window. Just by watching the markets as a whole we do not quite have the plethora of uptrends in commodities to make me overly worried yet about inflation, but it could be a matter of time.
On a side note, if anyone who reads this has any political influence, I would love to see them stir up something on the PPT. What they are doing now is just so outrageous that they are ruining the markets. Markets need to be allowed to function normally, just forcing them in only one direction to support an Intern who gives a speech every day on something is just beyond anything I ever thought I would see. It is also an abuse of the PPT's original intention when it was formed. They were supposed to support huge plunges, not further political agendas on a daily basis.
So what if the market happens to go down on a day health care is discussed. That does not mean anything. They need to quit trying to manipulate every thought people have for gods sake. Maybe people don't like certain ideas because they are lousy, and those ideas should be modified. Have we entered a phase where a group of political insiders are going to tell us every thought we should have?
Saturday, September 05, 2009
Thursday, September 03, 2009
Todays comedy from the spin masters was that it was good news that weekly unemployment claims were only 560k instead of the 570k that was anticipated! Are you serious? How in the world do people keep their jobs lying like this. I am not sure if it is just me getting cynical with age or if the media has just completely lost all sense of integrity.
However, the grand act of manipulation is ahead of us tommorrow when the NFP report is released. They will doctor the current number but look for a revision on the last months doctored number to accompany it. In other words, they falsify the data or play with it to show a certain current month number then revise the previous months fake number to it's real number. They hope for that to be a behind the scenes number that gets overlooked with everyone focusing on the current headline number.
This is not a new trick from Barry's group, it has been going on for decades. However, they do seem to be ramping up the doctoring of things.
Look for a sharp spike up that gets reversed on that report tommorrow. I think we are in a sell the rally mode here for a bit.