Wednesday, February 22, 2012



Yesterday I hit a milestone, the traffic in the blog passed 100,000 visitors. This was just in total not one day like I am sure many of the other blogs routinely bypass. I am a small town Midwestern boy with humble beginnings, so I guess I am easily thrilled. However since it does appear that the number of returning visitors is increasing steadily, the content must not be too bad in spite of all the Gold bugs wondering when I am finally going to get it. Speaking of that, the Gold orders I placed yesterday to short were never filled since the market took off to the up side. It appears to me now that once again Silver has taken over the weaker position from Gold, so I will try and short that market tomorrow if we break down. Today the range from yesterday is just too big to sell below in my opinion, even if it were to be breached. I am sure the people who think Gold is a buy every time a blade of grass grows are just rolling their eyes again at me trying to short this sucker. So be it. I follow my rules and they say to sell. When they say to buy, I will buy.

I am currently reading the book AMERICAN SNIPER the incredible autobiography of Navy Seal Chris Kyle. I always felt that was one potential alternate road for me that I never went down. I have no idea whether I would have made it or not, but the level of discipline required is something I definitely have in spades. This is an amazing book, I suggest reading it. This guy is what America is all about and he makes me proud to be an American.

You can see the Commercials have been steady sellers of this market recently, and Sentiment also got too bullish at the recent high. What can I say, this is a sell setup whether it works or not. One thing people can learn from this is that I stick to my guns, to my rules. They do not always work, but my track record proves they work well enough over time. I don't start jumping around every time I take a loss or miss a move. That will insure you will chase your tail your whole life. Yes minor adjustments are constantly made, that is part of adapting. However, when I see this type of thing going on it does tell me that on average, the next large move should be down. Therefore, I want to look to the short side.


The next chart looks pretty similar, and it is of the Copper trade I got stopped out of for a small gain of only $1312 per contract. You can see the setup looks very similar to that of Silver. This one looked for a while like it was going to be a big fish, but as often is the case, there is a first retracement of the new down trend. We have had so many V tops and bottoms recently, that I took this thinking that we might get another one but it was not to be. This is still a sell setup on this bounce, so I am looking for another way in here.

The last chart shows something unusual that happened in the currencies. The three strongest ones broke down and the two weakest ones the Swiss and Euro held up. I don't recall ever seeing this happen before like this and I do not have an explanation. The markets are full of random activity so perhaps this is just more of that. 

We do appear to be putting in a short term top in stocks here right on schedule with the mystery forecast chart. That thing never ceases to amaze me with it's accuracy. I did mention I am looking for a way into the short side here but have not taken the plunge yet.

Good Trading


John M said...

Congratulations on the readership milestone, that's pretty darn good in my book. I keep telling people about your blog, don't know if any of them come by, but I hope they do, for their own sakes.

Rigorous said...

I don’t trade at all like Chris. I read for the philosophy and inspiration which is the same no matter the style of trading. And over time, I am getting better at this business. Chris is an abundance of knowledge and experience and I learn new things. Lack of discipline is my biggest problem.

A week and a half ago I shorted the S&P 500 index with ETFs and am in the hole by 16 S&P 500 points. My system did not invalidate my short yet so I am still short. I don’t usually stop out because I use my system to tell me when the short is no longer valid.

As this rally is so persistent, I am prepared to get out at a loss. Then I will reverse and go long as it seems there are few nervous sellers.

Chris Johnston said...

Thanks John

Rigorous, if you are trading a mechanical system you have to follow the rules come hell or high water. There will be losses that is really the only thing that can ever be guaranteed. If you just follow your rules and wind up taking a loss it is just like any other trade. It is not easy, but to the best degree you can you must try to treat wins and losses the same. They are transactions basically.

Robert said...

i know you want to short gold but it just keeps going up--i agree with you that gold is extremely over bought but its been like that for weeks now
What is your position on gold now --still looking to short soon?

Bob Lau said...

Hi Chris,

Ordering the book ... American Sniper. I thought the record confirmed kill by a sniper belongs to Carlos Hathcock?

Chris Johnston said...

Bob this guy has been on Bill O'Reilly so I don't think they could be able to say he has the record if he does not. That show has millions of viewers every day, a false claim could never be made on it. He does not say in the book the exact number, rumor is it is 170ish

Robert, my short term stuff on Gold is not a sell anymore other than the COT stuff which is only a setup not an entry. There is no sell signal in sight for me at the moment, it has rallied too much. I would assume you are a holder of Gold based on your view of it so things look good at the moment for you. The 4 year cycle top is still due right here which is something Larry Williams has been talking about and he was also trying to short this market when I was. He was in the same trade I was in. Nothing imminent at all now. Bubbles as I have said are impossible to time accurately at least for me even though I have caught a few pretty well over the years.

Robert said...

I agree with your comments.all except gold is in a bubble--ain't so--
not sure what your definition is of a bubble but no matter what it is gold is not in a bubble--
I guess we agree to disagree--

Keep up the good work

Chris Johnston said...

Yes indeed Robert, we have a friendly disagreement. However I have reached an end to talking about this. My view on this has been stated over and over again. Lets move on to something else, deal?

Robert said...

I agree-just one last word-here is a little something to read
An affluent neighbourhood in Palm Springs was recently surveyed loosely
on their gold buying habits. As it turns out the bubble talk on CNBC and in the
news isn’t quite as dramatic as they portray it to be as not many Americans are
yet buying gold. We’ve got much further to go in this secular bull market so
get your gold while it’s cheap as the recent breakout points to much higher
prices later on in 2012.
also you base a lot of your shorting of gold on thosr fudged COT reports--as if those reports are worth anything--
the trend has ben up for ten years so stop fighting it
That my final word..we don't agre but its fun going back and forth
You do a great job on your blog and I look forward to it every day