General markets getting pretty overbought here. McClellan summation index, Moving average of A/D line, Williams oscillator as overbought as they’ve been in many weeks.
Very curious to see if the overbought/oversold game starts to work again.
No new buys into conditions like this, even though there are a lot of oil and gas stocks, basic materials, some tech, that looks pretty good.
Commodities generally acting oddly divergent. Oil starts the day strong, finishes weak, feels like a reversal.
In a mode where I want to take some profits, if for no other reason than to throw a virgin into the volcano. I don't have it on in this account, but probably start with some of the SU I have over in the long-term account, put on at 18 in December.
PMs started weak, finished fine. Almost lost SLW to a stop, actually felt kinda stupid hanging in there with it. Gold having trouble with its downtrend line (and its 200) since last June. Probably sell the weakest gold - GBG.
Be aware that I am frequently wrong, and often early even when I'm not. As a matter of general principle, perhaps just because it brings a sense of order and control to my universe to sell at a price of my own choosing.
Tuesday, January 6, 2009
Wednesday, December 31, 2008
Long time, no post
Happy New Year to all two of my readers!
OK, it's hard to work full time, do the trades and think aloud in public. A lot of things kept me from writing... health and work issues.
I look at where I stood back in September and now, all those positions are gone.
Sitting here on the last evening of the year, the trading account is +26% for the year.
It's not really relevant, since I'm only writing about my trading account, but the gains don't come close to balancing out the ass-kicking my value-oriented advisors took on my behalf in a separately-managed account. The next time we sit down together, we are going to have to have a frank discussion about the value of trailing stops for winners and stop-losses for losers.
Let's fast-forward...
I went into October in pretty good shape. I was short basic materials (SMN) and gold (DZZ) over long Dow (DDM).
If you pull out a 1-year chart, gold was a head & shoulders top with the neckline at 850 that should've resolved to about 750. I had one batch on at that right shoulder in July about 950 and another batch when it broke the neckline. I put on a third batch when it pulled back to the neckline in August.
I took off the position when the physical metal hit 750, just a matter of discipline. This was a nice, tidy trade. It did just what it was supposed to do.
I had a lot of SMN on. That was my big, secular bet that the Chinese buyer's strike leading up to the Olympics wasn't going to end. If you looked at a broad range of commodity charts, you could see the world just fell off a cliff starting in early July.
It got up to 1150 shares at one point. Every day in the fall, just doing money management, I'd put what I thought were outlandish ask prices out there to take profits on the position. I'd put 100 out there asking +15, +20%... and get hit.
The problem was, as I took profits, I lost my hedges and started getting my ass kicked by the Dow longs. Should've taken them off at the same time, but I was still playing the overbought/oversold oscillator game that had worked so well for 15 months. It completely broke down in October.
I had two good trades in SDP (short utes) and EWV (short Japan).
If you pull out the utilities index XLU on a 2-year, they did a head & shoulders with a neckline about 36 and a target about 29. I couldn't figure out a thesis for it at the time, thought maybe they were predicting inflation? Of course, now we know it's because they're all debt monkeys and were going to have to pay much higher coupons for their paper. So I put on SDP in August. Same situation - as I took it off, I was left exposed on the long side.
Japan just had an ass-ugly chart. Nikkei broke longstanding support back in July. I sold this one really well into those gaps in October. Looking at it, Nikkei is trying to fill that same gap. Starting to look tasty on the short side right here.
The volatility all through late October and November was insane. At my best point, mid-late October, I was up 34% for the year at $202K, but I wound up taking off all my short-side stuff and giving back 10% of that in about a week in November.
I took a deep breath, got completely back to cash, and started playing for volatility. That worked for a week or so.
Bid on the long side -5%, ask +5; bid on the short side +5%, ask -5%, playing for lunch money. In the depths of November, I'd come in net long and get my ass kicked all over again. The newsflow seemed to be driving things. There wasn't a rational strategy you could play that didn't involve foreknowledge of events.
OK, so, where I am today...
Half cash. $95K
- After losing it once to a stop, long TBT, the double-short long bond. As manipulated as this crap is, owning TBT feels like walking up and slapping a cop. I have about $28K of this on. After yesterday, I'm basically flat.
I have no edge on what the Fed will or won't do. I'm just looking at TBT's inverse, the chart for TLT. Textbook exhaustion gaps. So I am long 800 TBT now at various points in that big floating island over the past couple of weeks.
- Long gold, watching that downtrend line very carefully, though. About $16K. Basis of 15.25 on DGP.
- Long a wee bit of gold microcaps (NXG, AGT). About $5K lottery ticket.
A few years back, I did some research on the gold bubble from '76 - 80. Until the final year, you were far better off owning physical metal than miners. The same has been generally true since 2002, due to extraction costs.
In the 70s, gold ran from 35 to 200, got cut in half to 100, then went parabolic at the end of the decade.
In the last year of its run, the best vehicle was stocks on the Toronto Venture Exchange, Canadian microcaps. It's hard to get good data from this period, but from what I've been able to piece together, the *average* junior miner on the TVE had a gain of 350% over the final year. If you could pick a single stock in the top 10% of performers, you had an average gain of 2800%.
A caveat: whether due to mergers, bankruptcy, whatever, not a single one of those tickers existed as of 2003. You have to be willing to take your profits.
So I decided on a strategy of building a basket of junior miners. They had to be cashflow-positive and have low or no debt. Any rate, I wound up with NXG from 0.65 and AGT from 0.18.
There were just some pretty, pretty setups in this group.
- Speaking of pretty setups, biggest (and best) position is long 4000 SLW from 2.73. I got interested because I'm aware of the difficulty obtaining physical silver. Watch how it behaves around that 8 resistance.
- 300 DDM, about 10K
- 300 FXP, about 10.5K.
OK, it's hard to work full time, do the trades and think aloud in public. A lot of things kept me from writing... health and work issues.
I look at where I stood back in September and now, all those positions are gone.
Sitting here on the last evening of the year, the trading account is +26% for the year.
It's not really relevant, since I'm only writing about my trading account, but the gains don't come close to balancing out the ass-kicking my value-oriented advisors took on my behalf in a separately-managed account. The next time we sit down together, we are going to have to have a frank discussion about the value of trailing stops for winners and stop-losses for losers.
Let's fast-forward...
I went into October in pretty good shape. I was short basic materials (SMN) and gold (DZZ) over long Dow (DDM).
If you pull out a 1-year chart, gold was a head & shoulders top with the neckline at 850 that should've resolved to about 750. I had one batch on at that right shoulder in July about 950 and another batch when it broke the neckline. I put on a third batch when it pulled back to the neckline in August.
I took off the position when the physical metal hit 750, just a matter of discipline. This was a nice, tidy trade. It did just what it was supposed to do.
I had a lot of SMN on. That was my big, secular bet that the Chinese buyer's strike leading up to the Olympics wasn't going to end. If you looked at a broad range of commodity charts, you could see the world just fell off a cliff starting in early July.
It got up to 1150 shares at one point. Every day in the fall, just doing money management, I'd put what I thought were outlandish ask prices out there to take profits on the position. I'd put 100 out there asking +15, +20%... and get hit.
The problem was, as I took profits, I lost my hedges and started getting my ass kicked by the Dow longs. Should've taken them off at the same time, but I was still playing the overbought/oversold oscillator game that had worked so well for 15 months. It completely broke down in October.
I had two good trades in SDP (short utes) and EWV (short Japan).
If you pull out the utilities index XLU on a 2-year, they did a head & shoulders with a neckline about 36 and a target about 29. I couldn't figure out a thesis for it at the time, thought maybe they were predicting inflation? Of course, now we know it's because they're all debt monkeys and were going to have to pay much higher coupons for their paper. So I put on SDP in August. Same situation - as I took it off, I was left exposed on the long side.
Japan just had an ass-ugly chart. Nikkei broke longstanding support back in July. I sold this one really well into those gaps in October. Looking at it, Nikkei is trying to fill that same gap. Starting to look tasty on the short side right here.
The volatility all through late October and November was insane. At my best point, mid-late October, I was up 34% for the year at $202K, but I wound up taking off all my short-side stuff and giving back 10% of that in about a week in November.
I took a deep breath, got completely back to cash, and started playing for volatility. That worked for a week or so.
Bid on the long side -5%, ask +5; bid on the short side +5%, ask -5%, playing for lunch money. In the depths of November, I'd come in net long and get my ass kicked all over again. The newsflow seemed to be driving things. There wasn't a rational strategy you could play that didn't involve foreknowledge of events.
OK, so, where I am today...
Half cash. $95K
- After losing it once to a stop, long TBT, the double-short long bond. As manipulated as this crap is, owning TBT feels like walking up and slapping a cop. I have about $28K of this on. After yesterday, I'm basically flat.
I have no edge on what the Fed will or won't do. I'm just looking at TBT's inverse, the chart for TLT. Textbook exhaustion gaps. So I am long 800 TBT now at various points in that big floating island over the past couple of weeks.
- Long gold, watching that downtrend line very carefully, though. About $16K. Basis of 15.25 on DGP.
- Long a wee bit of gold microcaps (NXG, AGT). About $5K lottery ticket.
A few years back, I did some research on the gold bubble from '76 - 80. Until the final year, you were far better off owning physical metal than miners. The same has been generally true since 2002, due to extraction costs.
In the 70s, gold ran from 35 to 200, got cut in half to 100, then went parabolic at the end of the decade.
In the last year of its run, the best vehicle was stocks on the Toronto Venture Exchange, Canadian microcaps. It's hard to get good data from this period, but from what I've been able to piece together, the *average* junior miner on the TVE had a gain of 350% over the final year. If you could pick a single stock in the top 10% of performers, you had an average gain of 2800%.
A caveat: whether due to mergers, bankruptcy, whatever, not a single one of those tickers existed as of 2003. You have to be willing to take your profits.
So I decided on a strategy of building a basket of junior miners. They had to be cashflow-positive and have low or no debt. Any rate, I wound up with NXG from 0.65 and AGT from 0.18.
There were just some pretty, pretty setups in this group.
- Speaking of pretty setups, biggest (and best) position is long 4000 SLW from 2.73. I got interested because I'm aware of the difficulty obtaining physical silver. Watch how it behaves around that 8 resistance.
- 300 DDM, about 10K
- 300 FXP, about 10.5K.
Sunday, September 14, 2008
Very little point in strategizing
Sick the last several days... passed a kidney stone yesterday. I never trade or plan a trade when I'm sick.
Best to stand aside here. LEH is the elephant in the room at the open.
Outside of that, what I'm looking at: FXE makes an island. This is one of several indications $USD might be heading lower.
Best to stand aside here. LEH is the elephant in the room at the open.
Outside of that, what I'm looking at: FXE makes an island. This is one of several indications $USD might be heading lower.
Thursday, September 11, 2008
A little snap trade yesterday
Trying to take advantage of all the intraday volatility plus the fact that LEH looks like a goner.
I got hit, surprisingly, on a lowball bid for some ITM Oct LEH puts, in at 3.30/out at 4.00.
If they're handing out hundred dollar bills at the door, might as well get in line...
I got hit, surprisingly, on a lowball bid for some ITM Oct LEH puts, in at 3.30/out at 4.00.
If they're handing out hundred dollar bills at the door, might as well get in line...
Monday, September 8, 2008
Fannie Monday
My catalyst - Ike entering the GoM - was predicted by the models before the open, so I closed the trade. In, 69.50. Out 75.01.
For a while, I've been watching the $BKX. 75.09 is the 38.02 retracement off the lows of July 15th. It also falls along a one-year trendline. 80 is the bottom of a channel that runs all the way back to 1991, violated in March of this year.
You really have to take a shot at an entry like this. I didn't know an appropriate level to bid for SKF, so I tried and failed at 90. I thought someone might throw theirs away in panic near the open, but it didn't happen.
Noting that RTH cleared a triple-top going back a year. A pullback would be a good spot for a defined-risk entry. I already have a half-position on with a much lower basis, will be looking to add to it.
Got hit, 100 more at 98.16. I arrived at that entry by looking at the 5-day. This would've filled the gap from Friday.
For a while, I've been watching the $BKX. 75.09 is the 38.02 retracement off the lows of July 15th. It also falls along a one-year trendline. 80 is the bottom of a channel that runs all the way back to 1991, violated in March of this year.
You really have to take a shot at an entry like this. I didn't know an appropriate level to bid for SKF, so I tried and failed at 90. I thought someone might throw theirs away in panic near the open, but it didn't happen.
Noting that RTH cleared a triple-top going back a year. A pullback would be a good spot for a defined-risk entry. I already have a half-position on with a much lower basis, will be looking to add to it.
Got hit, 100 more at 98.16. I arrived at that entry by looking at the 5-day. This would've filled the gap from Friday.
Friday, September 5, 2008
Green banana trade for Ike
Several things were in my mind last night - this week's hedge fund redemptions, the dollar/yen cross, Hurricane Ike, Bill Gross' bitchslap.
Oil was down near important support at 100. This looked like as good a time as you'd get to put on a defined-risk trade, really, nothing but a bet with a couple of ways to win.
Sitting at 72 yesterday, DIG looked to me like 2 down and 10 up. With 70 as support and every divergence in the book, I bet on a little overshoot. I put out bids at 69.50, 69, 68.50, 68. Got hit on 250 at 69.50 early in the day.
2 PM runs of all 6 models show Ike skimming south Florida and entering the GoM as a Cat 3.
After the close, we get more Nice, Cheap Words from Treasury about a Fannie/Freddie bailout that ought to goose everything at the open on Monday. The question is whether the bounce lasts a month or an hour in the morning.
Of course, there's always that twinge for selling NLY up only 9% when it's going to pop on Monday. Never regret taking a profit, though.
Oil was down near important support at 100. This looked like as good a time as you'd get to put on a defined-risk trade, really, nothing but a bet with a couple of ways to win.
Sitting at 72 yesterday, DIG looked to me like 2 down and 10 up. With 70 as support and every divergence in the book, I bet on a little overshoot. I put out bids at 69.50, 69, 68.50, 68. Got hit on 250 at 69.50 early in the day.
2 PM runs of all 6 models show Ike skimming south Florida and entering the GoM as a Cat 3.
After the close, we get more Nice, Cheap Words from Treasury about a Fannie/Freddie bailout that ought to goose everything at the open on Monday. The question is whether the bounce lasts a month or an hour in the morning.
Of course, there's always that twinge for selling NLY up only 9% when it's going to pop on Monday. Never regret taking a profit, though.
Thursday, September 4, 2008
Hasty post covering the last few days
Haven't written due to vacation and lots of work-related, well, work.
One snap trade off the big nothingburger hurricane Gustav in WNR. In at 8.75, out at 10.76 for 1000.
Lost NLY to a stop. In 13.76, out 15. A little over 9%.
On the long side, considering the strength of the $HGX, liking LEN in this group as close to 10 as possible.
Many pennants in retail. GPS, KSS, even the RTH. EBHI.
Watching the reverse H&S in BA.
On the short side, lots of toppy-looking action in the transports. NSC looks like a nasty double-top with negative divergences.
There's probably more, but I'm forgetting them, whatever they are.
One snap trade off the big nothingburger hurricane Gustav in WNR. In at 8.75, out at 10.76 for 1000.
Lost NLY to a stop. In 13.76, out 15. A little over 9%.
On the long side, considering the strength of the $HGX, liking LEN in this group as close to 10 as possible.
Many pennants in retail. GPS, KSS, even the RTH. EBHI.
Watching the reverse H&S in BA.
On the short side, lots of toppy-looking action in the transports. NSC looks like a nasty double-top with negative divergences.
There's probably more, but I'm forgetting them, whatever they are.
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