Gold

Was a twit and held on too long to the GLD and GDX. Sold the GLD at 104 for $13 profit. I'll sit on GDX til it comes round again. Hopefully sometime before 11 years.

As sharebuilder doesn't like DZZ I went with GLL instead.

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Hmm, ZSL might have been better. Ehh

Probably early but

I sold my PCU shares and am now watching DBA for an entry. Even if early a $11.49 profit is plenty nice.

Holding GLD and GDX for now and watching DZZ for hints of a real reversal.

Another interesting tidbit on gold

From the Kitco BB (Text in blue is the poster's response):

"Quote:

Originally Posted by showtime What is the odds that c of (ii) ended already at 1101 and we are already in (iii) of {iii} of 3? It could but not my preference Could the mkt be that strong, that the (ii) correction was just 36 hours? hmmm doubt it, it would be healthier for the bull to relax just a bit more, IMHO, DYODD. If you are short would you say you better cover with a stop around 1128 or would you say your opinion would still be stop at 1123 or so? mine is just above 1123. But if you have that kind of risk tolerance, then a short stop above 1128 could still be profitable Where is the highest b of (ii) could go before its no longer valid? I would say that above 1138 would lead to a greater break-out into (iii), proving a very small correction for (ii) did in fact occur. You have said in the past, if the mkt goes over 1135, get long as fast as you can? Is this still your opinion? oh yeah! there is a very prominante multi-year channel line just above us now at 1132, a 1/2%+ ($6.00) breach or 4hr close above this level, would likely indicate that we are into mania, the majority of buyers do not care about technicals, they just want thier gold and want it now, at any price. A pure emotional response to the market, another signature of the 'point of recognition'. My concern on the (iii) of {iii} of 3 is the mkt never lets people get in easy. Its either going to be a big shakeout that will get many longs to exit around 1080- 1100 range or it just simply never pulls back to 1080 to 1100 range as (ii) is already done. My observation also, no more pussy-footing around, wild swings are going to become more common. I get the feeling as well, many mid-term traders are on the sidelines right now, looking for trend confirmation. A big move is very near.

The market is currently producing daily swings of 1-2% and having weekly swings of 3-5%. As the bull progresses further, we may start to see 3-5% daily swings and 8-12% weekly swings. When the gold bull is near toping out, I suspect to see daily swings of 8-12% ($100+)."

Market had a large jump at 2300 GMT to 1125+ and sideways since then.

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Hit 1130+ briefly.

I'm pretty happy with copper (pcu) but that low volume makes me think a top is near.

In an update to the linked thread above:

"

Quote:

Originally Posted by neildavis2002 Quad, It looks like POG did in fact climb above 1123 in its opening hours, making another new all time high. Are you looking at this as an extended b wave still? Looking forward to see if the super-bull plays out. Scary times ahead if it does. Looks like Bernanke may have been able to squash the deflationary bug after all. We'll see. Looking forward to your insights. Thanks.

yes I think this is b of (ii) still with c of (ii) down startng soon.

There is a significant pocket of resistance between 1027 and 1033 [Ed. he meant 1127 and 1133], not likely to be taken out on the first try, or even second try, but 3rd time should breach it for sure.

Pog still plenty bullish above 1084.

FYI: EW rules state that waves 2,4,B,X,XX,W,Y,Z,ZZ cannot be 5 wave impulses. They must be 3 wave corrections of some form (A 5 wave sideways triangle is considered a correction, not an impulse). So this move up from friday, so far does not look impulsive to me yet, it looks like a double zig-zag. However, if Pog stays above 1116 and goes to 1130 -1133 before monday is done, then we may have our impulse, so get in quick on the next higher-low, for the possible moon-shot. A fall below 1110 into monday early will kill this view, and suggest a day or two of more corrective behavior, perhaps the wash-out to 108x.

we'll see....

silver, should remain in the triangle presented earlier if POS stays below 17.80, and then correct down with gold into wave C target 16.40 - 16.70. Any move below 16.10 brings much more bearishness.

There is some firm support for crude between 75 and 75.75. I will be looking for a 4 turn bottom."

Interesting quote

From zerohedge:

"And if you want to be really scared, here is the comparable representation for the DJIA in ounces of gold. It cost about 30 ounces to buy the 10,000 Dow last time. Now it costs less than 10."

And from the comments:

"When it takes about 3 ounces of gold to buy the Dow, I will start selling my gold. I have no idea if that means Dow 15,000, and gold $5000, or Dow 6000 and gold $2000."

Interesting that.

Interesting

I've been very careful with my trading for quite a while now. Mainly because the market didn't make sense.

One week things were deflationary and the next inflationary. Now those cycles seem to be daily.

I've been pretty confused over that until I read this.

Seems the Feds have been trying very hard to inflate things for a while now. But any movement in that direction lives only so long as it takes the large trading houses to sell off during the rally.

So how much more before the real bottom is in? When all the trading houses have stopped selling in an effort to offset trades and/or meet margin requirements? I'm not at all sure.

I did see gold rally this week. Enough to make me think that maybe the inflation will start to hit (and I'll finally have some surer footing to make trades), but in my gut I'm thinking not yet. If I were braver I'd buy a couple mini gold or silver contracts and take delivery. Seems gold and silver contracts are much lower than the physical metal. But those 1K oz bars would have to be made into coins or small bars. I have no idea how much of a cut that would take out of the deal.

Changed my P&F charts a bit

Switched to "close only" view.

In looking back on my last SMN trade, I would not have exited if I was following the close only chart.

Looking at the hi/lo chart, I think I would have exited three different times before the current run.

With the close only chart, I may have exited in the 40s but I generally want a two box movement past the last low or high depending on direction that I'm going.

Something I wrote to a friend

And thought I might just post here as well.

This was in response to speculation that the government will start examining what happened and determining who's to blame.

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I'm not so sure the heat has passed.

Also, here are more details on how this bailout is not only for Wall Street, but for the world.

"Larry Kudlow:

Let me just ask you one question. I think you are referring to foreign banks headquartered in the United States. I do not see how foreign investors get bailed out.

Rep. Brad Sherman:

Larry you have to read the bill. It's very clear. The Bank of Shanghai can transfer all of its toxic assets to the Bank of Shanghai of Los Angeles which can then sell them the next day to the Treasury. I had a provision to say if it wasn't owned by an American entity even a subsidiary, but at least an entity in the US, the Treasury can't buy it. It was rejected.

The bill is very clear. Assets now held in China and London can be sold to US entities on Monday and then sold to the Treasury on Tuesday. Paulson has made it clear he will recommend a veto of any bill that contained a clear provision that said if Americans did not own the asset on September 20th that it can't be sold to the Treasury.

Hundreds of billions of dollars are going to bail out foreign investors. They know it, they demanded it and the bill has been carefully written to make sure that can happen."

What the executive branch started (FED and Treasury - Repub controlled) was knocked down by the legislative branch (Dem controlled) the first time. But only because of a large and loud grassroots roar. The Senate (legislative - D) tacked on all sorts of pork (a tax subsidy for wooden arrow makers? sheesh). There are claims that there are new provisions for accountability. But from my reading, the audit board has no teeth. They can't stop anything.

I like Palin and I think she'll come along nicely. My problem with her is on the topic of immigration. I know McCain is for open boarders and I know AK has sanctuary cities. I have no problem with skilled immigrants that 1) come here legally and 2) seek high US salaries (meaning they don't lowball Americans).

At this point is seems to me both parties support this kind of thing.

It is bad enough that we have so many idle hands due to cheap, illegal low-end labor. But now that model is moving up into "professional" employment.

Going back to gold/silver -- I was speaking with my wife about going ahead and starting to buy physical metal as an insurance policy. What my concern was/is that while gold's value stays the same, the dollar moves wildly. Meaning, what I buy now may be worth $30/oz in ten years and $1500/oz in twenty. On thinking about it some more, if physical metal is insurance and as it moves in cycles, I shouldn't buy if I'm anywhere near the peak. So I hunted around for some long term price graphs --

gold -

Gold 1975 to present.
Gold 1985 to present.
Gold 1995 to present.
Gold 2000 to present.

silver -

Silver 1985 to present.
Silver 1995 to present.
Silver 2000 to present.

Those tell me two things -

1) The metals have peaked
2) The metals show the nature of the economy before it is felt

#1 assumes one of two things 1) that at some point soon interest rates will be hiked and the dollar made strong or 2) like oil, there is demand destruction because people don't have the money to buy.

#2 Note the 1980 gold peak. I was pretty young but I remember things being pretty tight in the early 80s. I remember in the late 80s people decrying the rise of the consumer nation. That tends to happen when only a small potion of the population gets to play. Note that by the 90s most of those types of complaints disappeared when every single household started to get all the shiny baubles. By the late 90s everyone was tossing around money. What I'm getting at here is that I think that the next 2-4 years might be tight.

1976 bottom was around $100/oz. That climbed to a 1979 peak of $750/oz (750%) and then dropped to $350/oz (47%) low in 81. Final low in 99 at $250/oz (72% off 350/oz and 34% off peak).

From that 1999 bottom we've hit 1010/oz (400%). Does that mean it will climb near 1875/oz (750%)? I'm continuing to hold my GLD shares in case it does make a move like that.

I don't know. But I'm not sure it is prudent to buy physical metal now that it has climbed more than half the old peak.

I do know I will be buying physical gold once it hits the bottom of its cycle again. That'll be around 343/oz if 1010/oz was the peak and 637/oz if it gets to 1875/oz.

My thinking is this: if by the time I'm 60 and we're going through this again, my gold will be worth something. Should there be a huge boom going on when I'm 60, I know my girl can make use of the gold I've bought.

Also, looking at the historical silver charts, I can't see any reason to hold physical silver. Perhaps if there is total government collapse it will be needed for day to day money, but I don't see that happening.

I suggest eliminating all debt and getting a good low energy freezer. We've finally found a good price on one and are now starting to stock meat and other spendy type items when they go on sell for bulk purchases. I'd also suggest putting 6-12 months salary into a very liquid savings account of some type, regardless of what tiny return you'll get.

Why? Well, considering that both parties are moving so close together on policies, take a look at the possible ramifications of something Obama wants to pass --

"Biden -"Number two, with regard to bankruptcy now, Gwen, what we should be doing now -- and Barack Obama and I support it -- we should be allowing bankruptcy courts to be able to re-adjust not just the interest rate you're paying on your mortgage to be able to stay in your home, but be able to adjust the principal that you owe, the principal that you owe.""

Why would any bank make any loan to anybody if they could be forced to adjust the principal so that they are losing on the deal? Sensing, and I agree with him, suspects that down payments of 20-30% or more along with crazy high interest rates will be on their way.

Take care.

Sold the C $10 September put at $0.10 for a four cent gain.

This covered half the broker fee.

=\

As the debt destruction continues I'm not certain where I should trade. I'm thinking that the dividend stocks I'm in (GDX, PCU, and MAT) will be ok dividend wise, but will fluctuate a good deal.

I'm not sure if I should stay away from the banks for the time being. What is annoying is the action of the banks will affect the commodities in a non-trivial way. I'll be on the lookout for good trades but will be very picky.

Sold SMN at around 39.64 for 3.87 profit. (ehh)

Bought PCU at 23.91


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9/4 update -

Dang it! I thought I saw signs that there would be a break above the 250 EMA, but I've been stung so many times recently I saw the move to the 250 EMA as an exit. Thinking a spike to 48 is possible.

Dang it!

But a comparison to DUG makes me wonder if that will happen. Perhaps today's high (so far) of $43 will be the top before the drop?

Learning Experiences

P&F hi/lo said to get out of SMN, but the 'close only' says to hold on unless it drops to 30-31. Three month or greater regular chart shows that I should stick it out as the 50 and 75 EMA are acting as support. The 250 EMA is acting as resistance at 39.44.

I had been looking to exit at 39 with an eye for the price to go higher. Now I question myself.

Same with C. Both P&Fs and 3 month or greater regular chart show it going down. But it is zipping up.

I suspect that until the credit crunch works itself out the banks will move real odd. I think I'll not touch them again for a long while.

Took a 1/5 holding of MAT.

Wondering about GDX and GLD.

GLD doesn't run close to GDX and has no dividend. Which has me leaning towards GDX more.

At this point I'm thinking of both GDX and GLD to make a 1/5 holding with 1/3 of that holding being GLD. I'll get those in line once GDX and GLD find their bottoms

Entered C $10 September put.

USO - isn't close to target. I wonder if that is due to IYE, DIG, and DUG being focused on oil/gas companies as opposed to oil specifically.

DIG - was six cents off target. Close enough for me with regards to my DUG position. Looking at the "close only" p&f chart, I think the high was 39.61. Offset DUG at $35.85 for a $6.02 profit.

IYE - is a slower mover but it looks like it may have hit bottom.

IYF - dropped below $70

SKF - hit $130

Would do SKF options but the realistic positions are much too spendy. So I went with the Citigroup put.

Not at all sure what to think about SMN.

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And DUG hits near $38 today (Thursday).

>.<

Sold WM

Sold at $4.33 so a 50 cent profit.

Was not focused on the short term and missed the boat both times it came near $6.

I was of an opinion that things were on a real reversal. It seemed early but I bought into what the talking heads were saying.

Now I suspect that oil and the financials will bounce around a bit and then the the bears will have their way.

I'm watching USO, DIG, IYE, DUG, IYF, and SKF for signs of a reversal.

Maybe --

USO: 75-85
DIG: Perhaps a move to 84
IYE: Not sure about this one -- maybe 45
IYF: Hmm... short term - if it drops to 70.. longer - if it goes up.. say around 78.. look for the reverse
SKF: 126-128

Regarding options -- I need to figure out how far out I should buy. Current seems too risky unless I'm aiming for a few cents or am willing to pay through the nose for the options.

Seems to me that the risk/reward ratio is too skewed on expensive fast movers.


Hmmmm

"The Ultrashort Financials (SKF) may be an option as the stock approaches $100. Sell-stops can be set below that level."

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Closed out the GM and SKF options. Approximately 80% loss

It is looking like I set my time horizon too early on my options.

SKF was a pure bet and I'm not going to be too sad if I don't make it.

GM I think will go below $7.50, but I'm now thinking that won't happen before September or October.

Ehh, live and learn.

I did hit 267 though.

DUG and SMN indicate offset on the 5 day charts but hold on the P&F charts.

=\

P&F charts have the edge over the 5 days charts, so I'll hold.

Entered GM Aug 7.50 put

Forgot to mention that I made a small bet on WM at $3.83

Not sure what to think with DUG and SMN. Short term looks down and long term up. I may be setting myself up for a loss but I'll hold on for a bit more.

I want to see PCU reverse $3 before I think it has bottomed. But I think the bottom is near.

MAT and DOW are generally slow movers so it might be a while before they hit bottom.

I'm getting mixed signals on GDX. I think it will move lower but it is acting like it wants to reverse now.

Pure bet puts on SKF $85 Aug are still iffy, but looking ok. SKFTG briefly jumped to 50 cents before dropping to 40 cents. Open interest is up 100.

WM is moving up nicely. Which makes me wonder about SKF's bounces. IYF is showing the drops that are causing SKF's bounces but I'm not sure what is pulling on IYF. WM, WB, and BAC are all up.

Dunno

Made a pure bet of a few Aug SKF $85 puts. Should see that price in 3-6 days if it is gonna move that way.

Thinking of the following:

Moving both accounts to 3/5ths high div paying positions, 1/5 into GLD, and 1/5 into riskier plays.

Perhaps set the sharebuilder drips on the divs and gld.

Things to keep my eye on for dividends

DOW
MAT
GDX
PCU

PCU and MAT might be close to a bottom.

GDX isn't close. I noticed that I bought at the year's high.

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Entered SMN

Entered SMN at $35.77

I would wait for a pullback but many of these short etfs just skyrocket.