Saturday, December 31, 2011

31 Dec 2011 - The Year in Review (Gold Versus Nasdaq Versus USAGX) (Energy Consumption) (Shiller Data)

This will not focus on political or macro events, but merely the success and failures of this blog and my trading. 

I consider this a successful year for both my trading and my blog's growth.  I'm getting a pretty steady stream of 100 hits a day which is much better than the 20 a year ago. On other fronts, I was turned down about 25 times by different companies for jobs.  Guess what?  This outsider is going to keep doing it while only spending about 35 minutes a day at the computer during trading hours to make decisions.

For people who think I'm here to push an agenda while making money off of ads, please see the below picture for how much I've earned from ads since this blog started.  I don't really know why I'm here because it is not worth it, but I enjoy the opportunity to have somewhat of a voice while having an actual log of successful calls and failures. Maybe I just keep hoping "someone out there will find me" to use the words of Green Day.
In the interest of full disclosure, I decided to report my Jan 3 - Dec 30 2011 trading history.  Find another site that will do that.  There are some serious bruises.

After four long years of many frustrations and a bad 2008 (the only non-profitable year), I handily beat the market in 2011 (20% versus flat) without fancy research reports and using only a few tools.  Granted, this is probably considered a small account to most of you.
Here it is:
I drew black or red lines around massive losses that I incurred.  Most are not realized because I'm stubborn - BBX, CHRS, CPF, MTG, OGXI, SCSS - a total of $14692 - or another ~15% that could have been added to the bottom line .  Maybe they will keep getting bigger and will wipe out all of this year's wins. Who knows? I still believe we are in a long term (decades) bear market, and that is why I haven't closed them. 

BBX is the only one that is not the result of bad money management.  It gapped up and went up 300% the day after I opened the position.  I held it (told you I didn't have emotions) and now the loss is about 50%.  Much better.  The rest I had plenty of opportunities to limit to the losses to about 400 bucks.

A lot of traders tell you to focus on the big wins - having a high slugging percentage and cutting losers.  I still agree with that, but in a sideways year it is harder to get the big winners.  My 2011 history shows a solid batting average and consistency that was able to overcome massive losses and still show a profit.  I am not proud of the losses, but its a learning point for you and me about how important money management is.

Since it is the end of the year, I also wanted to update some of the charts. Here is Gold versus USAGX, Silver, Nasdaq, and the 70s bull markets.

Source:  Various. / yahoo finance.

Gold still seems to resemble several parts of the Nasdaq bull market.

Energy consumption for the US.

 Source:  The economic recovery story doesn't seem to surface here.

I would guess earnings can easily be higher now that debt issuance (& inflation) has largely taken the place of taxation for government spending. 
People keep saying bond yields will rise in the US soon.  Looks like it took about 50 years for yields to get back to where they were in 1921.  Just saying.
Source:  Shiller data.  Dividend yield still doesn't say "buy."  In fact, it is not even close.  Now you know why I stay short on a mattress company.

I marked the three dates above to correspond with the below posts.  Yes, my posts are wishy-washy, but that is because I know I don't know.  I just go with the odds - sorry if I don't lead you more to the water.  Oversold to me means buy most of the time, and overbought means sell most of the time.  I don't need to put more than that.  As for the first half of 2011, as most of you know I am better at calling bottoms than tops.

And I can't find them for whatever reason, but don't forget my posting about how silly it was to be buying silver in April as it hit its 3rd standard deviation.  Or the targets I set 2.5 months ago for silver of 21 - 25 and gold of 1420.  I was junked hard on Zerohedge for both of those predictions...

"The test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time and still retain the ability to function. One should, for example, be able to see that things are hopeless and yet be determined to make them otherwise."
 F. Scott Fitzgerald

I get a lot of my quotes from - check out their site.  Lots of great information.

Thursday, December 29, 2011

29 Dec 2011

Hard bounce off lows for silver today.  Before it really bottoms, I expect a hard rally, followed by a slow drifting fall to a new low below this low.  That is only because that is how it happened in 2008 though, and its a common chart pattern - breaks through resistance line then settles back to it and tags it.

 Hold long decreased today in the short term.  Remember that moving averages lag price.  I ... think... that this is because the 3 day started to trend down three days ago and just finally went under the 7 day today.  I'm saying this to prove that this doesn't necessarily mean today was weak beneath the covers.  I mainly use this one for divergences anyways, and finding extreme oversold points as this is better at finding bottoms than tops.
 Possible target for the S&P500 is the white line.  I know it seems insane that the "Santa Rally" could continue into the new year, but the market seems to always does the insane thing.  The slope of that white line is about 5 points down a month.  Today it stands at 1308.  If they meet at the beginning of February, it will be 1303, March, 1298, and so on.  My readers are smart so they can do the math.
This is just showing that we made a new high today on this cycle, and that we are nowhere near overbought on TSV and RSI for the long term chart I run.  We are not for the other time periods either, but this was the most extreme.  Humans like extremes to both sides.  Its what we do best and its why we only have two political parties.  The world is much more simple in black and white, but "the truth resists simplicity."  Watch birds sometime, you will notice how each one jumps to each location until they all finally reach that spot, and then, I must assume, the leaders leave again and its a drift of them to that spot.  And sometimes the leaders leave before the others even get there and the other birds have to skip the first location all together.  You can see it in trading and fashion very easily.

New high on this (4 week cumulative highs / lows) today as well for this cycle.  However, the stochastics are high here, but can remain so for a long time. 

"I learned very early and painfully that you have to decide at the outset whether you are trying to make money or to make sense, as they are mutually exclusive."
-- R. Buckminster Fuller

Wednesday, December 28, 2011

28 Dec 2011

 Medium term still playing in the middle.
Short term worked off its overbought condition today.
 GDX TSV and Stochastics ridiculously low.  This doesn't mean its a low.
 Stochastics low on this.  Broke trendline today, we will need to watch what happens next to see if it finds support.
See stochastics on silver.

27 Dec 2011

As you can see we are still pretty low on the McClellan summation index for RSI and TSV.  Whether or not this will provide a tailwind is TBD.
 As we are near overbought levels in the short term, we can expect some weakness.  We will have to see how strong any support is. 
New highs back at new high since we "bottomed."

I looked at a few gold stocks..  They have been persistently weak for some time.  Maybe too long.  See RIC, GDX, EXK and MDW.

Thursday, December 22, 2011

22 Dec 2011

 Close to overbought in the short term.
In the middle in the medium term.

VIX has broken down very quickly.  Maybe a little too quickly.  We'll have to watch. 

"Don't worry about what anybody else is going to do. The best way to predict the future is to invent it."
-- Alan Kay

Wednesday, December 21, 2011

21 Dec 2011

My macro view hasn't changed much from two nights ago - weakness got too extended even with us heading into a recession.  If you want to take some risk, you probably can as trade lightens through the holidays.  But you must be aware that a downgrade or any big news item can quickly ruin any "Santa" rally.

Tuesday, December 20, 2011

Monday, December 19, 2011

19 Dec 2011

The TSV shows it is getting quite low.  We don't have a sign for a bottom yet, but we are closer to a short term bottom than a top.  I hate to admit this because it doesn't line up with what I think should happen according to the calendar.  I was thinking we would have a very weak January, but that is looking increasingly unlikely as we sell down lately just because there is no much room left.  Maybe we will have to wait until February.  I will keep my eyes open.  Not going long anything, but not initiating shorts here although tempting.  Too little reward for too much risk.

Good luck.

Sunday, December 18, 2011

18 Dec 2011

 Bouncing off oversold levels in the short term
 Stalling in the medium term.  Negative divergence from last peak for hold short.
These are all saying about the same thing.  The bottom one is in no-man's land.

Moral certainty is always a sign of cultural inferiority. The more uncivilized the man, the surer he is that he knows precisely what is right and what is wrong. All human progress, even in morals, has been the work of men who have doubted the current moral values, not of men who have whooped them up and tried to enforce them. The truly civilized man is always skeptical and tolerant.
-- H L Mencken

Thursday, December 15, 2011

15 Dec 2011

I think I recorded it here, but my target for gold was 1420 - the resistance area for the end of 2010, which pretty much necessitates a break in this trendline.  There are reasons to believe there will be a bounce before that happens.  See TSV (middle) hitting 2nd standard deviation.  Stochastics (not on this chart) are also oversold, and we sit upon massive support.

Wednesday, December 14, 2011

14 Dec 2011

This story is very, very interesting.  No idea if it is true not.
I think I get it.  Some old rich Chinese families lent gold and silver a long time ago to the US and received various financial instruments for it.  They claim to have THOUSANDS of TRILLIONS in these financial instruments, and it appears they want to collect.  Still reading...
Update:  Got word that this is a common con to try getting people to invest in fake bonds.

Covered shorts today.  I had bad entries on them (I did not get them at the recent peak in my short term indicator - about half way down), my short term indicator is a bit oversold, and felt a bailout package coming soon.  Depending on any retracement, I may re-open at a better spot.  We'll remain flexible and see.  Remember, I hate in between spots.

 New lows aren't getting extremely high.
 Medium term not oversold yet.  Negatively divergent from last peak.
 Mostly oversold in the short term.  There are higher readings, but is it worth messing with?

Tuesday, December 13, 2011

13 Dec 2011

 Still in the middle in the medium term
 Nearly oversold in the short term. 
In negative territory in the long term ...

"Only a brave person is willing honestly to admit, and fearlessly to face, what a sincere and logical mind discovers."
-- Rodan of Alexandria

Monday, December 12, 2011

12 Dec 2011 (Night)

12 Dec 2011

Considering these are both in middle areas, there is not much that can be gained from them.  The only thing that seems to show is that this latest rally did not help the medium term indicator much.  The short term bounced at a higher low on Friday, and is neither oversold nor overbought.

It appears that gold and silver are currently negatively breaking through the support lines of my triangles.  However, gold's candlestick will still lie across the line.  Silver will as well, but it is far more likely to consider this a real break.