Monday, 26 September 2011

Into gold

I just reinvested 25% of my silver profits into Gold bullion, a  no-brainer for me really.  I have a lot of dollars in a trading account  so it's a nice hedge for that, I am not convinced of the view that there  will be hyperinflation at some point, nor that gold will ever be part  of a monetary unit.  However, I realise I could easily be wrong and want  to hedge against that.  If there is one thing you can count on, it's  for politicians to repeatedly make bad decisions.  I am quite sure that  if gold were to be considered as part of a monetary unit, it will be the  very last option available on the table, and by that time things could  be a real mess.  I've done very well indeed with silver, but it's far  less well rounded as a hedge than gold is.

I may put another 25%  of profits in over the next few days.  I'm keeping the rest since if the  precious metals story turns out to be complete bolshoi longer term, I  still have the gains to show for it.

I'm a fan of Moses Kim  from, he seems quite shrewd and reckons there's  more to come on the downside.  His latest post;

Gold's Collapse Continues

"As  I write this, gold is trading at  $1591 in the overnight markets, after  trading as low as $1531.  Surprised? You shouldn't be. Gold was  overstretched and needed a  breather. I am actually starting to think we  will see gold in the $1400  range.

Gold has monster  corrections  all the time, yet people are surprised when they come.  Every time gold  rallies, gold bugs say the world is ending and  hyperinflation is  imminent. This doesn't make sense to me. Treasuries  are hitting high  after high, which means the interest payments on our  debt are holding  stable, and somehow gold is supposed to skyrocket?  Let's be objective  here.

True believers in gold should  take a  one month vacation and not even look at the price of gold. When  your  vacation is over, buy gold at whatever price it's trading at.  I  honestly believe this is a better strategy for most people than  the  alternative, which is to constantly monitor gold prices and buy and  sell  in an emotional frenzy. Let gold bounce off the 200-day moving  average,  then let's start talking about a rally."

As an aside William Patalon III, Executive Editor, Money Morning posted a story on 20th September, the headline -

Why We Know Gold Prices Are Headed Higher

You gotta love it, gold now $200 lower.  I'll be paying close attention to this guy in the future!


As regards futures trading, I still haven't received my copy of Windows 7 that I ordered that I need so I can run the PC software provided by my broker.  I ordered it from Amazon, delivery date states between 22nd September and 4th October...

I can't complain since it's still within the "delivery window", I'll just need to be patient. 

Post date 23rd September (forgot to post this at the time...)

I think this may be the end of the cyclical bull market in silver. As a result of yesterday's drop my NAV dropped by 2.6%.

Previously in April, I bought puts on SLV, and sold half of my physical right at the top, I then cashed in the puts between $33.75 and $35, and bought back my physical position at $37. At the time people were rubbishing the idea of it being a top (apart from Bubb). My thinking was that the bull market would continue, but that the price would have to reach and exceed $50 for this to be confirmed to be the case in my mind. Selling after a drop is not typically what you do in markets, however, the meaning of yesterday's price action and the price action in the markets from a macro perspective could be very significant in my opinion.

After much vacillating, late yesterday I sold my entire physical silver position for US Dollars, I got out at $36.4. I am now entirely in cash.

Today I see silver down a further 10%, so at the moment it looks like the correct decision, but it's too early to say.

Only time will tell.

Tuesday, 20 September 2011

NASDAQ diverging from other indices

I've not really been checking my indicators of late since I can't trade right now but thought I'd I'd post this, a sell signal on the NASDAQ that triggered on the close yesterday;

DBDT sell signal E-Mini NASDAQ - 1 year chart

E-Mini NASDAQ - 1 year chart;

This is NYSE composite with Dow Jones Transporation Index and SPX;

Divergence between the NASDAQ and these the indices.

And divergence between the E-Mini NASDAQ and AUD/JPY, EUR/USD and AUD/USD - 6 week chart;

A review of

   19th September 2011

There  are  a seemingly  endless supply of technical indicators a trader  or  investor can choose  from, and since many are derived solely from  one  data series - the  price of a security, it's important to  complement  these by including  sentiment indicators as part of any  market  analysis.  

SentimenTrader began in 2001 and  is operated by
Jason Goepfert, a trader of 15 years, the founder and president of Sundial Capital Research, Inc.

Sundial's focus is on "
the research and practical application of mass psychology to the financial markets".  Their work has been mentioned in prominent   media  such as Barron's, CNN, CNBC, SFO Magazine, The  Economist,   Reuters,  The Wall Street Journal, Active Trader, Futures,  and  TradingMarkets.
SentimenTrader  is  a  subcription access website, they offer a 14 day trial with  no   obligation, along with options to subscribe on a monthly  ($25),   quarterly ($70) or yearly ($250) basis.

Once you're  logged in  you find a well organized page with a bar along  the top with  drop down  menus available under most headings, aside from  the  "Intraday" heading.


The  "Stocks"   "Bonds" and "More" headings have further sub-menus allowing  you to get   the information you are looking for quickly.   To start out, I  found   it was useful to head for the "Complete List" sections, you can  then   scroll down the list of available confidence indexes, models  and   indicators to get an idea of what is available.  There is a lot  of   information on SentimenTrader and it seems quite comprehensive.  Eg  For   stocks there are: proprietary models, numerous Volatilty,  Put/Call   ratio, Breadth and Sector indicators along with many  economic  surveys.   There are also many indicators for each of COT,  Shorts, Cash  levels  (eg Mutual fund cash) and Rydex.   On the complete  list page data  is  in the following format;

The  data  is  available to download in Excel format for those that wish to,  the  last  column is a Bullish - Bearish scale that allows a quick  glance   showing how bullish or bearish the reading is.  You can also  bring up  charts depicting the data;

Example chart;

For   Bonds,  there are indicators for Rydex fund flows, Put/Call ratios,   Trader  Commitments and Surveys.  What caught my eye was the Treasury   Bond  Indicator Score, this a form of composite indicator proprietary   to  SentimentTrader where they weighted and combined data from   sentiment  indicators for the bond market, together with put/call   ratios, Rydex  mutual fund flows, sentiment surveys and Commitments of   Traders  data.  The result is an overbought/oversold indicator that   looks very  useful;

For Commodities, there are indicators for Trader Commitments, Public Opinion, Rydex Fund Flow
   and Individual Contracts.    For the Individual Contracts, all major   Currencies, Energy, Metals,  Grains, Softs and Meat contracts  are   covered, although it should be  noted that Platinum and Palladium are   not featured.   Seasonality charts  are also available for each contract   listed within the Individual  Contracts section.
The "Public Opinion" charts are of notable interest, an excerpt from an explanation on the website;

"To  calculate  this gauge of public              opinion, we have  created an  index  based on many of the established              surveys  currently  in  existence, some of which are noted below.                We have  looked  at the history of the surveys to determine how                accurately  they have measured extremes in the past, and weighted                 their influence in our indicator appropriately based off   that               analysis."

The following is SentimenTrader's Public Opinion chart for silver as it was towards the end of April 2011;

This  chart  played an important role in my analysis of the silver  market  back  then, I was not a subscriber back then, but I found this  chart and  it  led me to their website.   The analysis was posted  on  Green Energy Investors  (GEI), with others contributing  theirs  also, in a collaborative  effort that led to a very accurate and  profitable  top call in silver.   Even some of the non-traders took  action, such as  swapping silver for  gold.

The initial thread on GEI that started that  process,
can be found at: "$50-ish Peak in Silver Coming? Hunting the Top "


Moving on to the Models section, these are also proprietary to SentimenTrader;

In  a  similar vein to the Treasury Bond Indicator Score these  are  weighted  composites of sentiment indicators, also depicted  as  oscillators,  suggesting overbought/oversold conditions.  These  are  offered over a  variety of timeframes, from intraday to a few  days,  weeks or months.    Since I mainly trade E-Mini NASDAQ futures  the  STEM.MR NASDAQ is of  potential interest (although I haven't  properly  studied it yet) and  could be useful as a filter for trading  signals  from other indicators,  as it suggests points where rallies may  be  overdone, and where  sell-off's may be nearing an end.

The  charts on the Intraday  section show two week periods for the  S&P  500 and NASDAQ 100, and  are updated every 15 minutes, charts  showing  the STEM.MR model are shown  beneath each, along with cumulative  tick, a  price oscillator, breadth  charts, VIX and Put/Call ratios.   This  isn't part of the site I  generally use since I prefer to have my  own  charts set up through my  trading platform with my own settings  applied  however for those not at  their normal workstation it's helpful  to  have on the site, rather than  you having to look elsewhere.

Finally,  under the More section  you can find seasonality charts for  each month  of the year for the  S&P 500 with data covering 1950  -  2006.    You can also check  seasonal performance of the S&P  500  around  various holidays eg  Labor Day, New Year's Day etc.  This  is an  interesting feature I haven't  come across before and allows you  to  quickly gain an understanding of  market activity around  various  seasonal dates.

Other features  I like from this  website are the Sentiment Summary on  the main page  that gives a brief  run down for the day and some  commentary, both on a 1  to 5 day and 1  to 3 month basis.  As a  subscriber you also get a daily  email with  interesting commentary and  analysis including general equity  market  indicators, and also details  and analysis of the top  sentiment  stories, the most recent being about a  Wall Street research  report  highlighting a  long-term sell signal from  the Coppock  Curve  indicator.  You can also create a list of your  favorite charts,  saving  you time when you want to refer back to your  preferred charts.

Overall  I  think sentimenTrader is well worth the subscription.  The  fact  that  all of the information is well organized and formatted makes  it  very  user friendly and they've covered a lot of bases with the  range  of  content, making it appealing to both the trading and  investing   community.   I'm also a big fan of their proprietary  indicators.


Tuesday, 6 September 2011

Back in the UK

I'm baaaaack, and boy is it freezing back home.  It's no wonder so many  brits head mediterranean bound each year, (and in the twilight of their  years).



It  looks as though my call for a potential "Silver style" correction in  gold hasn't borne out, although the next few days should be interesting  since gold may be forming a double top;

Gold futures;

I made a very good call on GDX (Gold miners) back on 10th August on the gold thread on


Gold topped on 20th Feb 2009, 2 weeks before the stock market bottomed.

I  just  checked my proprietary DBDT indicator and it gave a buy signal on  GDX  by the close of trade on 10th August.  That's quite interesting for  me  since historically my indicator has been reasonably accurate with  GDX.

GDX buy signal 10th August;

GDX 1 year;

Also a buy signal on XAU (Gold/Silver index)

If  gold  remains at elevated levels and crude remains suppressed then I  would  certainly think there is a strong chance of a very large  upward  breakout for the gold miners."

GDX today with 10th August marked;

I also made a good call on EUR/USD before my trip abroad;

And how about the ugly sister?;


The  first  word that came to mind here is - Precarious.  If I could  still  trade  through ThinkorSwim right now I would be minded to buy some  FXE  puts  here."

EUR/USD today;

I  would have lost buying puts on GLD but made decent gains on the other  two had I not been without a broker.  ThinkorSwim no longer offer  brokerage services outside the US and Canada, before my holiday I'd  instructed a new broker Mirus Futures to organise the account  transfer from TOS to them.  Nothing has happened.  I'm  having second thoughts about Mirus, I spoke to them on the phone before  my break and they told me not to worry, everything will be sorted blah blah blah. 

I'm now going to review my options regarding a new broker - Mirus have not inspired me with confidence.  They might have at least emailed me if  there was a problem, but there hasn't been any email or phone message  left from them.  On the plus side TOS advised me that my account would  be closed and I still have login access, including to  the Prophet charts I use to calculate my indicator charts, so that is very useful.  I can't count on it lasting though.