Saturday, August 17, 2013

A lot To Say Today

The markets have finally woke up, especially the commodity sector which I specialize in trading.  It has been a long winter.  Exciting times are once again upon us.

Before I get there,I want to talk about some market, professional, and personal milestones that we crossed in August.

Personally; I trade a stock called XIV the most of all of the stocks I trade.  Why?  Because it is designed to go up. When the market is moving higher, you can simply go with the flow, buy oversold and sell overbought on the 60 or the daily.  When the market is down, like last Thursday and Friday, you can catch very profitable one or two day moves off of extreme oversold settings.  In this case 3% in 24 hours, in a down market!

I spent a lot of time looking for a high probability of profit, simple indicator(s), to trigger a trade.  I found it, and I decided to share it with everybody in a eBook I wrote for Amazon.  They have accepted and published it, and the reviews have been very good so far.  We hit number seven on the stock and investing bestseller list in its first week, and I priced it reasonable for all to afford and enjoy.  It is called Stock Volatility Money Machine, by Bob Kudla, on Amazon.

Professionally;  I have had my trading signal service for three years now.  We have provided over 500 signals that average over 100% annualized, average time in trade 7 days, and as part of a portfolio of equal sized trades, with trade costs factored in, over 30% returns in 2011 and 2012.  My expectations are we will meet or exceed that in 2013.  These are very good returns considering most of my trades are in the commodity space.

Based on my paying subscribers feedback, I now list and vary my trade size, average costs and how I buy and sell to maximize my profits when riding a trend, especially triple leveraged ETF's. This more closely matches my own portfolio.  The cost of my service ranges from $20-$40 a month, month to month. It is a great value. is the website.

I also started posting some trades daily for free, that hit my buy or short screen, that are not in my focus list, but might be of interest to you.  These are swing trades primarily (5-7 day trades)

Now for the market.  The sea change I have been talking about, has occurred, and my view is the money flow is moving to hard assets from financial assets, even though in my opinion there is no economic growth. This is a currency problem.  Look at when SPY started sputtering, and when gold and oil started moving higher; July 1st.  That is when the YEN collapse started reversing in on itself.  The Yen is even more shorted than the dollar, and as this trade unwinds, it will move higher than the dollar.  Traders were shorting gold, miner, commodities, and buying SPY, and high beta.  This is all being reversed.

In addition, and much more toxic is the 10 year is moving much higher, this adds fuel to the fire as funds bailout of losses in fixed incomes, look at financial assets struggling, see commodities moving higher, and jump in.  None of this makes economical sense, but relative value currency sense.  If our dollar continues to weaken, all of these moves will accelerate until food and oil prices crush the economy.

Tactically, next week can be a bit of a counter trend move.  Gold, silver, miners, oil and such are all hitting resistance zones of fib/trend/MA lines. Don't short into these retracements.  Use them to add to positions. SPY looks like the 50 may hold again, and I expect they will try to chase out weak shorts.  We will short the failure of this counter trend with TZA and EDZ.

Natural Gas looks like a bottom is in, and I am very close to buy signals on GASL and CHK.  I am also watching BHI for a trendline breakout, and DDD for a high beta long trade if we move sharply higher.

Please ask any question or provide any feedback in the comments area. Enjoy the charts.

Saturday, August 10, 2013

My Meme is Still in Place

SPY is struggling, gold, silver, and the miners starting to move higher, oil tested a bottom, but still not sure if we break out, and waiting for Natural Gas to bottom.

Knowing this, I am holding SH, and will add TZA at some point in the next two week.  I will probably scale in 20% positions over the next 5 down days.  SAND and SLW are coming to life.  I was disappointed in myself for not buying more on the latest weakness, and instead of chasing, I will buy some SIL as my miner proxy and hold my current size in SLW.  Scaling in positions of PLG, and PPP as 50% move lotteries.

Regarding NUGT, I was early on the last attempt for a breakout, and closed my position for a small loss. This time my scale in was better timed, and we are solidly green and I have started to scale out on the last two day big moves higher.  My plan for the foreseeable future will be to buy back on weakness and sell strength.  The upcoming move higher in the miners will give us 200-300% returns, and still allow us to manage our risks.  YOU CAN'T BUY and HOLD triples.

I have the same game plan for SAND, I am nearly break even, and I have capital to buy 500 more shares to get me to 2,500.  Once there, I will be scaling in and out.  Everyone is getting excited about a 30% move in GLD, and if that happens SAND will double, and with no COMEX default risk.  So staying with SAND, and occasional GLD call debit spreads.

Energy, it sure wants to go higher, and I have been trading aggressively in the futures market, but also built positions in NBR, XCO, NE, and CPE.  We had nice trades in SGY and SWN, and stopped out of NFX for a loss.  I want to buy BHI, at some point, as well.  The drillers seem to be saying we are moving higher, even the NatGas drillers.

I am not keen on solar, except that YGE looks like it wants to break out (chart below).

Next week is OPEX week, so we could see some head fakes, but those will be opportunities to add back. The market is starting to get fun trading again.

Saturday, August 3, 2013

Broken Record

This week I am going to stay macro, and insert a number of charts I read that gives credence to my thesis that we have;

  • Topped in the broad indexes
  • Bottomed in bonds (interest rates to fall)
  • Bottomed in gold
  • Bottomed in miners
  • Energy is a wild card, but probably a chance for a blowout
Citi put out a great report on the data points that lead the equity markets.  I copy and pasted a couple of their charts to visualize the point I have been making.  I also copy and pasted charts from Calibrated Confidence to show that investors are tapped out.

To set  the stage, my view is the lemon has been squeezed.  Volatility has been rung out,  investors are all in, smart money is leaving as retail money is moving in, housing has been squeezed, car sales have been squeezed, and margins have been squeezed.

It got us marginal new highs in equities, but now revenue sequentially is moving lower, energy costs are moving higher, interest rates are moving higher, the dollar is eliminating free FX profits, the consumer is tapped, employment has peaked, and the government is stalemated.  energy, jobs, and finance charges are all that matter to people, and that will drop consumer confidence, which sets the dominoes in motion.

Fascinating charts below.  You can read my previous weeks posts to understand my linkages between gold, energy, bonds, etc.