***APRIL 2012 Gold and Silver Stocks/Options/Futures trading thread***
ProofCollection
Posts: 6,107 ✭✭✭✭✭
This is a continuation of the March thread for discussion of precious metals stocks, options, and futures trading.
0
Comments
Knowledge is the enemy of fear
Even the HGSI was at -16% last week indicating that among the several dozen leading gold analysts they follow all were bearish...and with net short positions.
Some concern that silver gapped up 27c on last night's open and has moved upwards. Gold filled its gap shortly after the usual London AM takedown.
The dollar moved up following the London open to fill the gap at 79.12 left from Friday. It could bounce a bit further to backtest last week's flag breakdown. So
far gold and silver don't seem to care that the Euro took a dive this morning to break below the 2-3 uptrend line. It just may end up being a quick bend and snap to
catch traders off guard.
<< <i>Gold sentiment in the toilet >>
Yep, that is the fuel that I think will send gold soaring. I think we'll see gold at $1800 give or take (and possibly much higher) at the end of the month. There's a great case to be made for $1800 gold by the end of next week. This holiday week could see some upward grinding, but cycle timing indicates that next week could be big.
Lots of moving averages and trendlines in the 33-34 area on silver.
Gold volatility index at 17--found support here several times during March.
Knowledge is the enemy of fear
Obviously I expected the miners to bounce as I've been playing them the last few weeks, but their underperformance could be foretelling of continued and prolonged sideways action in metals--which is what I expect anyway.
Knowledge is the enemy of fear
<< <i>Sold this weeks $50 call against GDX position. GDX up against 50dma--may push thru, but I think will remain near the 50dma for the holiday shortened week. So I took in a little premium while getting some downside protection.
Lots of moving averages and trendlines in the 33-34 area on silver.
Gold volatility index at 17--found support here several times during March. >>
Meant to write the 20dma above. Sorry for the confusion.
In any case, GDX was turned back hard at the 20dma. Now, do I buy back my covered calls? Maybe sell the 49 put which if it expires would be a 0.5% return for 2 days (125% annualized)? Nah, I still think market will act squirrely this week.
Knowledge is the enemy of fear
Knowledge is the enemy of fear
Im long TBT at 20.21.
Knowledge is the enemy of fear
<< <i>Currently, gold is showing one of the worst relative strength days vs other metals in the complex, that I have seen in the last few years. I think there is a decent chance(above 50%) we'll see gold take out the intermediate lows at @ 1550. >>
A well-coordinated gold raid at precisely 2 pm today (shortly after comex close and at the time of the FOMC minutes). Interesting that silver was not hit as hard though I suspect it will be dealt with tomorrow to fill Sunday night's gap of $32.10. Was much more impressed with the action in the TIPs today which reached higher to close a gap just above 181, then collapsed to 117. TIPs and Gold have moved somewhat in unison for quite some time. Just on today's action TIPs put in a weekly bearish engulfing candle. If that momentum continues it will likely draw gold down with it. Dollar and gold were the specific targets today so no surprise they took the brunt of the move. The dollar bounced back up to retest the flag breakdown of March 26th-29th. It also retested a swing line going back to its March 8th left shoulder. Another tenth or two and it will backtest the neckline of the 1 month H&S. Needs to continue back above 79.6 to keep the move going. Gold held up well today with support at $1667-$1673 while Comex was open. There have been a lot of 2 pm takedowns since last August.
I think it implodes much deeper than that. If I was Sir Iron Balls I might consider going all in on ZSL. But i'll probably just play a few SLV puts. Gotta watch the miners to make sure they hold supports. I think they will outperform PMs if PMs do continue to slide.
The miners have been fun to trade the last week or so. I dont want to see that game end so quickly.
Knowledge is the enemy of fear
BTW, I was lucky enough to pivot to a short GLD position yesterday (short a vertical call spread).
good call
Liberty: Parent of Science & Industry
<< <i>This negative sentiment is exactly what gold needs to spring to life Thursday or Monday. This is a great buying opportunity, take advantage of it. >>
I dont listen to the newsletter sentiment, but rather the sentiment from J6P, and they all keep saying, buy, buy, buy. Public sentiment always carries much more weight than "professional" sentiment. At least thats been my experience and is what im gonna follow.
Gold is down $100 from the negative HGSI reading.
Knowledge is the enemy of fear
<< <i>This negative sentiment is exactly what gold needs to spring to life Thursday or Monday. This is a great buying opportunity, take advantage of it. >>
Current move still looks to be early (ie wave 3 decline). Wouldn't be surprised if this lasts well into next week. GLD, SLV, and SIL gaps from very early January now on the table, basically reversing all those Jan-Feb gains. I'm just hoping this stops by gold $1560-$1600 to form a more symmetric IH&S.....rather than probing for a new low <$1523. GDX
breaking below the expanding wedge trend line (log chart) not good news for miners. Gap down today in gld, slv, and miners suggests this was just the first half of this move.
Interesting that this move was well timed after Comex close yesterday so that all of these COT tracks will be washed away by next week's report. Didn't expect that silver gap
at $32.10 to end this move. It was just the first and most obvious target.
Jim Dimmick nailed this from 2 weeks ago.
<< <i>I dont listen to the newsletter sentiment, but rather the sentiment from J6P, and they all keep saying, buy, buy, buy. >>
J6P is clueless about the need and benefits of gold. J6P is still cashing in their old jewelry and grandpa's coins at the Cash for Gold store. J6P is not buying and has yet to.
<< <i>
<< <i>I dont listen to the newsletter sentiment, but rather the sentiment from J6P, and they all keep saying, buy, buy, buy. >>
J6P is clueless about the need and benefits of gold. J6P is still cashing in their old jewelry and grandpa's coins at the Cash for Gold store. J6P is not buying and has yet to. >>
I think J6P is already heavily invested. He's been hearing commercials to buy gold for 4 years how. If he aint in now, then he never will be. The J6P you speak of is really Joe 40oz. These people will never buy gold.
Knowledge is the enemy of fear
The monthly RSI on AAPL is 87.73. It has only been as high or higher a few times in the last 28 years. In 1987, 2000, 2005 and 2007. What happened in 1987? What happened in 2000? What happened in 2007/08? Maybe we can hope for a repeat of 2005.
But in each of the 4 previous times, AAPL dropped 25% or more over the next 1-2 months.
They say a picture is worth a 1000 words. But only 2 come to mind--OH $HIT.
Knowledge is the enemy of fear
Liberty: Parent of Science & Industry
<< <i>Not scared. Know its coming but later in 2012. Markets that go parabolic always end badly. Problem is knowing when they end. Trading the short side could be costly for many months to come. It will end and will end bad. When? >>
Its pretty easy to see from the chart. Within 1-2 months of the RSI hitting similar levels, AAPL was down 40%. In fact, the overall market peaked at the same exact time. Maybe AAPL can push another $100 higher over the next few weeks, but that will only mean it has an additional $100 to drop and the magnitude will be greater.
BTW--If you own PMs, expect them to crater as well. History has proven them to be horrible stores of stock market crashes. But maybe this time will be different---LOL.
Knowledge is the enemy of fear
<< <i>
<< <i>Not scared. Know its coming but later in 2012. Markets that go parabolic always end badly. Problem is knowing when they end. Trading the short side could be costly for many months to come. It will end and will end bad. When? >>
Its pretty easy to see from the chart. Within 1-2 months of the RSI hitting similar levels, AAPL was down 40%. In fact, the overall market peaked at the same exact time. Maybe AAPL can push another $100 higher over the next few weeks, but that will only mean it has an additional $100 to drop and the magnitude will be greater.
BTW--If you own PMs, expect them to crater as well. History has proven them to be horrible stores of stock market crashes. But maybe this time will be different---LOL. >>
I think you are correct there will be large drops in all asset classes. Stocks may be worse but PMs may tumble too. It's really hard to be sitting in cash right now but it could be the best strategy this year. Buy this Q3 or Q4 when asset prices are much lower.
There is no stock market crash coming this quarter. There is way too much liquidity sloshing around the markets and that will continue to fuel the upside. The SP500 charts look great and are holding up well. They need another 2-3 weeks to consolidate the last move and then they will be ready to go again.
Bought GLD calls around 1618 gold yesterday and I think 1613 will prove to be the bottom. Look for gold to take off today or Monday. Reistance is 1643 for today which is where I think it will end up. Gold buying early this week was hindered by the gold buying strike in India and closed markets in Asia. The Asians will snap up gold at these levels. The UK central bank is discussing beefing up it's gold reserves. Central bank buying of gold has been strong and will probably get stronger.
Gold still isn't on the radar of any J6Ps that I know. There's still only a few percent of Americans that own gold for investment purposes. How many own stocks, 48%? There is still plenty of room for J6P to enter the market.
Indeed not. I prefer to follow XAU--very similar--but more established index and not subject to management fees. Chart should the break of the wedge, but im holding (hopeful) for support at 160 to hold. If not, then it gets ugly and confirms that PMs will turn in a horrible performance this year.
Knowledge is the enemy of fear
Sold NUGT at 13.13. Didnt move all afternoon. Not good that it didnt bounce more, especially since metals were higher. But maybe I can still afford a McDonalds value meal.
Knowledge is the enemy of fear
Knowledge is the enemy of fear
Knowledge is the enemy of fear
I wanted to see a longer term picture so I produced this graph. Conclusion: Yup, gold needs to bounce right now. Otherwise the ratio probably heads to 0.10 which is the 50% retracement of the upmove and some price support. Easy to figure possible price scenerios.
Knowledge is the enemy of fear
Log charts just smooth out the parabola. If that upper trendline breaks, then the ratio still drops to a minimum of .10. Doesnt matter the scaling of the chart.
Knowledge is the enemy of fear
Knowledge is the enemy of fear
I knew it would happen.
<< <i>I would expect all ratios to have changed significantly since the advent of the massive bailouts and stimulus programs. Any type of traditional financial analysis is bound to have been skewed badly with these massive injections of capital and their resulting market distortions. That's my opinion. >>
The reason for the change in ratio is irrelevent. Its obvious that the ratio changed. Thats the perception of reality that I mention.
Question is....Is the trend of the ratio about to change? And it matters not why it might change, just that it does. The ratio changed from 12 to 17 last summer. Did it really matter why? Thats the beauty of charts, they dont give a rats behind the reason for the move. Only things important are the magnitude and rate of change.
Knowledge is the enemy of fear
http://stockcharts.com/h-sc/ui?s=$TSX&p=D&yr=3&mn=8&dy=0&id=p70027116338&a=204395865
Knowledge is the enemy of fear
<< <i>Another view of the Canadian stock market. QE doesnt seem to have helped this commodity based economy/market. Rut-Roh. >>
The TSX chart shown is in Canadian dollars, isn't it? Show me the chart priced in USD equivalent, I bet the picture is quite different given the movement both currencies have had over this period. Not sure why a US QE program would affect the value of Canadian stocks that are priced in Canadian dollars, which it seems is what you are implying. Maybe I don't understand.
A retest down to the 200 dma would seem to be a logical place to go...and retest the region of the 3rd/4th legs on the way up as well as filling a big gap at 7.25.
It also recently tried to break out above the 2 yr downtrend line but was pushed back below it. Over the past 2 yrs it appears that the major moves have lasted
around 7-8 months each. The current rebound is now about as old as the last plunge from Feb 2011- Sep 2011. The last 2 rebounds into early spring resulted in
drops through the following summer. This chart has a number of similarities to the gold/silver ratio chart too.
The Dow/Gold ratio has formed what appears to be a broadening top/expanding wedge pattern over the past 100 yrs. A completion of that pattern would
suggest a final ending point below the last low (ie <1). This pattern is basically a result of inflationary pressures/govt market interventions or the tail wagging
the dog. On each cycle the system becomes more unstable and volatile.
Dow vs. Gold
The reason for the change in ratio is irrelevent. Its obvious that the ratio changed. Thats the perception of reality that I mention.
Question is....Is the trend of the ratio about to change?
I think that the reason is indeed important. Our perceptions are in agreement that the ratio has changed significantly, so why do you have to ask whether or not the trend is about to change? Don't you already know what to expect and what is real? Do you seriously pull the trigger on a trade without knowing any background info?
And it matters not why it might change, just that it does. The ratio changed from 12 to 17 last summer. Did it really matter why?
You ask whether or not the trend of the ratio is about to change, but you state that the reason for any change is irrelevant. I disagree.
If you have to ask whether or not the trend of the ratio is about to change - then the reason does matter.
If you don't know what the chart's relationship is to the rest of the real world, the chart is meaningless. Which chart are you referring to? Do you mean .12 to .17 on the GOLD:INDU chart? If that's the chart you're talking about, it looks obvious to me that the rate of change is mainly in reaction to real world monetary policy since 2008.
Thats the beauty of charts, they dont give a rats behind the reason for the move. Only things important are the magnitude and rate of change.
Ya think? What if it's a long-lasting "flash crash" for keeps, and you think it's not real? What if you see a huge magnitude move accompanied by a steep rate of change and go "all in", only to find out that it's not real? Not good.
I'm just sayin' - unless you're plugged in with Timmy & the boys, you're only gambling like everyone else - the main difference is that you are playing more hands at a time than most of us. I don't doubt that you're sufficiently nimble and good at what you do, but man, I still worry about ya.
I knew it would happen.
<< <i>
<< <i>Another view of the Canadian stock market. QE doesnt seem to have helped this commodity based economy/market. Rut-Roh. >>
The TSX chart shown is in Canadian dollars, isn't it? Show me the chart priced in USD equivalent, I bet the picture is quite different given the movement both currencies have had over this period. Not sure why a US QE program would affect the value of Canadian stocks that are priced in Canadian dollars, which it seems is what you are implying. Maybe I don't understand. >>
Well, that not what I was implying, just showing a terrible looking and underperforming chart of an economy that is supposed to benefit from rising commodity prices that supposedly has a strong banking system and is fiscally sound. It is also very simple when one considers that the Cando and USD have been trading with great stability---the 200dma is at 100 or par. If the Canadian dollar had fluctuated wildly over the last 2 years, you may have a point, but that isnt the case.
It really doesnt matter if the chart is priced in US$, Can$ or casino chips. If the moving averages are pointing lower, then its going down.
The value of the Can$ vs the US$ is the same today as in April 2010. The TSX is also at the same level. So Canada had a stable currency, and their stock market hasnt moved. Do you think Canadians feel richer? If rising commodites havent benefitted the Canadian economy, then what will?
Roadrunner, the chart I show is the same as the one you posted, just inverted. Yours shows an overall trend down, while mine up. No disagreement on the direction, im just making a comment a possible near-term direction change. Even sideways is different than straight up.
Knowledge is the enemy of fear
Yes. Background is history. I dont care what something did yesterday, I want to know what it will do tomorrow.
You ask whether or not the trend of the ratio is about to change, but you state that the reason for any change is irrelevant. I disagree.
If you have to ask whether or not the trend of the ratio is about to change - then the reason does matter.
If you don't know what the chart's relationship is to the rest of the real world, the chart is meaningless. Which chart are you referring to? Do you mean .12 to .17 on the GOLD:INDU chart? If that's the chart you're talking about, it looks obvious to me that the rate of change is mainly in reaction to real world monetary policy since 2008
You're missing my point completely. I am not asking myself why it changed, as it makes mo difference. You are trying use fundamental analysis to justify technical analysis. I am just keeping the two completely separate.
You assumption might be that since the FED is going to constantly print money or that the debt will never get smaller, then gold must go up. Well, since Aug the Fed has printed money and the debt has not gone lower, yet gold is dropped 20%. These are facts. It matters not to me whether the Fed prints or that gold drops.
I posted a simple chart showing that gold and the DOW needed to maintain a certain a certain ratio, otherwise that ratio could change 20%. Whats the big deal?
What if you see a huge magnitude move accompanied by a steep rate of change and go "all in", only to find out that it's not real? Not good
If it moved, then how was it not real? It wouldnt matter if there was some conspiracy or manipulation to have caused the move, the fact that it moved is still a fact. If you lost money based on a perception that YOU thought was real, does that mean what happened wasnt real, or that YOUR perception was wrong?
Knowledge is the enemy of fear
I knew it would happen.
<< <i>Got long GDX. Lets see if this dog still has any bark. >>
Sold this weeks covered calls against position. Would result in 3.2% return over 3 days if called away. But not sure if that happens as GDX is up against the broken trendline and is close to filling last weeks gap and the 20dma.
Knowledge is the enemy of fear
<< <i>Are you not trying to predict what will happen based on the chart? I think I really am missing your point. >>
Yup, simply saying that if the upper trendline breaks then the ratio will drop. I think your point is that "fundamentals" havent changed, so this break is impossible, no?
Knowledge is the enemy of fear
I was well aware the charts were saying the same thing, just in different terms. Just saying that I find some charts easier to work with than others. While some use the SGR (silver
to gold ratio) I like to use the GSR. Maybe it's all in my head but some charts show things more easily.
The USERX gold mutual fund chart below is a decent miner proxy and has been around for over 35 yrs. I find it interesting the cup and handle formations being built, especially the 20 yr one. Note also that the breakout of the 24 yr downtrend line in 2010 was just retested. The big failure in 2008 was basically a pullback from the 21 yr downtrend line. Recent low around 11.7 has pulled it back to the 10 yr uptrend line. The 20 yr chart doesn't make things look as dismal as when looking at 2 yr performance. The current 2-3 yr ABC correction looks similar to what occurred back in the early 1990's and would be expected action following the run up from 2001-2008.
The GDX gap in the 48's essentially was filled today. Let's see if it can make it to the 52 gap before OE hits occur mid-next week. Nothing accomplished until HUI can get back above the
475-480 breakdown of the 18 month H&S/wedge.
USERX chart - 25 yrs
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
I'm saying that if the trendline breaks, it's because something is causing it to break:
1) Gold could be falling
2) The Dow could be rising
Or both.
Looking at the chart, it appears that the increases in the ratio seem to parallel the Fed's injections of liquidity, which appears to have favored gold over the Dow. This is counter-intuitive to me.
The declining ratio at this time seems to tell me that liquidity is being withheld, which appears to be favoring the Dow over gold. This is also counter-intuitive to me.
I think your point is that "fundamentals" havent changed, so this break is impossible, no?
Nah, I was only looking at the ratio. I really don't know if the fundamentals are changing, because there's not much reliable information being released these days - as far as I can tell. I'm not even sure if price is a reliable indicator of anything.
I was much more confident when I was younger and knew so much more than I do now.
I knew it would happen.
is this true?
Liberty: Parent of Science & Industry
<< <i>I heard online here that it's best to sell all stocks and buy all gold until the Dow:gold ratio is 1:1, that's the target
is this true? >>
Don't know if that's true. But today, if I were given only the 2 choices of having all my money in a DOW index fund or all of it in physical 1 oz gold coins held in my possession, the
choice would not be difficult.
<< <i>I heard online here that it's best to sell all stocks and buy all gold until the Dow:gold ratio is 1:1, that's the target
is this true? >>
That is where it is all going, IMO. The timing is what I do not have a handle on.