Wednesday, November 9, 2011

and here's the payoff....

Those 3 previous posts were entirely in service to this fourth one.

Here's $HUI at end of day. Look at it.

The green is meant to illustrate that $HUI has often fallen to touch the EMA(8) before recovering. We're there right now. That's why I went to big cash a few days ago... I was no longer interested in chasing anything way beyond the EMA(8), up in the 2nd standard deviation, so I decided to let it come to me.

So today I bought $10K FR, $10K MFL, $10K SBB, and another $5K of AR. All at the end of the day. That's only 1/3 of my cash. That's in case we get a bounce tomorrow. After all, $HUI has only fallen to the EMA(8). It tends to recover from that quite a bit. And today it fell because the doom that nobody gave a shit about yesterday has suddenly hit everyone's minds today.

Note that I'd probably like to hold a few small amounts of those 4 stocks in any case. So I bought them today cos they were a fair bit cheaper than they were yesterday.

The yellow is where $HUI actually falls all the way to the EMA(40). That still could happen - target of maybe 570, tomorrow or Friday. I'd probably add there, again as much - $30-$35K. Cos it can recover from there. Double down and at least you can sell at a wash when it recovers to a lower high, if that's all you end up getting for a bounce.

I'm feeling confident-ish in this because the orange in the chart shows that RSI(8) hasn't become overbought enough yet. As long as RSI stays above 50, it has the potential to go to 80, which then would be a prime time to sell I'd think. (I say this because I tune my RSI period to the actual data instead of using 14 for everything.)

And the magenta (or for those who don't work in CAD, light purple) is just a notice that standard MACD isn't particularly triggering anything yet.

Of course there's pol risk at play here, so we could still see staggering gap-downs tomorrow.

In which case I'll be happy to watch as the more illiquid stocks, which spiked 25-35% earlier this week on newsletter & analyst pumps, collapse right down to their previous week's prices - or worse. Then maybe I might buy them. If the carnage is bad enough.

(I guess maybe a clever thing to do, if I were some newsletter publisher or bank analyst, is to publish not just a reccy but also a trade set-up that the buyer can use to get in without leaving his pants down to a potential market collapse 2 days later? After all, it's almost never a rush to buy in, and the buyout/payoff is almost never tomorrow.)

Anyway, I wouldn't be doing even that small amount of buying that I did at end of day today without a few things giving me confidence here.

1) If Italy really tanks, the dark-horse possibility then is the inflationary-printing scenario. It's really the only way to rescue the Eurozone at that point. Thus gold skyrockets, and maybe miners catch a bid. After all, Einhorn and the Chinese can't be wrong, can they? BTW: go read this post from (I-can't-believe-it-was-only) yesterday, where I was trying to think of reasons why the market wasn't collapsing the way I expected it to when I sold everything off on Monday.

2) Alternately, if Italy really tanks and doom spreads its dusty cloak over the countryside and "Satan laughing spreads his wings", and they don't print money, then you'll see bank runs aplenty - uh, and gold will skyrocket again. And maybe miners catch a bid. Um... not the explorecos, or even the more illiquid juniors, but certainly the major gold miners. (Wonder then why I bought crappy silver miners? Yeah... I don't get that either.)

3) In any case, I made $9K last week (triple my quota) and another $4K this week. So I can easily write off $1000 in losses this week and still feel fine. I can actually write off $4K in losses and still feel okay since last week was a 3-bagger. The idea with dipping my toes back in at end of day today is to take a chance to stretch a double into a triple. Odds are in my favour right now, I'd think.

4) Besides, GT was confident that we'd see $HUI go beyond 610. I've learned to just shut the fuck up and do what he says. To some extent, anyway. I'll do that here - again, because I have a bit of a cushion, per my quota as in point (3) above.

And after all, the $HUI chart doesn't suck right now. It won't til it loses the EMA(40), at least. Maybe til it loses the EMA(200), since that still gives us a 550, which ain't a bad place to bail if really the world is going to end tomorrow.

But as the sage says, "tomorrow is never the apocalypse".

1 comment:

  1. Otto isn't big enough to move MFL with a reccy. As for the others, point taken - but I figured it was oversold yesterday and a $HUI bounce today would give it a chance to move back to a midday price.

    Besides, the chart seemed to have horizontal support looming.

    Might be a screwup on my part but it's still within tolerances.

    At least it ain't Kinross!