Saturday, June 18, 2011

Another fool portent of doom

Here's an article where Mark Spitznagel from someone called Universa asserts that "there is a 20% chance of a well-over 40% correction in the S&P 500 within the next few years."

Now, if you actually read it, you'll see the author (not Spitznagel) calculate based on options that, yeah indeed, the options market is portending a "19.89% chance that the S&P 500 (SPX) could get down to 762 by June 18, 2014 -- which would be a 40% drop."

My response to that is, is she using the normal curve? Because Black-Scholes assumes a normal, which has been pretty much proven to be useless - in fact some options traders began to make money by calculating their own probability curves. Use a normal and your math is suspect.

But, for those of you who didn't bother reading the article, maybe because you consider it a waste of time, I guess I don't even have to point out that predicting S&P 700 by June 2014 is an abjectly worthless assertion.

It's obvious that markets go down once in a while. Hey, by 2014, this market should be crashing. It happens every few years. It's the cycle. This assertion is as worthless as telling me that the sun's gonna die in 4 billion years.

It tells me nothing about what's going to happen tomorrow.

I'm amazed that people get to post this crap on the intarwebz.

Friday, June 17, 2011

yawn time

In times of great strife, like this present horrible market collapse, it's always good to look for a frosty fellow to keep you on an even keel.

One that I like is Otto's once-in-a-while post of the long-term gold chart. He usually posts this, says "yawn", and I can forget about Tanashian's latest Million Charts Which All Portend Doom which I get every weekend.

The Technical Take had a nice reassuring post to that effect, yesterday or so. Except in this case, he's plotting the SPY monthly candles. Here you go:


OMGWEALLGONNA-- wait, what? SPY's still in a channel. In fact, if you look hard enough, you might get the impression that we've been here before... um... last spring, maybe?

In fact, not that I'd ever waste my prime drinking time digging through a mountain of electronic bullshit to find for you last year's bloggers' portents of doom and gloom; but I darn well betcha that 2010's May and June also saw a whole load of stories about sovereign debt default, the American deficit, unemployment, a double-dip, Rosenberg on CNBC, buy gold buy 50 gallon drums of soy buy .22 ammo blah de blah de frickin' blah.



Speaking of which, soy makes you grow man-boobs.

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By the way, there's a nice little wine that I haven't had for a while but might buy tomorrow with some of this week's winnings on the market.

Three interesting things about it:

1) It's from Newfoundland. That, to me, is like a wine coming from Scotland or Greenland.
2) It's made from blueberries. So, it's sweet, not my thing, but it's got all those anti-oxidants that they're all gabbing about in the media today, so you can have 3-4 bottles a week and tell your doctor you're only doing it to fight cancer.
3) It's even certified as Kosher.

Apparently Rodrigues also makes other berry wines. Have only seen 1 other in the store, though. Available through the LCBO if you're lucky enough to live in Ontario, even the shitty parts of Ontario.

friday night videos

Since obviously the entire world is ending, I mean with Rosenberg allowed out of his cage to appear on TV, and with CNBC calling for a depression right around the corner, and with the $VIX all the way up to fucking 20, we should probably watch some depressing videos that embody the post-apocalyptic future we are about to enter. That way we can prepare - emotionally, at least.

Of course, the first thing that happens is we get a day when everything becomes nothing. No thunder roars, no lightning cracks; no missiles rain from the sky, this won't be a sneak attack! It's actually a very existential moment, as Canada's greatest punk band Nomeansno point out:



Society annihilates itself existentially long before the inevitable doom becomes apparent, long before you see its effect in the stock market, as pointedly noted in Gary Numan's "Me I Disconnect From You".



Then absolutely everything goes all to the shit: the Dow drops 50 points, and next thing you know, one day you've gone all goth, and just like Combichrist, you're saying "Aw Geez. Today I Woke to the Rain of Blood".



As the plummeting continues, all we can do is watch sadly, watching the collapse act out all around us. S&P 1300! S&P 1290! Oh no, S&P 1280! The world is left a radioactive husk where sweaty goth people (cunningly disguised as an anarchist aggrotech band) raid and pillage the few remaining palaces of capitalism, as in Combichrist's "Sent to Destroy".



Ultimately, we finally fail to bail out the banks for the last time. Our species is destroyed. Thousands of years into the future, Peter Gabriel comes as the "Watcher of the Skies" and surveys our dead husk of a planet:



"Creatures shaped
This planet's soil,
Now their reign's come to end;
Has life again destroyed life?
Do they play elsewhere?
Do they know more than their childhood games?"

-Nouriel Roubini, just before the apocalypse

market comment

The FVI that I dumped a while ago at $5, I bought back today at $4.73. Dunno why it should be so low.

Also added to my position in BTO.

Am quite disappointed with US Silver's lack of movement following the conference call. Am also disappointed that the Galena workers have been without a contract since March 1st, according to the MD&A - this means potential downside. Why not fix the damn contract at the same time you're supposedly fixing the damn mine?

NCG is downish, but not on much volume. I'm hapy to hold and wait for drill results.

RIO's down as EPU is still down. Wonder what the problem is that the Peruvian market is telegraphing to us all?

GUY still looks unimpressive... wondering if they have a date coming up with $6? I'm not interested in owning it to find out.

So I'm nearly all-in, going into the weekend. Silly me!

OSK, CFO, USA

So Osisko backed out of Clifton Star's Duparquet, eh?

Now I gotta go back to monitor US Silver's price... it's conference call time, I'm not listening in, but this is the moment when the price will either prove Otto right, or prove him wrong....

BTW, still not convinced the market has settled down. This is Friday. Miners are boring on Friday. But I bought another half-position in BTO, seems like I bottom-ticked the buy too. Might grab back some FVI too, if it drops to $4.60 or so.

Thursday, June 16, 2011

OMGWEALLGONNADIE

EPU (Peru ETF) is down to $38.41, only a couple percent above the Humala low. Wanna buy some Peru? Here's a good opportunity.

That might also be why RIO's back down to $2.10. Wanna buy a good gold miner with a minimum $3.50 value?

But it's not all Peru's fault: GUY continues to collapse, $7.38 and falling.

The Nasdaq just touched its Fukushima low from March.

Silver, strangely, looks calm - it's forming a pennant within yesterday's range.

BTO $3.30, FVI $3.83, $HUI at 489.

Kaminak, Argonaut and Pretium are strong though.

market comment

$HUI's looking weak, dropped down to 495.

I unloaded some of my AUU on the news release that came out today. JM Franklin must write the geo in these releases; it makes for rather dry reading. But, at least we know they are on the track of some VMS up north. I figure the "mild VTEM conductor" might just be graphite again like last time, but the arsenopyrite and galena would signify a possible swath of minerals.

I figure (especially with no actual assays, just description of core mineralization) that we still have no clue about whether AUU has an economic-sizded deposit, but at least we know that they know that there's something up there. Anyway, they're years away from a 43-101 resource; right now they just have to find the darn thing, then maybe next year delineate it.

Also unloaded my GUY at a bit of a loss today. Guyana Goldfields has lost its $8 support pretty conclusively, and so I'd rather take the 3% loss (which gets covered by the money made today selling some extra AUU) and get a half position's worth of free cash for something else.

What do I want to buy today? Meh... I'd rather sit back and watch. BTO, NCG and FVI are all teetering on the edge of losing their supports and moving down. I might buy more of each if I can get a deadly deal on them. But I have two half positions' worth of cash on hand right now.

Oh... Clifton Star is halted. I'll have to see what's up with that.

Wednesday, June 15, 2011

pennycrapper day!

Well, I dumped all the rest of my FVI. Probably a dumb idea, but I'm kinda fed up of it not going anywhere. Grabbed some more NCG. They have 5 drills turning.

In addition, I bought some tiny little positions in GPM (if it's good enough for Sheridan to buy a million shares at around 20 cents, I'm happy to buy 50k at 0.165) and BHV (someone was dumping at 36 cents... we'll see if I can get 40 for them tomorrow for a ten percent profit on a couple thousand dollars).

I really think, with PMs up as the broad market went down, that miners might be at the bottom. The $HUI is painting another sandwich (my own name for the big downcandle-big upcandle-big downcandle formation), so maybe we'll continue going down? But I really think the drop has kinda exhausted itself.

Now watch me jinx the $HUI by saying I think it's finished going down.

I dunno, all this doom and gloom crap in the media, with Rosenberg appearing on TV again (he's really botched calls a few times this year so god knows why anyone's listening to him now), with everyone screaming "double-dip!"... ah, it's all crap.

BTW

Oh and by the way. I dumped another half-position in FVI yesterday, to buy a half-position in BTO. Too bad, but the diversification and BTO's superior chart made this a no-brainer, especially when selling FVI gave me a profit. I also figured FVI's boost over the past few days was entirely due to being included into the... um... what was it, the GDXJ?

Basically, FVI was acting like dead money, while BTO looks better, and diversification is always good, and taking a profit is always good especially when you're not sure you've hit bottom yet.

Today I might try to dump half-positions in SWD and USA, same reason. SWD has been acting like dead money this past week, and I'm tired of waiting for Titiribi news, and when their geos dump the stock while waiting for drill data that looks suspicious, and I've been burned waiting for drill results before (BHV, AUU). Similarly, USA's been diving before their Friday news release, so that is a bad omen. I do certainly care what Otto's fundie analysis suggests, but when the market insists on disagreeing I listen to the market more.

I'll still have a full position left in SWD, and more than a full position left in USA, but I'd like to take that $20K and either buy more GUY, more NCG, or maybe even more BTO if it falters. Or maybe a stink bid for a bit of YEL at 12 cents, or some GPM at 17 cents.

Oh, most importantly: if I do do any dumping, it will only be at a profit. So essentially I'm taking half profits and initiating/expanding on new positions. That seems kinda wise to me.

Something fishy

Haven't had the time to check the news yet, but something fishy is being broadcast by the national public radio service of the State of Denmark.

The markets are down, yet the PMs and miners are resisting the downmove.

Gut feeling of a newbie here, but this sorta feels like the "miners are diving" paradigm has come to an end and a new paradigm is taking shape.

Tuesday, June 14, 2011

GET A JOB YOU MORANS





Again, I was reading yet another stupid article about how horrid the US public debt is.

Let's see what the CIA Factbook has to say.

As of 2010:

The debt-to-GDP ratio of the USA was 58.9.

Brazil? 60.8.
The Communist People's Revolutionary Republic of the Netherlands? 64.6.
Austria, the land of right-wing fascists and their economist friends? 70.4.
The UK? 76.5.
America's forever-buddy Israel, forever put upon by mean nasty Arabs? 77.3.
Germany, the powerhouse industrial superpower where everyone makes $40/hr and has generous social programs? 78.8.
Japan, the other industrial powerhouse? 225.8.


Certainly the US debt situation has gotten worse since then. But so have these other countries, I think.

Tell the right-wing fascist fruitcakes to shut up about US debt.

And by the way: do you want to balance the US budget overnight? Shut down the DHS (Department auf der Heimat Securitatsburo) and move all its functions back to the CIA and FBI, pull all the troops out of Afghanistan and Iraq, cancel all the socialist statist anti-free-market farmer subsidies, and revoke the Bush tax cuts. Budget balanced.

But the fascist statist state-socialist "libertarian" "right wing" would never vote for an end to war, the military-industrial complex, tax breaks for the rich, or subsidies for farmers!

Wall Street Journal - "What It Would Take to Do a Double Dip"

Here's a good WSJ article, "What It Would Take to Do a Double Dip".

Good calming reading. Most of the "omgweallgonnadie" horseshit is overreaching and histrionic. (God, they even put Rosenberg on the TV last night! Did anyone tell Gary Tanashian? Rosie's asserting that balance-sheet recessions are followed by much shorter recoveries than normal recessions, so we're about to dive back into recession imminently.)

One thing that popped into my mind while reading this WSJ article: the suggestion that the US government, by doing nothing about the debt ceiling, would cause a recession.

Since when did governments doing nothing cause a recession? Seriously. When the US government is in gridlock, the markets are supposed to do well! And when the government no longer can print money, that's supposed to be good!

Isn't it?

The economy is having a mild slowdown because that's what always happens 2-3 years after the market bottom. Zzz. S&P 500 is down 5.5% from its peak. Wake me when your precious little apocalpyse is coming

Ritholtz

Ritholtz says "we often see a 7 day rally following a 90/90 day downside day".

I trust him more than most other analysts out there because he actually has to fucking work for a living in the market, not just write about it.

Macusani Yellowcake

If Macusani Yellowake is trading at 15 cents right now (ouch!!!), and if they have 10c/share in cash, and they have the possibility of shooting even 1 more good B-horizon hole in the Mausani plateau, and if they're going to one day be bought out by Vena's JV, wouldn't that be a good trade?

Or if we wait, will we be able to buy them for less than their cash value?

Speaking of which, why doesn't Cameco buy them out for their cash value?

market comment

OK, so for some reason people like the data coming out of China or something? Because the market's up today.

It doesn't matter what the news is. What matters is the market's reaction to the news. If good news tanks the market, the market's bearish. If bad news raises the market, it's bullish.

Thus, for example, if US Silver put out fantastic earnings this Friday and it didn't react sufficiently bullishly, I'd dump it in an instant, take the loss and move on. If the stock price reacts poorly to good news, there's gotta be something wrong with the stock.

I learned this when GNH had run up to 90 cents on a pump that went all the way to a CBC feature. They then put out a drill release, and the stock tanked to .70 or so in one day. I didn't know why, because I had no idea how to read drill results back then. All I knew was the cheerleading going on in the GNH bulletin board at Agoracom. I ended up figuring out later that the drill release was poor, but at the time the best response was "it doesn't matter what the news release was; GNH is tanking, so I'm dumping".

I dunno if this is maybe just a very short (1 or 2 day) rally; it could be, because almost every stock and sector in the broad markets is strongly oversold, especially considering the VIX is still low.

But if you look at the chart for $HUI, it's painting a bullish outside candle. If this isn't just the usually morning happy, if this carries on all day, then we probably hit a bottom in the $HUI.

If that's so, maybe you want to look around for good stocks to buy? Argonaut Gold is seeming to want to break out to GT's $6.25 target - it looks quite strong today. And Coro has collapsed into the mid-70s; what was Otto's original reccie price for it, last year? I know COP's going to be dead money, but that wouldn't stop the pumpers from getting the herd back into it now that the market looks better, right?

Monday, June 13, 2011

Why now's not a good time to buy a Chinese solar stock

Okay, I'm no market expert. I'm just some guy who's been at this for a year and a half, I've read a few good books, I've subscribed to a few good newsletters, I've paid some tuition (i.e., I've learned lessons by losing money), and I'm tested in the top 0.5% for IQ (just want to throw that out there).

But my recent experiences, generally involving explorecos favoured by rogue Peruvian bloggers (and I won't mention which ones), have taught me not to buy something (ever again) that's broken support and is flying down a downward channel. Don't add, don't buy, just sell and run away. Cut your losses, because you have no idea where the downward channel is going to take the stock, and you have absolutely no reason to ride it all the way down.

This is actually very simple technical analysis - sorta like Victor Sperandeo's own interpretation of Dow Theory.

So, a certain pay website of which I'm familiar (we'll just call them, um, "Fettle Fogmentor") has suggested the idea of trading a solar stock in China. Now, I don't keep up much on the news and all, being more into miney stuff, but I seemed to remember some bad things recently being said about China. There's the whole "Chinese companies are frauds" angle we're hearing a fair bit about. There's even Roubini's calling for China to be the next crash, in 2013 (which seems to have suddenly stimulated a whole bunch of voices on teh intarwebz, who are all now expecting a China crash imminently).

So. I remember the China ETF symbols from when I first got into investing - long before buying individual stocks, I was into buying ETFs, because it felt so much more like my old stomping ground of shitty Canadian bank mutual funds but without the 5% MERs.

I charted some China ETFs to see what they've been up to recently. Let's look at them and see if they tell us anything useful about investing in China, eh?


This is FXI, the Top 25 You Can Trust Us companies in China, the ETF that all the big instos buy for China exposure so it's always heavily overbid. (Or at least it was that way 18 months ago.) Upper channel is broken, but still there might be support at 41. So, China looks bad-ish, but not terribly so.

But then:

Here's CQQQ, the China Tech ETF. Many smaller companies, probably a lot of scams. It broke that red support line, and started painting a downward channel. Channel presently is accelerating downwards.


And this is KWT, the solar ETF. Mostly pure solar plays in this one. Probably a lot of China in this one, but, well, what can you do. It's also broken a red support line, broken horiz support, and is painting a downward channel.

Sperandeo says it's stupid to buy anything in a downward channel. You wait til that channel gets broken, wait for some sort of confirmation (I'm not clear on that bit yet), and then you might be safe to buy.

I'd suggest that these two charts are telling me not to buy a China Tech stock, or a solar stock. Not right now. The nation (FXI) doesn't look great, the sector (CQQQ) looks terrible, and the product category (KWT) looks bad too.

Now the guys on this website I was reading, they have a compelling fundamental case for buying the stock - assuming you can trust the company's financials, of course. They even are doing an option trade to limit their downside to $1.50 if the stock collapses to $4. (They called it a buy at $5.00.)

But look at the stock's chart:



Hey, that's a downward channel again, eh? I don't want to buy those, do I? No!

Their reasoning is "we can limit our downside to $1.50 by buying the stock at $5.50 and simultaneously buying a Jan 2012 $4 put at $0.50."

Unfortunately I suspect that's not a winning strategy. Right now, to me anyway, the chart says this stock will hit $4 by August (according to the slope of the downward channel) and so these guys will be guaranteed to take the 30% loss.

Because their stock is in a downward channel, the stock's product group is in a downward channel, the stock's sector is in a downward channel, and the stock's national ETF is probably only looking good because the top 25 companies in China are better than all the rest of them.

If I were to buy a stock, I want to make sure there's a compelling reason to buy it. And that compelling reason has to include a compelling chart.

NCG has a compelling chart. BTO (still not bought in, sorry, dumb me) has a compelling chart. This solar stock shown above does not have a compelling chart.

It might be compelling if it breaks the downward channel in a week or so, and then hits $6 on decent volume. The guys at this website have said there's a tremendous upside to the stock, so I'd be happy to wait for a spike to $6 (shit, even $7) before touching this thing with a 10-foot pole.

That's just my opinion, I'm just a newbie, I have never worked as an analyst or broker or even a geologist. My past employment has included a convenience store, 2 market research call offices, a donut shop, a porn shop, a tube plant, and an engineering company. So either I'm an idiot, or past failure is no predictor of future success.

NCG's chart




See, compare NCG to the $HUI and $SPX. It's just been going up. I find this very similar to BTO, except NCG runs on a much slower cycle - pops every month or two, not every 2-3 days.

I'd be worried if it dropped much past here, but it seems people are expecting them to put out a lot of results (5 drills, remember?) extending their 43-101-compliant resource. Expectations support the price, I assume - maybe not that different from SWD.

So I bought a small (1/3 sized) position in NCG. Unfortunately too much of my money is tied up in AUU, RIO, USA and SWD. But I guess we get resolution of at least one of those positions (USA) this Friday, and I'll be able to start switching money around looking for the next big things.

I only hope that I fortuitously get my positions in USA and SWD closed happily, and get it right at the moment the $HUI's bottomed.

more moves

Dumped my HQD Nasdaq double-short when I got reminded that I liked NCG's chart.

North Country Gold is drilling north of Meadowbank, it's greenstone belt gold (a different terrane than Meadowbank I think - I mean not contiguous, different orogeny but similar time period), they already have a 43-101 estimate, and are now extending it along strike, with 5 drills on site. Their chart looks appealing in the same way BTO's does - lumpy, but with a good upward trend to their support.

I also grabbed some US Silver at 45.5 during the dump today. I don't like it, but there it is. They announced their Q1 comes out Friday at 7AM, and are doing a conference call. This better work out well, Otto!

today's moves

A small surge in the morning, followed by downward momentum building by 10AM. You can see the down in the QQQ, and in the $HUI. Silver is also down this morning.

So I think today will be a down day.

So I sold a half-block of FVI at a small profit (I had averaged down already, so I took some money off the table to realize a small profit and get my position back down to size). I threw that $10K into HQD, a double short Nasdaq ETF, while the Q index was at 2642.

I figure everyone's so doomy and gloomy, and the 10AM high was completely rejected by the market. If there really is some doom coming, I want to make a bit of money off it.

SWD has nice aggressie support right now in the L2. BTO is falling back - might be able to buy some at end of day fo $3.35. Other prices I'm watching are USA .47, and GUY $8 - either of those are where I'll put my profit on the Q if I get one.

I'm actually thankful that my money's mostly in miners with strong price support. Well, not USA - they're pretty much at critical support right now, and if they dropped to .45 I'd dump, take the loss and move on. I've seen that loss of support too many times.

Sunday, June 12, 2011

Puno

Reading about the strife in Puno, and how it's affecting a certain mining company, and how this might make for a fantabulous trade, one thing struck me:

How likely is it that the strife down there right now could spread, worsen, and become habitual? I mean, not MRTA-level strife, but still a situation bad enough that anyone invested in a certain mining company just throws in the towel completely?

Basically, could the situation in Puno go on for years? Get worse? Become a major separatist movement?

I remind the court of the "oh, Ecuador sucks now but they'll get things sorted out in a few months and then we're on a rocketship to candyland" investment case for Dynasty Metals. To put it diplomatically, DMM is offering up better and better entry points each week.

I'm the last to criticize a good "buy 'em when they're bleeding in the gutter" investment play. I bought Century, remember? I'm just inquiring as to whether the potential downside is limited or not. Being ignorant about the politics and culture in Peru and Puno, I'd have to ask the question.

Speaking of which - some investing success-story author guy, probably Victor Sperandeo, said "I'm only interested in buying the middle 60% of a stock's upmove. The first 20% is pure luck because you never can know when the bottom's in; the last 20% is pure luck because you never know when a top's in. But the middle 60% is easy money; you wait until the previous downtrend is broken, get confirmation, and then you buy."

VIX says no crisis


Yeah. Also, the $VIX does not indicate any fear - just an orderly exit. If there was a "crisis" about to happen, the $VIX would have spiked by now.

For example, see that spike to 30 in March? That was fear, a disorderly exist from the market due to the Fukushima disaster. See the spike to the 40s last May? If you remember, last May everyone was screaming that we were going to have a double dip because Obama (the Anti-Christ) was disobeying the commandments of the Lords of Libertarianism. Or something. Fuck, I dunno.

So, why no options volatility now? It's because the only people freaking out are the tinfoil-hatters.

Sunday chart silliness

Just got finished reading a newsletter that insisted on using the word "liquidity crisis", over and over, to refer to a summer market correction. "Liquidity crisis" means the 2007-8 US bank collapse, or that Asian Tigers collapse from a few years ago.

I may be a noob, but I think "liquidity crisis" is supposed to mean:
  • there's no liquidity. (e.g., money flow has seized up)
  • it's a crisis.
A 6% summer market correction is not a liquidity crisis.

Okay, but the argument is, this isn't your typical summer market correction. It's the big money sensing that the stock market boom is over cos there's no more Qualitative Easing in the US.

Okay fine. That's still not a crisis. We knew that was coming. It's like EST dropping from $1.20 to 70 cents. The pump is over and now we're back to reality. The broad market was over-valued, but nobody minded because of the certainty of QE3. Now Bernanke has hinted there won't be a QE3, so we lose a few buyers and gain a few sellers. Market drops to a lower level.

So here's a chart to ponder:


That's the EMA(10) of the NYSE Advance-Decline Issues. It drops to -500 or so in each of the minor corrections we've seen. I guess, if this is more than just a little correction, it should go lower than -600. But we shouldn't see it go a lot lower.

Anyway, it's just a lot of people leaving the market because they think the market is going to go down with the end of QE2.

Problem with people who read too much radical right-wing fruitcake Libertarian silverbug tinfoil-hatter stuff is, they end up refusing to believe the S&P 500 should be higher than a small decimal number. So for them, everything is a crisis. Every 10% correction gives them the opportunity to scream "we wuz right! Obama destroyed capitalism! Bring back Ron Paul!"