Friday, September 16, 2011

Reformed Broker - sarcasm

Another possible valuable signal is when you see people react to news with extreme hyperbolic sarcasm.

Here's an article from The Reformed Broker:

Intergalactic Bailout Announced!

And I quote:

"This should make for a monster face-ripping rally"

bears outnumber bulls

Bespoke Investment Group has an interesting article up. I received the full article as part of my subscription service last night....

And just because it bears repeating, BIG is a really great subscription service that has several times led me away from the hyperbole and emotionalism of newsflow and towards better trading. For the same price as an Otto newsletter. I can't recommend them enough.

Anyway, go read this.

Bears Exceed Bulls in Both AAII and II Sentiment Polls

Now you don't get to see the accompanying chart if you're not a subscriber... so just let me tell you that, outside of major crashes like 2008, you only see bears outnumbering bulls at absolute frickin' market bottoms. I mean, it's a bottom-tick predictor.

That is, outside of market crashes.

So, if you think we're in the middle of a market crash, it means nothing.

I'm not assuming I know anything, I'm just weighing balance of probabilities... and right now, with "Greece DOOOOOM" on the Colbert Report and AAII sentiment bearish, that tells me the probabilities are different from what mass media is expecting.

Candlestick pattern: bullish abandoned baby

Go read up on the "bullish abandoned baby" candlestick pattern.

Because it's being printed as we speak in the $HUI. See previous post.

HUI provides more questions than answers



From top to bottom:

Was the RSI(8) decline to around 50 all we'll get for this? I.e., was this a minor corrective downtrend only?

Will $HUI break above the EMA(8)? Was yesterday's hammer important? Are we merely at the bottom of a strong upward channel?

Does the MACD crossover mean anything?I dunno. I took off my shorts and bought some long positions again today.

A Dash of Insight

Another blog I follow, less often, is A Dash of Insight.

Interesting post today:

Market Musings and Lessons

I'd like to re-post what he says about ZeroHedge's favourite gloom-merchant, David "Rosie" Rosenberg, not only because it's funny but also because it's something to keep in mind:

David Rosenberg's 100% recession call last year based upon the ECRI data. This happened in spite of ECRI denials about the interpretation. A reader asked me about Rosenberg's most recent recession forecast --- another 100% call using new and improved methods. I wish I could remember who gave the example of a Neil Diamond concert. The audience demands "Sweet Caroline." I'll get more interested when Rosenberg gets a step closer to the mainstream, but meanwhile he has an adoring audience including those interviewing him on CNBC.

Pwned!

As Jeff Miller (ADOI's writer) notes, don't believe the hype.

In fact if I was at home I'd change this week's Friday video to some Public Enemy... oh well.

next story?

I like the ETF Trends website - it's not just ETF analysis, but also news that you don't seem to get elsewhere.

Here's a story on the China real estate "bubble" story.

China Real Estate ETF Plunge Revives Bubble Fears

It's something people have stopped thinking about with all this focus on Europe.

Speaking of which... why is the market levitating with the Greece disaster apparently looming?

Maybe it's because the story has filtered all the way down to the shoe-shine boy now. Last night it was even mentioned on Colbert. Meanwhile there's co-ordinated central bank action being organized to fight it.

Always one step behind, us peasants, eh?

Friday video, doomsday edition

I'm writing this on Wednesday night cos I'm going to be busy all the rest of this week.

I'm assuming that the market has tanked on Thursday and we're all headed for DOOOOOM. You'll be eating rats and tulip bulbs, shooting each other for your gold bullion (ha! losers! I don't have any! I get to live!), and eventually the robots will awaken and exterminate the teeming rodent mass that is humanity.

So here's Orchestral Manoeuvres in the Dark, with the song "The New Stone Age":

Thursday, September 15, 2011

Silvercorp, Ottotrans edition

Here's the original:

Silvercorp Responds to Second Anonymous Allegation and Provides Government Certification of Taxes Paid

VANCOUVER, BRITISH COLUMBIA--(Marketwire -09/14/11)- Silvercorp Metals Inc. ("Silvercorp" or the "Company") (TSX: SVM.TO - News)(NYSE: SVM.TO - News) advises that a second set of anonymous allegations against the Company has been made, which was published on the internet (the "2nd Anonymous Report"). The Company refutes the substance of all allegations in the 2nd Anonymous Report, and believes it has been published in furtherance of concerted efforts by a group of short sellers to drive down the Company's share price through false, selective or ignorant statements and rumors. Investigations are ongoing by the RCMP, the BC Securities Commission, the SEC and the FBI to determine the identity of the anonymous authors.

Translation: Silvercorp advises anyone living under a rock that a second set of allegations has been made, and while you can find the report right on teh intarwebz we'll still call the second guy "anonymous". The RCMP, BCSC, SEC and FBI can find Alfred Little in 5 minutes, and when they get there we hope they don't ask about any of the substance of his allegations, like how we aren't hauling as much ore as we say we do and the ore was sampled to be low grade. Because holy crap, this could come back and bite us real quick.

Dr. Rui Feng, Chairman stated, "Over the course of the last five years, Silvercorp has developed and commenced profitable mining from its Ying Mining Camp. Revenues from operations have resulted in Silvercorp's operating subsidiaries having paid over US$116.6 million in taxes to the Chinese government, as evidenced by the Tax Certificates issued by Chinese government, and total dividends of US$152 million to its shareholders. These reflect a total revenue stream that is in accordance with the mine production and sales revenues reported by the Company during that period.

Translation: Chairman Dr. Rui Feng says his company must be making money, because he has statements on paper that vaguely suggest so.

"I ask shareholders to exercise common sense in assessing whether these allegations of "fraud" against the Company have any merit whatsoever in the face of very significant revenues, tax payments and dividends, and particularly when the accusations are made anonymously by parties whose only interest is in depressing the Company's share price. I invite the authors of the anonymous allegations to come out of the shadows and participate with the regulators in their investigations, if their concerns truly extend beyond the profitability of their short positions."

Translation: there is a shadowy conspiracy. Perhaps the Lizard People are involved. Also, note that I'm a Chinese male in a position of power: that means that I can do no wrong, though secretly it really only means I can never admit that I am wrong.

The Independent Committee, in keeping with its duty, has retained independent legal counsel to examine the anonymous allegations. In addition, KPMG Forensic Inc. was engaged on September 6th by legal counsel to the Independent Committee to assist the Independent Committee by completing a report on certain aspects of revenue, cash balances and income tax and VAT payments in China, and to perform certain reconciliations of the Company's filings in China with those filed with North American regulators. The Independent Committee will report further on its findings and respond to the allegations in the 2nd Anonymous Report in due course.

Translation: The Independent Committee can't read Mandarin and won't inspect the ore, and count the trucks, the way Alfred Little did. We made sure of that. So don't expect much.

evening comment

It's 10:17 PM, silver down 32c to 39.59, gold down $13.80 to $17.76.

Well, if that doesn't tank the miners, I don't know what will!

I'm not $62K short the gold miners with HGD. I took off my silver short during the day because it just didn't seem to be painting the right shape intraday - yet again, yes, tear me a new one for getting out of a position early.

I also note with humour that SVM actually went up to $7.50 or something the day after I dumped my position. $10K profit lost. Oh well. I felt there was no reason for it to go back up, after the Alfred Little writeup came out, so there was no reason to hold it.

Speaking of which, the Silvercorp news release that came out after Alfred Little was enough to make me roll my eyes.

In fact, I wanna do an Ottotrans. I'll leave that for the next post, though.

quick post - gold and silver lose support?

Gold has fallen below $1800, silver is about to fall below $40 it seems.

So now's the time to double-short the miners for a while, maybe? Let's see what happens. $HUI lost support and finally painted a red candle. The 2 previous candles had 2 long bottom shadows, which suggested strong price support; so a red candle yesterday maybe means the support at 600 will now be breached and it can start a short drop.

Or a long one. Who knows.

I actually took off my silver short yesterday at a small loss... I however shorted S&P 500 at 1200, and made some good money in the few minutes before the close to balance my silver loss out. Now I still have my HGD double gold miners short, and might add to it if things look bad today - which I'm hoping they do given gold and silver losing support.

Wednesday, September 14, 2011

Interesting S&P weekly moves



Looks like damn near everybody is hopeful on Tuesday and Wednesday, then gets scared out of their positions by the weekend, eh?

I dunno. It's a chart for you. Make of it what you will. I have to get back to work.

Morning moves

I normally hate to post these things because of an irrational superstition that the moment I say what I'm doing, the market goes the opposite way. I've also had terrible luck doing this sort of thing and never make money at it, so don't for a second even think about making this trade yourself...

But, I've hedged a little, with a double-short HGD (gold miners down) and HZD (silver down). Not much money, ust a single position size. I do plan on holding my BTO, FVI or GPD right now, for the duration of a correcton in the miners and metals whih I hope will be minor, so I'll hedge them. I still have lots of cash.

My big problem with these hedgey moves with the leveraged ETFs is that I get faked out real easy.

But as for gold miners: the $HUI has hit resistance at the EMA(8) three days in a row. That tells me it's more probable that it goes down from here. Eventually - these $HUI tops seem to take a while to play out. But I think the broad market newsflow should make the move come sooner rather than later.

Silver hasn't looked too great either - SLV is also finding resitance at the EMA(8), and the silver miners haven't even tried to retest their own EMA(8) resistance line, they've been so weak.

Meanwhile the broader market still has more opportunity for fear than it does for hope, I think. Greece is still broken.

Unless SLV can break above $40.50, it should have a downward bent. Similarly, $HUI looks bad below 615. I am actually going to try and use sufficient discipline to stick to these as my stop-loss points.

As GT says, any correction in the PMs and miners should be small. We have to assume his paradigm is correct.

Tuesday, September 13, 2011

Anatomy of a failed trade: Silvercorp

OK, so many things could be said to have failed in this:

I did insufficient (meaning no) due diligence. However, as the Alfred Little report shows, sufficient due diligence would be impossible without knowledge of Mandarin, a plane ticket to China, and a fuckload of time. The report asserts that (to put it politely) reading company reports and documents is not always the best way to research a company. So, I can't be faulted on that.

I made the trade on another person's reccy. Now, of course, I'm not blaming him for the reccy; it looked good to him, and his past experience trading SVM was fruitful. Besides, I'm a fucking grown-up and responsible for my own money! I've avoided several of his actual official newsletter picks before. At the same time, some of his reccies have been stellar (for me, or for others when I fail to buy them like BTO or VEN), so obviously neither he nor I can be faulted on that. He makes his picks, I pay him money for the service, but if I buy something it's entirely my win - or loss.

I wasn't watching the stock well enough, so I didn't get out til right before the bell. So I lost more than I should have. Oh well, I was at work, and I was very busy too. Maybe I shouldn't take on any position that needs babysitting when my attention is needed elsewhere? Yabut, this was supposed to be a guaranteed win, right? Well, maybe you could fault me for failing to watch the chart. After all, if the stock drops something like 20% and I buy in, and it's supposed to move back up, and it doesn't move back up, then the fault is mine for not watching the chart. If I'd watched the chart I'd have seen the lack of upward mobility and I would have gotten out faster, I think.

I invested in a company run by Chinese. That's about as bad as investing with the Russians. (Ahem.) Actually, I already lost a bundle earlier this year investing in a shitty Chinese solar power company. Fool me twice.

But my truest failure, I think, was that I was staring at a $3000 win at one point today. I thought about selling, and said no. Part of it was being greedy. But part of it, I think, was failure to recognize that if I'm in this business to make money on trades, then when I see a short-term trade position that's in the money I should take that money! I could have at least taken half off the table. But, dumb me, no.

So how much of a loss was it? Not bad. I did have to sell into the end-of-day panic, so I lost more than I had to; but I'm still in positive territory for the week, back to cash, and a little bit wiser.

So? As for the stock?

The end of day really did seem to look like a panic sell. I guess the Little report was making its rounds. I'm amazed there was support at $6. I myself was just selling at Market, I didn't give a shit.

There's a successful part of the trade: I got out with a small loss, compared with what it might have been if I'd held on and the stock opened tomorrow at $4. That would have fucking crucified me. My self-confidence would have been shot, and I wouldn't be able to trade for months. I've been crucified 3 times already this year: once with that shitty Chinese solar company ReneSola, once after PDAC when I let my losses in FCV, BHV and VEM grow larger and larger, and once when Fukushima destroyed my Uranium explorecos. Those 3 screw-ups are why I'm not showing a profit on this year.

(Actually, Fukushima itself wasn't my fault. Having too many eggs in the nuclear basket was my fault. And believe it or not, I don't beat myself up at all over the huge loss I took; after all, tens of thousands of people were washed away, their bodies never to be found. My 5-figure stock loss was trivial compared to that. My only mistakes in Fukushima were not selling early when everyone else sold, and instead holding because I believed the chickenshit lies that were being promulgated by Tepco and the Japanese government.)

This time, though, I got out with a small loss. I'm still showing a profit on the week, and since it's only Tuesday I still have 3 days to make my quota (though I am not going to touch anything tomorrow unless there's a catastrophe; I'm going to finish this post and then not look at markets or anything like that for a whole day, because I need to clear my head and reset).

Rule 12: If the situation changes, get the fuck out of your position.
Rule 36: If the trade's not following the script, get the fuck out of your position.
Rule 7: If you're showing a small loss, get the fuck out before it becomes a catastrophic loss.

I just made those numbers up... but maybe someday I'll create a "Rules of Acquisition" book. Maybe a lot of Star Trek fans will buy it. Then they can become better stock traders. I dunno.

Anyway. I want to cut off this post right now, and go do something else for the rest of the night. Clear my head.

Silvercorp update

Yeah, so I panicked and sold my SVM before the bell.

Because this report came out. Follow the link, download the PDF, and for cripes' sake read it.

Don't ever bet that a Chinese firm accused of crookedness isn't crooked, is my motto now.

Oh well, still up for the week.

Silvercorp

Yeah, I was mostly cashed up this morning, except for a good position in RIO and an underwater position in REG that I don't really care about right now. Oh, plus some standard-sized ($20K) positions in BTO and FVI that I'm not interested in dumping, really, cos those boys have always been good for a short-term trade, and they're good value also, with nice insto support.

Then something came in on the wire from Otto about Silvercorp, so I just went and threw a fat wad of cash into that.

I mean a fat wad.

Let's have some fun, boys! DYODD, I certainly haven't. Fuck, I'm investing in a Chinese company, trusting the opinion of some crazed rogue blogger from Peru with communist sympathies. He's probably at that Peru mining conference, drunk on vodka & yerba mate martinis or whatever they drink down there.

But I think I've gotta live on the edge a bit.

No, seriously, I trust Otto, I just poke fun. After all, he's the High Crooksniffer Pursuivant, so if he sniffs no crooks at Silvercorp, I should maybe trust him implicitly.



IMPORTANT UPDATE PLEASE READ: Yeah, no, I sold before the bell, and I sincerely hope that you're not following my blog for buy and sell recommendations.



As for the miners - things still look baddish, the PMs are up a bit but that's to be expected. The PMs should really do well if Greece defaults, so I don't see the problem. Other than a major liquidity event of course. $HUI is still on a downward trend, but it seems to be supported quite well at 600. For now.

RIO is a countertrend trade par excellence, with production numbers coming. And I'm hoping SVM is another one that totally bucks any possible downward trend in miners.




IMPORTANT UPDATE PLEASE READ: Yeah, no, I fear it won't buck any downtrend, and seriously don't come to my blog for buy and sell recommendations.

Monday, September 12, 2011

one more chart - silver


Silver also lost EMA(8) support. But not in a big way. And anyway, the upward trend (see SMA(50) for an approximation of the line, sorry I forgot to draw it in but I want to do something else tonight) isn't really in trouble.

Yet.

If silver loses $40, I'll be scared. If it then loses $39 and $38, I'll have to assume a fork is being stuck in it.

Problem is silver can lose all that in one day.

We'll see....

Two possible "mistake trades"

Yeah. so this is what happens when you can't leave your cash position the hell alone and start buying shit in the last hour of the day. You get greedy and buy dumb shit.

I'm not saying it's dumb to own these stocks, btw - just that it was very frickin' dumb for me to buy them today, I think.


BTO's in a nice rising wedge or whatever you call it, and dinged nicely off its EMA(8). So that magical line still provides some support. I figure I can at least play it for a countertrend win, maybe squeeze ten cents out of it... which, come to think of it, is stupid. I'm not supposed to be trying to play cute in downtrends.

Oh well. If it loses its EMA(8), I'll dump and take the loss. But I did want to own some again, and $4.05 wasn't a bad price to pay.



FVI's chart looks like puke, as all the other silvers do. It's lost its EMA(8). Badly. So why did I buy it? I got a case of happy feet.

Silver was down 3%, but FVI dropped 8%. Normally I can play that for a win - FVI does go way oversold like the other silver miners, but then often fights back. Plus, it is going to get listed in the US, right? Isn't that going to be a good thing? Plus, Gary Tanashian is all in my face about how trendlines mean nothing, lateral support is where the real action is.

Well, we'll see about that!

But I shouldn't be playing oversold conditions like this when the entire market might be overselling for a damn good reason - like, oh, Greece defaulting, sending Europe into a tailspin and destroying world liquidity. I seem to remember that this sort of thing has happened once before.

I dunno. I can't help but thinking I should have left it the hell alone, sold what I already had of it, and waited for it to collapse to its SMA(200), around $5.

We'll see. At the very least, maybe if silver and gold do well in the overnight, I might be able to unload these two for a bit of a win? BTO could continue to look constructive (it always overshoots Otto's sell targets by about 20%, doesn't it?), while FVI... well, at least I'm averaging down.

Dumb ideas. Oh well. Most of my money is in RIO, so I'm not too concerned.

vix - in a flag waiting to explode?


$VIX is still trending down in a range....

But if things go bad in the marketplace while VIX is up this high, I'd think that would mean you'd see extreme volatility.

the miner charts and why I'm not hopeful

I'm operating under the impression that the other miner indices will tell me more than if I just looked at $HUI. The lower down the totem pole you go, the worse the liquidity is, the weaker the hands are, I think.



$HUI crashed below 600 today, but some good solid buying near the close brought it back up above GT's 600 support level. Me, I'm only really concerned with the EMA(8) support level, and with today's action that support has turned into resistance. So I'm not particularly hopeful. Especially considering how incredibly overbought $HUI was according to the CCI(40). And MACD about to cross over.

Here are some other reasons why I'm not hopeful:



SIL, the silver miners ETF, looks atrocious. It completely lost its EMA(8) support. Now, above, it has pinged off its SMA(50), but frankly I've just left the default SMAs in these graphs. I doubt SMA(50) is that important. More important might be the MACD crossing over and RSI(8) going solidly below 50. That to me, with my limited experience charting things, means something wicked this way comes.

I saw First Majestic get slaughtered today - down over 10%, I think? GPR didn't fare badly (have none, sold at $3.40, sorry, happy to buy back at $3 or even $2.80 next week if the opportunity comes), and FVI got beaten up bad (I doubled down around $6.03).

If silver quits acting like gold, and goes back to being GT's liquidity indicator, then it could indeed "get ugly" as he says, if silver just falls a bit more. Then the silver miners will be on special. God, I hope for a reaction day tomorrow so I can cut my FVI position back down to something smaller.



GDXJ is pretending to obey lateral support in the $36-$37 area. I'm not buying it. It lost the EMA(8). If you're lucky you might get a gap fill tomorrow.



Now this is the one I can't figure out. The exploreco chickenshit ETF's chart actually doesn't look that bad, now, does it?

But it's still lost its EMA(8) as well.

ETF Trends on gold

Don't worry, nothing's changed.

ETF Trends notes that gold is simply dropping as people cash up to pay of losses in other parts of their portfolios.

You'd expect gold to remain strong-ish as European currency, banks and sovereign debt all collapse.

Question is, where do the miners go from here?

ETF Trends is a very good site, do read it, it's not all just ETFs.

Endgame still on hold?

Greece's 1-year yield is now over 100%, and Italy just had a disastrous bond auction. Go read ZeroHedge.

$HUI is still being supported by its EMA(8), and GLDX (explorecos ETF) is strangely the strongest of all 4 miner ETFs right now. But SIL is atrocious, and GDXJ has lost support. I'm going to operate on the theory that once SIL and GDXJ look bad, the peak has been put in and I should trim back.

I dumped my EST to Mickey Fulp's readers this morning, for a profit. I dumped GOZ because it's been such dead money for so long - at a profit. RIO's exploded upwards, so I trimmed my position (just a bit) for a massive profit. FR looked horrible, so I took a loss and left that position. Sold half my GPM at the open, at a profit, will be happy to buy it back at .33 or lower. So now I've made double this week's quota (most of the profit was in RIO), am now half in cash (with half the remainder in RIO), and feel quite safe.

Now crash damn you! And give me some deadly deals!

Sunday, September 11, 2011

Fear of a collapse in silver?

GT's newsletter this weekend was pretty easy reading, because this is the point in time where he gets proven horribly right.

One bit of his write-up that worried me a bit, though, was the part about how the gold-silver ratio is at a bit of a resistance zone... and the implication that if silver drops relative to gold, it might be very very bad for silver.

To me, that also means it might also be very, very bad for gold miners - at least on the GDXJ and GLDX side of things. If silver goes back to being the greed metal, easily destroyed by a liquidity suck, then GDXJ and GLDX should also crash.

So here's a look at GDXJ:


Sad that while $HUI and GDX are off to blue sky territory, GDXJ looks kinda spent. The orange bits are my suggestion that GDXJ is rangebound, and thus can't be trusted below $39; the red bits are the suggestion that by RSI(8) and CCI(40) GDXJ is already spent; and the yellow bit is just a way of pointing out that a minor hiccup in silver can cause an "OMGWEALLGONNADIE" reaction in junior gold miners.

I wouldn't buy the touchdown back to the EMA(8) at this point; I'd wait for the range to get broken to the upside before buying. Of course now that means I've got to look at my portfolio again with a critical eye.

Here's GLDX, the exploreco pennycrap ETF:


The range isn't even horizontal. I guess this is a "bear flag"? But at the same time, CCI(40) isn't overbought. Then again, it wouldn't be because the last month's positive action has frankly sucked, compared to the previous pop in July.

I dunno... $HUI does look good, but these two are a really bad story, methinks.