Friday, August 24, 2012

Meanwhile, the horrible drought that gets worse and worse....

Let's check in on that mindblowing advance of corn that's supposed to be continuing anytime soon....

Nope, still not going anywhere.

Okay, how about grains in general?

Nope, nothing there either.

So the newsflow disagrees with the chart? Then the newsflow is wrong. Now I see why they call it the "LameStream Media". Very apt and witty, old chums!

Just to confuse you....

Here's a different gold miners ETF chart for you:

It's not as overbought as GDXJ (not even RSI>70 yet), has moved up less than GDXJ percentage-wise, and hasn't met horizontal resistance yet.

Dunno what the difference is, since I'm not interested in looking up its components now.

But one point is, if you look under the hood of that ETF you're charting, you might realize you need to tweak your expectations slightly.

GDXJ later that same day is not behaving as planned

This is interesting to me.

The little gap from Thursday AM is filled. But GDXJ has no interest in filling the Tuesday gap; nor any interest in spending a day within the 2SD line. As of this second, it's pushed back above the upper Bollinger.

In addition, volume isn't half bad for the first 3 hours of a Friday. This Friday looks like it'll print more volume than last Friday, Thursday or Wednesday, for sure. Volume drives price. Do the math.

This suggests again that if I were to sell today, it would just be to the other people who are trying to get back in. Like, maybe, all those really smart people who dumped in May (see the May volume bars) and now have a chance to get back in at the price they sold at, with silver the same price as it was.

The people who don't own the juniors are waiting for a pullback. And in general, it's natural for traders if they don't get a pullback that they're going to get desperate and start chasing. At least that's what the people say in all them books I've read. So maybe the natural direction is still up?

Speaking of which... I want to look at 6 months of silver prices versus 6 months of certain miner prices - my theory is that, since silver was at $30 at end of April but in a downward trend, and now it's $30 but in a strong upward trend, and (sometimes - but this should be one of those times) silver highly correlates with the junior miners, that the natural setpoint for a good junior's price right now should be higher than it was at the end of April.

Thus if you want to see if something's overbought, look at the end of April price and compare.

But I'm going out for lunch and I'm way busy this afternoon. So I can't do the silver vs miners charts for you today, sorry.

Oh, and also - the good miners in the GDXJ should all be higher than they were in May, if you remember that a whole whack of GDXJ components (the ones you don't want to buy) have utterly collapsed in value.

Small trading update and a bit of trader psych for you

I actually dumped my smaller ($4K) AR.WT position (in my unsheltered account) yesterday. Had bought at $3.62, and sold at $4.65. Still have $10K in AR.WT in my RSP. Since a $10K warrant position is effectively equal to a $20K share position, I figured why keep such a large position anyway?

I also dumped a bit of BCM around $2.80, but only because I'd doubled down twice on that when it collapsed, and as it came back it turned into a huge part of my portfolio. I still have something like $60K in BCM, which is still far too much, but because it's still going up I'm not in any rush to sell any more.

$10K from BCM went into some BTO right before the close yesterday. It had been puked down in a few large-quantity sells, back to inside its 2SD, so I figured with a tight stop it'd be a good time to start that position. I love BTO cos Clive's a genius and Otjikoto adds value beyond their present cash flow.

Funny enough, I had gotten into BTO at $3.85 or so... then dumped for a 2-cent loss, went home, and got it back at $3.78 at the close. I don't try to bottom-tick, but I do like to get a 3% price cushion.

And here we get into the psych.

Those last 12 months or so of hell in the juniors had really taken a toll on my self-confidence, as would be expected of any human being. But in reality, even though I'd been trying to time the bottom, then selling at a loss, I didn't actually ride much of anything all the way down. So the majority of my losses over the past 12 months were in 1 or 2 stocks that were simply drill play failures: when it came to trading, I actually kept myself from losing much at all.

Now that things are looking up on the GDXJ, all of a sudden I've got a crapload of confidence. Why? Cos, as it turns out, it presently looks like I'm making exactly the right decisions. I'm not selling stuff for a 5% gain; I'm not rotating out of the good positions too early and throwing that money into idiot positions in laggard companies.

Even better, when the morning shows weakness, e.g. in GDXJ or SLV the past 2 weeks, I don't sell and run away. I'm happy to hold and see what the afternoon brings. I'm happy to hold overnight.

And know what? I bet there's a strong tendency in the junior market for people to take those 5% wins and get out; we saw it yesterday in the pukes in BTO and SVL. There are still doubters - they say they're not, but they keep holding out for a pullback before they add to their position; or they expect things can't stay so good so they sell and hope to buy back lower. So these nervous hands are rotating out. Which is bullish. Meanwhile, silver is acting very funny - continually going up - so there's something underlying that's driving things with more force than people seem to have noticed.

The problem, after a year of shitty market behaviour, is that the usual squishy human brain keeps expecting that hell to continue. For some reason, my squishy human brain already seems to be far ahead of the curve. That makes me feel confident.

An aid to confidence, though, is getting rid of all those red marks in your portfolio. I still have a few positions that are 40% down from where I bought them - I held them because I got stuck in that value trap way of thinking - but I've cut bait on a few stocks already. The only big red mark that I still have is LPK, and hopefully someday we get some drill results that will give me an out. Other than that, and my CXB position (which is only at 16 cents so I'm not selling, and like I said Clive's a genius so I have to assume that stock's worth a lot more), I'm holding stocks that are going up, and that makes me feel good.

How embarassing

Oh dear, Otto's blog is advertising Casey now.

Sure, go ahead, say you didn't mean to and it's all Google AdSense's fault.

PS at home I use Firefox with Ghostview and AdBlocker (and even a modified hosts file) so I never see any ads. Wow, it's amazing. It takes me back to when the internet didn't suck.

Morning quickie

GDXJ is doing little more than moving back within its 2SD range. Perfectly okay.

UUP is doing the same. Was oversold, and now is trying to become a tiny bit less so. Also of note, Italian and Spanish 10Y bond yields are up slightly today - nothing major.

And yet... US 10-year bonds are going back up? Strange disconnect here....

Happy Birthday Stephen Fry

It's Stephen Fry's gazillionth birthday.

Let's see what he has to say about swearing:

As he says, "the kind of person who says swearing is the sign of a poor vocabulary usually have a pretty poor vocabulary themselves."

Anyway, here's a video for Stephen Fry.

Thursday, August 23, 2012

BPGDM says....

You think junior miners is topped?

How 'bout now?

Funny failed cross

Another case of dummies at the pro houses:

Looks to me like someone wanted to do a cross at Haywood with 200k shares.

But they set up the transaction wrong, it happened on market, and they instead started selling into the bids.

What's even funnier is, Anon puked the price down 5 cents before Haywood got the deal done. Maybe coincidence, or maybe just bloody-minded nastiness.

Or that's what it looks like to me.

Look at GDXJ

Look at the last 3 days. Do you see?

Yes GDXJ is 3-sigma up and RSI>70. But it's 3-sigma up and RSI>70 on the most positive volume we've seen since start of June.

And that's because silver has been 3-sigma up since Tuesday.

And you and I and any fucktard at a hedge fund who's read "TA for Dummies" and who's been exposed to the Wagnerian epic tragedy of the juniors for the past year can look at this chart and say "therefore it hits resistance at $22.18" or "overbought let it back off" or "that fat gap at $21 needs filling" or "Jesus spent the last year telling me he hates me so why should nice things happen to me now".

And therefore, I think the above pessimism is already baked into the demand characteristic for GDXJ.

And because of that, and because silver's doing something patently wrong (going up), I'm keeping myself very open to the possibility that the GDXJ is about to do something else entirely.

I'm not predicting a continued advance - but I guarantee you I'll be the least surprised if it happens.

Silver $30.71 bitches

I like to think of this action as a rapid correction to 6 months of abject fucking stupidity in the PMs.

E.g., of course silver was worth more than $25, FVI was worth more than $3, and BTO was worth more than $2.80. The market's realized that and is now trying to make up for lost time.

Y'know what's especially stunning? Judging by the continued lack of chatter on the bullboards, it seems Joe Mainstreet still ain't bought back his $100K of junior mining stocks. The last fool hasn't yet entered the building.

That's why, while I do pay attention to my buddies' targets, and how close we already are to them after one stupid week, I'm not going to sell the Argonaut warrants that I bought last week just cos AR is at $9 right now.

We'll probably get an overshoot and a needed correction sometime. But the music's playing, bitch, so you gotta dance.

With silver temporarily above $30....

Remember, you should never assume I'm being serious with anything I say. It might be ironic at any given moment.
But oh look. Silver in the overnight gained 1% and is presently over $30. That's "overnight", as in "not London not NYC".
I know I'm the first to say gold is not silver is not gold stocks, but....
I've been watching the really good junior miners for pullbacks and instead they just keep flying. These are companies that have already advanced far more than a typical fibonacci move, like SVL.
Plus, with gold and silver going up, all of a sudden you can now see a speculative premium come back to the juniors, instead of a speculative discount like we've had because everyone thought gold and silver were going to continue dropping forever.
Gold also always sees strength starting in August. It's a secular trend, driven by the oft-ignored fact that the gold price has nothing to do with the 3s-10s spread, it has to do with the culture of south Asia. November is going to see really large buying from India according to the World Gold Council. And a lot of Indians are expected by a few people to switch to buying silver because gold is already at a record price in rupees.
Silver was also completely abandoned by traders as of a few weeks back. What, a 10-year low in open positions? Would that suggest to you that silver had zero speculative premium when it was at $26? How much speculative premium can an industrial metal usually carry - 25%, 50%? I'm going to be interested in this week's COT.
I'm thinking for the miners (and maybe the PMs, and maybe even the S&P too), this can run a lot further than the newly-minted pessimists think possible.
Our lives sucked for 6 months. Doesn't mean our lives will continue to suck. Maybe this is where the naive optimists get their game back. Maybe those of you who've had the pessimism beaten into you will be the last back on the bus as we fly to da moon Alice.

Wednesday, August 22, 2012

Evening news, don't believe the hype edition

BB: You know that train wreck you were expecting in US grains? Yeah... not happening, actually.

BB: You know that train wreck in iron ore? Yeah... not happening either, actually.

Cue music....

Jojo on gold and silver

Jordan Roy-Byrne at his site has a thinkpiece on gold and silver, and where they will go from here... assuming it's "up", of course.

First takeaway I get is, if silver can break $30, all of a sudden the feeling of doooom in the miners should disappear. Because "up" will suddenly be presented to the market as a new option for these stocks. And the market seems to prefer stocks that have the possibility of going up, y'know.

GDXJ weekly chart

So maybe GDXJ goes up to 23, dings the upper Bollinger, then backs down to 21 to the Bollinger mean or the EMA(20), and then starts moving back up?

I certainly wouldn't expect it to do much more than that.

Just making shit up of course....

Noontime reading and a few charts

All Star Charts: a technical analyst and a fundamental analyst walk into a bar.... You like the jokes more than the news so I'll put this one up first.

BI: China's real estate market should collapse in a US/Japan style debt bubble collapse, around 2014-2015, if demographics still have anything to do with economics. This about fits Jim Rogers' timeline for the third crash and the end of the bear market, by the way.

BB: Commodities headed for a bull market. By "commodities" they mean "grains" and by "bull market" they mean "whoops, you just saw it, it's over already."

FT Alphaville: Iron ore "floor" becomes trapdoor. That's what happens when China has a subsidized mining industry willing to operate at a massive loss.

FT Alphaville: BHP's Olympic Dam project on hold. That's what happens when blah blah etc.

FT Alphaville: Australia's capex cliff. That's what happens when blah blah etc.

Now two charts for you:

Tell me if you think those have further to run. Cos to me they look toppy.


Coffee frankly looks a much better buy. For a bottom-feeder anyway. More upside than downside, I'd assume. Buy at $36 with a close stop?

quick junior miner comment

I keep thinking, every day, "today's the day there has to be a pullback". Then I see a little pullback in silver, or a half-day of weakness in GDXJ - but then things turn around and continue with the going up.

So I'm just not going to think about selling anymore. I bet every other bozo is selling into the bids trying to make his quick 5% and then hunker down. And that's exactly what a healthy advance is made of. I'll happily sit here on the shares I bought, and not sell them.

Cos I've seen this several times - BTO goes up 10%, so I sell, then it continues going up for the better part of a bloody year. That was 2010, I think. Several stocks did the same thing. I'm not making this mistake again.

Tuesday, August 21, 2012

Various articles of newsreading

The Drudge Headline Indicator - interesting! If you're into the contra-herd mass-psychology investing strategy, then this is definitely up your alley!

Even more up the contrarian chartsie's alley - didja know there's a relation between the $VIX and the number of news articles about the $VIX?

Bob Janjuah says blah blah doom blah blah rape of the innocents blah blah slaughter of the firstborn. I like Josh Brown's take on it: Bob Janjuah still stark raving mad: "Risk-off effective immediately and your pet will probably be kidnapped on the morrow." Someone please tell all these "super-famous!" fucktards to just shut the fuck up. Clue that you're a useless fucktard? Your every fucktard comment gets reposted as gospel on ZeroHedge, land of the fucktard-lovers.

Americans don't know this, but there's a country called The Netherlands. Even worse, they're going to have an election in September. This could actually be the spark for a September selloff. And didja know, September is always the cruelest month for equities?

Cambridge House conference this September

My PDAC post was about the most popular post I ever did. Some have told me it's because goldbug newsletter writers are so famous that all their fans want to see what they were talking about; others have told me it's because goldbug newsletter writers are such self-conscious paranoid worry-warts that they are driven to look up everything that's said about them anywhere, 24 hours a day, and especially at PDAC where they fret about being laughed out of the building the minute they open their mouths at the podium.

Anyway, given that, and given I probably want to go hang with Jordan Roy-Byrne, this September I'll be going to the Toronto Resource "Investment" Conference 2012. There will probably be speaker reviews and a few visits to booths.

What's on the itinerary so far?

- For some reason, they have Brent Cook on both days - Friday even at 8:30AM so I have to wake up at 5:30 to get there.
- Mickey Fulp has his own booth! Awesome! I can go bug him to write a book on junior mining investing.
- Grandich is on Thursday at 9AM. You know how I feel about his politics and religion, but I'd still like to go see him. It's like Dave Mustaine - he was good once.
- I've never seen the Coffins, so I'll have to see Eric Coffin on Fri afternoon.
- John Kaiser's Fri 2PM talk looks neat.
- I have to try and remember who Jeb Handwerger is.
- I guess there's Jojo, and if I remember Sean Brodrick is a buddy of his? I actually completely have not been following his blog, I should go check that out again now that I've stripped down my RSS.
- Doesn't look like there's very many mining company booths worth seeing - I'll have to look some of these guys up to figure out why I even remember their names! Soltoro, Radius, Primero, Petaquilla?  Maybe I'll visit NCG and ITH to see what they have to say about life sucking in Nunavut. But wow - most of the booths are total avoids.
- I guess I could visit the Tamerlane booth and give my regards to Peggy, if she's there - you have to hand it to her, Century only got worse after she left.
- Maybe swing by the non-miner booths, like Northern Miner.

If you have any idea what else is worth seeing, let me know.

market comment - I'm happy I had a hard time committing to selling edition

Boy that buy of AR.WT looks awfully prescient right now.

Dunno what happened. Best I can see is China did a large Reverse Repo so now everyone's going to be fine forever.

The junior miners, even the good ones, are certainly beaten down badly, so who not expect them to run for a while? A few looked toppy yesterday (P and SVL), but today they've advanced even farther.

And meanwhile silver has utterly broken out: why sell miners when silver is broken out, I'd say! If silver can make it back to $30, that will be a frickin' game changer compared to the doomy attitude the juniors market has had for the past while.

As for BCM? You remember I told you that it looked like some large Anon shareholder was iceberg-selling like crazy, and drove BCM down to $2.20 over the space of weeks? Well, BCM's up in the $2.50s now, with decent demand too. About the large fund who was selling? Well, two options for you:

1) either they were doom-crazy and were throwing in the towel on their investment, and thus sold at the absolute bottom, and thus are idiots no smarter than us plebs in retail, worthy of no respect whatsoever;
2) or they were selling down BCM for some nefarious purpose.

Either way, give no respect to funds, they are no better than billy-bob on Stockhouse.

Monday, August 20, 2012

market comment - I'm sorry, I'm having a hard time committing to selling edition

Well, the junior miners looked bored this morning, almost as if the market was threatening to take their gains off the table.

Then for some reason silver popped at around 11:10.

SLV is now $27.75, and the next notable number is June 6 SLV close of $28.51.

It's not supposed to look good right now, but for some reason it does, so I'm happy.

Notable breakout today - DPM, $8.25 as of a few minutes ago, that's either a cup-and-handle or W-bottom-and-handle targetting god knows what, $10? I don't own any, too bad for me.

Anon still seems to be staying away from the ask side at Bear Creek Mining. As a result volume has dwindled back down, but at least it's back to my ACB now so I'm happy.

NCU has experienced a slow drift-down due to boredom, I guess. $2.25-$2.30 seems to be a good place to buy back in. Unless of course it's a bad place to buy back in.

Sunday, August 19, 2012

New Deal Democrat - still no recession

I'm thinking more and more about the few bloggers that are actually "necessary" for my weekly or daily reading. I'm trying to pare it down to the absolute minimum - and no political opinion*, just hard data.

One of the best, maybe top-3 for my list, would be New Deal Democrat, who writes regularly for Bonddad Blog. Bonddad himself is so-so for me, but I'm thinking NDD is an absolute must-read. Among other things, his weekly data dump has continued to explain to me exactly what's going on in the US and world economies - no bullshit, no opinions, no prognostication, just hard empirical truth.

He does provide a whole whack of different indicators - but he does so all at once, and with the explicit understanding that they are each indicators only, some can be contrary to the broader picture, and there are reasons why some (e.g. Harpex, Baltic Dry, rail) can underperform without it being a slight at the broader economy.

And he gloriously puts the boots to those doomers at ECRI.

Anyway, this week he points out that, still, there's no US recession.

Add him to your RSS if you haven't already. Maybe delete 3 or 4 opinionated dogmatic political pontiffs to make the space.

PS I hardly ever read ZeroHedge now and yes, I feel so much better, thank you.

* - One of the nice things about being the type of person I am is that I find it easy, almost natural, to assume that the rest of the world has utterly fucking stupid opinions.