Friday, November 28, 2014

WOW MY EMA METHOD IS A GUARANTEED WINNER: The importance of sell points

Since there is a gap in the US junior miner index charts cos of Thursday, here's a chart of the TSX's ZJG ETF instead, which is about as GDXJ as you can get:

And now you see how damn good it was for me to sell all my juniors on the suspected violation of the EMA(10) on Thursday, light volume be damned. Selling on the violation turns out to have locked in my gains for me.

However, I note a few problems with this:

1. How bullshit is it for the miners to turn around right at the SMA(50)?

2. That's an awful big volume candle for Friday.

3. Why the heck were people selling PMs and miners? Because oil dropped? Really? That's a reason now?

Anyway, USD threatened to break upwards today, but really hasn't yet. If USD does break upwards, there'll maybe be more pain as people short the hell out of PMs and miners for no reason.

So you goldbugs need to keep watching the US dollar if you want early warning of when to get back into PMs.

Um... oh, unless, of course, the PM drop is really driven by a worry about collapse in gold and silver demand because it's the oil barons who buy all the world's gold production. (Looks it up) Um. No, forget that, they don't.

In fact, I'm going to have to start following the India news again to see what the oil price collapse does to India's current account: their trade deficit was what brought down the heavy-handed gold duties, and oil is the other huge contributor to their deficit. So on a collapse in oil prices, maybe India doesn't need to muscle gold anymore?

How far can oil collapse, by the way?

That Friday candle, frankly, is fucking childish. 10% in one day? That's fucking childish.

It's so childish that you know it's being driven by hedge fund clowns puking their long positions and going short, and not by any real demand shock or supply glut.

Even if oil is going down, even if it's going down to $20, it's not going to do so in a week.

Personally, I think an oil move like Friday's needs to see a similar upmove in the USD to be believed. Is USD ahead of oil? Does it go up no more? We'll just have to wait and see!

Meanwhile, the real barometer of the US economy is doing this:

It was breaking out, but then the oil silliness at lunchtime made it turn back down. Now all the amateur hedge fund TAs are going to be crowing all weekend about a Friday gravestone doji and OMG that might just mean sell sell sell.

Personally I'm weirded out by the dive in IWM while QQQ did very little.

But yet the US economy is growing, debt is cheap, and the US consumer is about to get a shock the next time he fills up the tank and isn't asked for a sack of $100 bills.

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