Tuesday, August 31, 2010

SOLD CDY - $1.22 + BAA - $1.80 BOUGHT DROOY $4.20 + CLHRF $.329

Geez, it's not even September and look at those precious metal miners go!  Before we get into the details of what I sold and bought today, let's take a fast look at the 10 stocks I claimed Sunday evening (2 days ago) were on the rocket launch pad are ready to head for outer space.  I own(ed) the first four.
In just two days:
1.  ANO was $.88 and closed today $.92  Total gain = +4.54%
2.  BAA was $1.70 and closed today $1.84  Total gain = +8.23%
3.  BRD was $1.18 and closed today $1.19  Total gain = +0.85%
4.  CDY was $1.11 and closed today $1.28  Total gain = +15.32%
5.  CMIN was $.74 and closed today $.72  Total loss = -2.70%
6.  NAK was $6.71 and closed today $6.81  Total gain = +1.64%
7.  PAL was $3.19 and closed today $3.14  Total loss = -1.57%
8.  RVMIF was $.285 and closed today $.285 No Change = 0%
9.  SCCO was $30.09 and closed today $30.23 Total gain = +0.46%
10. TCK was $33.43 and closed today $33.38.  Total loss = 0.15%
This is Cardero Resource Corp (CDY).  I sold another position today at $1.22 and have just one purchase remaining to sell sometime in the future.  

This is Banro Corporation (BAA).  I set a limit order to sell BAA while I was off busy at work, but inadvertently had the mouse trap set to go off at $1.80, rather than the $1.90 price where I thought I had left the cheese.  My bad.  Oh, well.  It's just money, after all.  :)  I easily forgive myself because I fully expect these kind of snafus to appear once in while now that I am back to work full-time and cannot see a computer the first 2.5 hours of the trading session.
I bought some shares of DRD Gold Ltd Adr (DROOY) at $4.20 today.  It has a trend line breakout of both the True Strength Index (TSI) and Money Flow Index (MFI) indicator.  Also, the TSI as made the bullish ZERO crossover and volume looks like it is waking up.  
I really do not know a lot about the company other than it trades at a low PE of 5.5, pays a 1.63% DIVIDEND,  selling at just less that .75X Book Value and has a float of only 38M shares.  Those kind of numbers always get my attention and combined with the technical analysis, I hope this one is another winner.
My other purchase today was of Coral Gold Resources (CLHRF) at $0.329.  At the time I bought this, the TSI had broken out to the upside of the trend line - but by the close the turtle had put its head back inside the shell.  First time I've ever seen that.  Ha Ha.
Again, some of the fundamentals about this company caught my eye.  It closed today at 30 cents per share, but has a tangible Book Value of 57 cents per share.  Small float of 32.5M, PE of 3.4, no debt, mining operation in California and Nevada.  Between CLHRF and DROOY I've got to wonder if they remain "undiscovered" and "out of favor" when the gold bull takes off in September.  I kinda doubt it.  :)
My TSI trading record has surpassed 200% in less than 3 months and has been updated.


  1. Just a thought to contribute to that "wall of worry". I am being very cautious with both BAA (bought @ 1.64) and ANO (bought @ 0.888) because it looks to me like the precious metals mining stocks are somewhat estranged from the $SPX and even though $SPX just gave me a buy signal, $BPGDM is at a level signaling that PMs are near a top of some sort. Every time I get overly exuberant, I wish I hadn't.

  2. Hi Loren - great to hear someone bring up the $BPGDM, as that had fallen off my radar screen for the moment. I just took a look at it and see that the RSI (14) has recently reached above the 70 mark - perhaps that is what you may have noticed also.

    The $BPGDM reading is now around 65, but previous peaks have gone much higher - to the 80 and 85 level. Also, when something, such as miners, are in a strongly trending bull market, overbought is basically meaningless. Observe the period of time from late last March to mid May. We are now at what appears to me to be the beginning of an identical phase.

    Your other thought was interesting. The miners have become somewhat estranged from the $SPX. I would argue that this has been true since 2001. I wrote a detailed post about this many moons ago. The miners are in a long term (secular) bull market and the stock market is in a long term bear market. Since 2001 the miners, as represented by the $HUI index, have appreciated some 1300% while the stock market, as represented by the $SPX index, have DEPRECIATED some 50%. Clearly, miners have been estranged from the stock market for the past 10 years, and as these secular markets are very long term - like 30 years - this situation will remain as is for another decade, maybe two.

    Great points and thanks for sharing!

  3. I've been reading a trend following book which has some basic questions about any trading system. It would be interesting to see your answers to their basic questions.

    1) What to buy/sell? Small precious metal miners and explorers (so far).

    2) When to buy/sell? The TSI and MF trendline breaks that you've mentioned.

    3) How much to buy/sell? Fixed percentage of portfolio per trade?

    4) When to cut losses? When you sense a disturbance in the force? ;)

    5) When to book winners? Top of the bollinger band?

  4. Well, let's see. Your answers to questions 1,2 and 3 sound like what I do.

    Question 4 - I generally do not try to cut my losses unless I am aware of something fundamentally wrong with the premise of taking the trade in the first place.

    I have sold one mining stock for a 3 cent loss and another with a 4 cent loss. In these cases I agreed with myself that the technical analysis picture was depressing and going to mean a long draw down that I was not going to be patient enough to wait it out. Otherwise, I do not sell mining stocks at a loss. Period.

    The ETFs I fool around with I will sell at a loss if I lose confidence in the premise of the trade (ie. gold is not going to correct further so sell the short ETF).

    Question 5 - I generally book winners in a phase out process if I think they will likely continue higher and if I have a rather large position. If however I think the position has run it's course, I just sell the whole thing entirely. I usually rely on the TSI and MFI indicators to tell me when it is time to sell, but not always.

    However a trade turns out, I never look back. That may be my single best survival skill. If the stock continues higher after I sell it, I could care less.

    Not sure I helped you but I did try to give my best answer. Thank you for asking the questions.