While I wait for a clear BUY signal from the mining index HUI/GDX, I have been trading the US Dollar futures in my spare time and doing well with about 85% of my trades profitable. But I saw this Silver Falcon Mining (SFMI) setup, by chance, and decided to take a quick dive into the unknown.
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Click on either chart to ENLARGE
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The stock has a very firm multi-month level of support at $0.12, and it opened trade today at $0.14. But when I saw that it had traded at $0.09 in the mid-morning I thought that very odd. I looked at it later in the afternoon and saw it had traded to $0.07 and was presently just above $0.08.
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What in the world was the news that could account for the company literally losing 50% of its value in just a handful of hours? I checked it out as fast as I was able and determined that the news was news but not that big of a deal. The selling volume was incredible. Like 10X a normal day.
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I have seen this before. Some big elephant gets pissed off something does not go its way (company press release) and then decides in immature emotional frustration to take an elephant sized dump, right then and there, on everything and everyone below its 'you know what'.
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Everyone, including the ants, have got to be prepared for these *outbursts* to run. And run they did today, into whatever shelter could be found.
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But when the elephant has emptied its bladder and leaves in satisfied physical relief, life goes back to normal. The ants come out of hiding and the buyers return (including me). I have seen this scenario before and as long as there are elephants, I am sure I will see it many times again.
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Anyway, I bought SFMI today at $0.083 and sold at $0.097 about an hour later. I really did not want to own the stock, but this setup was beyond my temptation level, and worth a quick low risk 16.9% gain.
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Other things: the US Dollar closed today right on its 50 dma (basis June `11 futures contract /DX). The obvious question is whether the moving average will successfully hold the dollar as it takes a breather. If it does, I think we may get some clear signals for trading stuff like ZSL, DZZ, DUST, TZA, SDS, DXD and/or short other ETF commodity items. On the other hand, if the buck falls through the 50 dma it should set off the bullish bells and whistles for the precious metals and their miners. The TSI has not given me a great clue about how this will turn out, so if you see something I am missing there, send me an email, OK? tsiTrader@gmail.com
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My TSI Trading record has been updated.
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john good evening,
ReplyDeleteYou have a lot of courage jumping on something like sfmi at the moment. But, you did well. I can't come up with those nice little scalping moves like you do.
Now, Take a look at the 4 hr tsi on the uup. IS THAT A NEGATIVE DIVERGEANCE?? Other momentum indicators also showing the same. You read and work with the tsi much better than I. Maybe I'm looking at it wrong. That TSI gave a good indication this morning on slv. Positive divergeance then 0 crossover.
good evening Monty -- nah, SFMI does not scare me. I have known this company in gory detail for several years now and recognize when something is out of whack. I probably sold too soon, once again, but so what?
ReplyDeleteYes, 4Hr TSI on UUP has a negative divergence. As a matter of fact, it appears to have made three in the past week. This tells me a couple of things, neither of which are particularly brilliant. One, the dollar is running out of steam and getting closer to making a bearish ZERO crossover. Two, the dollar, if it begins to rally sharply will set off a bullish trend line break.
Silver - I see something of a trend line break on the daily and a near trend line break on the 4Hr. But in either case, the TSI is still below ZERO.
Where can we get charts of the "June `11 futures contract /DX"?
ReplyDeleteI see the $USD is just rolling above the 50dmva but curious to see the chart you are referring to.
Dan -- thank you for post. I stand corrected. My apology. Indeed, the US Dollar is sitting above its 50 dma, not 200 dma. And, in this evening's session the dollar has now fallen below the 50 dma.
ReplyDeleteMr John you must be bored. Silver Pink 009/007.
ReplyDeleteJohn- thanks for the clarification although my charts show the dollar hit 75.13 while the 50dmva sits at 75.14 so I'm not sure I would consider a one penny breach a true break of the 50dmva support. If we get a low volatility down day tomorrow it will look like a continuation of the bull flag formation.
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