Monday, September 10, 2012

BUY DUST @ $29.80

I bought a slug of Direxion's Gold Miner BEAR 3X ETF (DUST) early in today's trading session at $29.80.  That turned out to be the lowest price of the day. Wow, I wish I could do that all the time, but of course I cannot.

For now I am looking for a selling price that would be in the area of the gap open overhead - around $34.50 or so. This price area would amount to a 50% retracement of the collapse begun on August 31. The three take downs (beginning July 24) preceding the current episode retraced 61.8%, 38.2% and 38.2%. Today's action stopped at the first Fibonacci retracement level - 23.6%.

I restudied the daily chart of gold last evening and refreshed my recollection of previous studies I had done regarding explosive gold rallies. What I was reminded of is the very strong tendency of gold rallies to be retraced by 61.8%. In fact, there are only 3 or so rallies in the past 10 years that have not retraced at least 50%, and none of the exceptions occurred in the first weekly cycle of a C-wave. So this was the encouragement I used to purchase DUST today.

I ran into a huge snag last weekend with my real-time trading system experiment and when I could not fix the snag, I decided to throw in the towel for now. The problem was that I spent the past 3 day weekend doing a kazillion 'tweaks' to the code, but unfortunately did not do them on a copy of the code, but the actual file itself. 

Bad idea, in retrospect. 

When I tried to get the code back to where it was at the end of the first week of the experiment, I simply could not. Essentially, I had inadvertently corrupted my data and compromised the integrity of the results it was outputting. It was like I was trying to make the Kool-Aid sweeter and after I put in too much sugar  I could not take the sugar out. Or something like that. Very disappointing.

My TSI Trading record has been updated.


  1. John -
    I bought DUST on Friday anticipating a drop in confidence ahead of the German Court ruling this Wednesday and plan to sell at some point today as they are widely thought to be in favor.

    For your play to work, Ben Bernanke must withold more monetary stimulus on Friday. My stomach is not that strong when it comes to betting against the Sovereign.

    Bill A

  2. John,

    I must be thinking like John. Yesterday around mid day I was looking at DUST and the price of gold and more importantly looking at the TSI 7 4 change of direction. I was looking at the daily, 4-hour and 1-hour. the 4-hour had made a real nice strong turn on both gold and DUST. Also, as I had watched the strong push of gold over the past week I just kept thinking that QE3 is just not in the immediate offing... so with this info piling up I got in at $30.38. Wish I had gotten in on the $29.80 but if we get $34.50 out of this trade I will be very happy.
    Wild Bill

  3. John,
    Did you take profits yesterday or still holding?

  4. That is too bad about your coding John, don't give up!

  5. Sorry to hear about your experiment John. I lost lots of stuff recently too - I blame too hot Japan haha! Was trying to work out what you were up to - I made multi time frame and multi period tsis/ ergodics for metatrader(forex) to try and copy your trades but I guess you had more sophistication than that.. Any hints -hehe?? Hope you will feel energized to try again in the future!

  6. Good Morning Sir,

    I was wondering if you think a QE3 event would be enough to wipe out a pullback in gold?


    Steve in Austin

  7. I'm glad i got out of that yesterday...looks like dust just exploded

  8. Yikes, been holding $DUST from WAY higher than your entry price and this has indeed become a very testing time for my position.

    I am kinda close to throwing in the towel, would be interested in seeing how you handle the trade too. Thanks!