Tuesday, September 25, 2012

BUY CGR @ $0.85

I set a limit order in this morning's pre-market to buy shares of Claude Resources Inc (CGR) at 82 cents but there were no takers. So I upped my offer to 85 cents just before the regular session opened and my order was filled within the first 30 minutes or so. 

My TSI Trading record has been updated.

A number of considerations went into adding to this position. First and foremost is the concept that the solid gold miners with the highest cost to produce an ounce of gold are the hardest hit when gold falls and the highest percentage gainers when gold is rising. This is a conclusion I arrived at in my June 25th post Miner Cost per Ounce Study

With this concept in mind, and after double checking the current status of various miner's recent earnings and expected future earnings, CGR continued to fit the metrics I was looking for.

Second, I clearly recall the summer of 2009 as that was the summer I began this blog. Gold lifted off from around the $910 area in early July and finished just above $1225 in early December. It was a stunning 35% gain in just 5 months. And I recall that the daily cycle corrections were very shallow. Like if one was expecting a dramatic correction one just got left in the dust.

My sense is that, with QE3 in the bag, we could well be in a very very similar environment - an environment in which gold just continues higher and higher...and miners move quickly. 

Anyway, being long at this point will prevail - sooner or later - and being short is, as far as I am concerned,  like playing with a big pack of matches.

Thursday, September 13, 2012

SOLD DUST @ $30.20

Well, this was a crazy day.

I sold my position in Direxion's Gold Miner BEAR 3X ETF DUST in the pre-market this morning at $30.20. I registered a gain but with the transaction fees it was probably not even that.

My TSI Trading record has been updated.

Lately I have been reflective about my trading record, thinking about my success and my failures. And the conclusion I have been coming to is that I do quite well on short term trades, but tend to get clobbered by trades that I hold for more than a couple weeks, if that.

For example, this DUST purchase on Monday was timed very well and by the end of the day it showed a gain of around 5%. I saw that the hourly TSI (7,4) was impossibly strung out and would absolutely need to fall. But I did not sell.

Then yesterday, Wednesday, for some reason that I still have not had time nor the interest to figure out, DUST took off and at one point my position showed a gain of around 12%. I could have sold, but I didn't......and as the day wore on nearly all of the gain evaporated.

When I looked at things before going to work this morning I saw my gain inching smaller and smaller in the pre-market. I felt like my odds at that point were not what I wanted them to be. In fact, I told myself that from here on, with the Fed announcement in a matter of hours, to keep the position would be akin to being a gambler with only hope and luck going for me.

So I sold.

And sure enough, within the next hour or two DUST rocketed higher - without me. But I knew why I sold, and that whatever the darned thing does now does not really concern me.

Then many hours later the roll of the dice was in with the Fed announcement and DUST dropped and dropped and dropped - without me. Again, really not my concern what the thing does.

Anyway, the bottom line for me is that I need to play my game as best as I can. And this seems to mean that once too much time elapses and I am still in the trade, the very reason I entered becomes long gone. And when i find myself in this situation I need to get out. 

And that is exactly what I did today.

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.