Doug's log

It appears some of us are interested in the business of trading, hopefully for both fun and profit.
Here's a place to talk about that. I suggest two main categories. How to trade (timeless), and what are you trading now, and why, and how it turned out. Those tend to be missing from the pro boards, so pundits can have selective memory....but that's not all that is important. Being wrong is part of the game, and how to handle it and make money anyway is crucial, for just one example.
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Doug's log

Postby Doug Coulter » Fri Apr 08, 2011 10:08 am

I've got a little trepidation about doing this as if I'm honest right now, it's going to make me look pretty dumb, at least at this instant. I need to find a way to more easily redact my account numbers at TD Ameritrade as well, or risk having someone hack my accounts, I'll look into that further.

Dumb moves of late, just to get the ball rolling. After some "too good to be true" recent gains, I've just sold a lot of BTE (about a thousand shares worth, a big position for me) and PALL. Both had "glitched" and gone down a percent or so in heavy volume, often a sign a bigger selloff is in the cards. Both, of course, are up a couple percent this AM, so I got off the boat a little early.

On the other hand, 9-10% gains...back in the bank...that's how you do well. Or at least how I do. We can have some good discussions (arguments) on another thread on philosophy about this.
The slower, buy and hold type crowd would certainly laugh up their sleeves at that move and even I realize it was a mistake. It was that "too good to be true" feeling in my gut that triggered the sale at the slightest twitch, as I'd gotten that in a very short time, and even the best stocks "rest" or "consolidate" after a good quick run more often than not, so I was playing the odds.

BTE is one I consider a "best in class" stock. It's a fairly small Canadian oil/gas company, small enough that almost anything can move their price, it appears quite well run, and I've been trading in and out of it since the end of the last crash. This one is a "who knew", as when I started trading it it was in the $12 range -- that would have been better to just "buy and hold" at least for this duration, as it also pays a nice dividend, in the 5% annual range, but split up so it pays monthly. The Canooks take tax out of that before I see the money, but still not bad at all. But "who knew"? Not me, though if you hit me with a clue-bat enough times I'll get it. I fear this particular one is near the end of a long glorious run, but (as I won't say as much since it should be assumed) I could be wrong about that. I feel oil has to make a move soon, and it could be either way. But look at the consequences. With oil at 110/bbl right now, if it goes up, there goes the world economy in short order, again. If it goes down (I think more likely) perhaps to 100 or 95 range again, all the oil stocks will follow. It just doesn't "feel" like oil can sit where it is. So in two out of three possible cases -- going down or sitting still, oil will be the place not to be in the near term, though it's been great for the last few years.

PALL (palladium) is used in auto manufacture for the catalytic converters and is a pretty nifty precious metal anyway, which is catching some of that wind in its sails. However, recent events have make auto related things a little dodgy. In fact, the reason I had such a nice gain on it was the fact that recent events caused it to go "on sale" for awhile, so I bought some, then staged in another buy as it seemed I'd called that entry right. And I did -- the question is going to be, did I call the exit right, and honestly, I don't know yet.
Here's a chart:
Screenshot-3.png
PALL recent prices

As you can see, there have been a couple serious downdrafts, in Feb and Mar, and that latter one is where I bought. PALL is thinly traded and gaps a lot between days and within days, it's not for the weak stomach out there. But we know it's essential for autos (and hydrogen purifiers) so it's not going away until autos don't burn gasoline, which is going to be awhile. I see though it gapped right up this AM, it's going back down again -- a considerable amount of success in short term trading of this one is being on the ball -- It will do these odd things for just a few minutes, until the "real" value is established. It seems not to attract too many traders to smooth out the prices immediately. In other words, my kind of roller coaster stock! The big boys and hedgers will bring it to true value, but evidently they are doing their trading manually and they are slow, perfect for a guy like me, who can kind of judge what that value is going to be, and make my own moves accordingly -- but just a little quicker.

Here's a chart of BTE over a similar timeframe.
Screenshot-4.png
BTE


Same thing -- took a dump in middle of march, then zoom again. You can see the glitch that triggered me to dump it, after all, I had some thousands profit on a 2 week holding of about 1k shares, or about $54k at risk. That's enough that even I get nervous, it's a big position for me (I normally trade in #10k "units" and that was more than "all in" of 4 units). And "too good to be true" almost always winds up being the case, so I took the money and ran. That alone was enough profit to run me for about a month after all, and that's what I'm doing -- trading to eat. If oil stumbles, I'll be right back in there, as the dividend alone (which I captured) is pretty nice, and it goes up nicely most of the time as well.

For both of these, I look at futures to determine some timing input. I use ino.com to watch those. You can get all the futures by clicking on the markets tab, then selecting metals (if you do metals, and I do) or whatever. Nice free service. I've found that oil of course affects BTE, and PM's in general affect FCX, for example. Looking at the prices for the various month out contracts can be a leading indicator of the price of the stock that deals with the resource in question. Sometimes it goes the other way, but this is at least some "edge" in the grand game. If you see a spot price much higher than the futures prices -- spot's probably going back down, or the futures are going up -- they have to match on the date of the expiration of that future. And the vice is versa, so it's a nice tool to plug into your decisions.

Time will tell if those moves were right or not, but in two weeks I made about 2 months living expenses. That's good enough for me! I don't always do that, of course, and there were some losses elsewhere which I'll get into as things go along, but right now, time to go pay attention to the other things I still own, and to see if there's something I should be buying right now.
I've recently increased my holdings of TBT and TMV, which are going up with treasury interest rates. I predict that at some point, QE is going to wind down (they say June, but many guess that won't quite be the end), and that will make government debt go up in interests, which is bond prices falling when Ben stops buying 70% of our issued debt -- who is going to pick up that slack?
Those are short-term holds -- they are those crazy leveraged ETFs that trade futures, rebalanced every day, and they have a "built in loss" due to fees and rebalancing. No matter what people think about other things, these and other like them (FAS, FAZ) are NOT good to hold long term, long. Short, the fees and decay help you...the game can only be rigged one way or the other!
So, one might go short FAS rather than go long FAZ, for example, if you thought things were going that way.
Posting as just me, not as the forum owner. Everything I say is "in my opinion" and YMMV -- which should go for everyone without saying.
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Re: Doug's log - baseline

Postby Doug Coulter » Fri Apr 08, 2011 10:27 am

So, here's where I'm at now.
Screenshot.png
Current status


Sadly, I missed the boat on the last runup on FCX -- but that's how it goes, I thought it was just too overpriced, even though I really like these guys. They have one of those really good CEO's, which I really like to see in a company I trade -- there aren't many. I don't like Fords much, but I love their CEO too. If he was running this show, we'd have gain at fusion by now I bet.

But here's the FCX guy a little while back.

Obviously I should have bought more silver! I bought some CCJ right after the Japan incident, it really got hammered, and I have sold some since, some at a profit, some at a slight loss when it didn't bounce as hard as I expected. I'm about net zero on it at the moment, maybe a little ahead. I feel like once the Japan thing is out of the daily headlines, it will recover some, or some other large miner will acquire them -- it's a long-odds bet, but those are the ones that really pay.

I should note I'm using two slightly different trading styles in my two accounts. In my cash account, I play cowboy, in and out pretty quick by any standards. I'm trying to go slower in the IRA, and hold longer and through more dips there, which is actually working better. But, without what I do in the cash account, that discovers what I should be long in in the IRA (can't short there except by buying a short ETF, long) I doubt that would be as good.

Some people think it's good to hold through dips, and to the extent its a minor one -- I agree. If it's anything but minor, or continues for more than a day (note "logical or" there), I say dump it -- wait a little and buy back when it's cheaper. I can't see where a big drawdown is ever a good idea (I'm not alone in this). The guys who do say "but you won't buy back in at the bottom". For some psychologies, they are right, but I am trying to learn not to have that one. The trick is to define what constitutes a selling dip, and I'd guess what you'd want to do is look at std deviations that are normal, and hold though most of those if they aren't so big, and immediately dump if something went outside the normal wiggle range to the downside (depending on which side you are, short or long, that could mean either down or up). This is what I personally am trying to refine in my style, and automating this with a computer that can run a simple state machine with those "normal behavior numbers" plugged in would seem to be ideal, just haven't had the time to write the code yet so it's not all manual.

Often as not, these days, things will trade in a range, and its often (but not always) a good idea to buy them near the bottom of that range (bollinger bands help see that), and sell near the top of that range, unless it blows out of the top or bottom. And things will do that. I try to go long things that are generally trending up, but catch them at the bottom of a trading range -- you get more gain per day doing that. I try to go short things at the top of their range, going down, if they are trending down. Same idea. That's two edges I get on those type trades.

If the market as a whole is trending up or down, it will drag most stocks with it some, either adding or canceling out their own little trend. The key is to choose timeframes for what you think constitutes a real trend, and adjust accordingly.
Posting as just me, not as the forum owner. Everything I say is "in my opinion" and YMMV -- which should go for everyone without saying.
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Re: Doug's log

Postby Doug Coulter » Fri Apr 08, 2011 9:12 pm

End of day. I didn't do anything, nothing appealed to me today. Silver zoomed again, gold went up...TMV and TBT went up a little, and I made roughly $600 or so gains (had I sold it, but I didn't do anything at all). So holding all that over the weekend, and hoping for a bounce Monday, or at least not a big gap down on those things. I should have mentioned above that I recently dumped TSCO (at a profit) after it glitched - I've been too nervous it seems. But PALL seems to have flattened out, and I only missed it by one day, so not so bad. It looked like rounding over and going back down, and still does. Next time it's on sale, I'll get long again. Those nice swings on things are what make me money! STEL is getting into the buy zone again too. This is my hometown bank, dinky outfit, me and a bunch of tellers trade it, that's about it. Swings crazy, but they are in good health -- so anything under 14, wait for it to finish going down, get long(er) and wait for it to bo back to the 16 region, repeat as necessary. A great moneymaker that isn't manipulated as such -- merely traded by incompetents mostly. At that poker table, I'm NOT the mark.

Some people, who look in the rearview a lot think silver is going to be going back down, and farting around for years. It IS flighty and frothy now. I'm just watching, I know I don't make great long term predictions all the time. So I'll stay in while its going up, and trip out if or when it stops or goes down. That's the idea of trading - even if you're not losing, if it's sitting still and likely to keep doing that, why not be in the bank instead? Or better, something that's not sitting still and is going your way (which can be either way of course).
Posting as just me, not as the forum owner. Everything I say is "in my opinion" and YMMV -- which should go for everyone without saying.
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Re: Doug's log

Postby Doug Coulter » Tue Apr 12, 2011 6:16 pm

I went long SCO Monday morning (sorry I'm late telling it, nothing on purpose there, I just forgot I was doing this again) and closed the trade this afternoon. 200 shares, nice little profit. I also added some TMV yesterday, but that wasn't the right time, obviously. Sold the last 100 shares of BTE while still at a profit today. Looks like I'm tending to "sell in may and go away" but I doubt I'll stay out. It just seems like a good time to be trimming risk, I don't think earnings are going to be that great, and there's all this junk about whether there will be QE3 or not. I suspect, not unless the market totally tanks, which it will if they announce there will not be. Then Ben will come to the rescue, perhaps. The banks are just one FASB rule away from insolvency still, and there hasn't been enough propping up for them yet.

SCO is short oil....I knew it had to move, just not which way. And I'm still not sure it will keep going, so I closed the trade when it flattened out. A classic "day trade" that worked nicely. I didn't get all of both days rise, but I did get 8% or so -- not so shabby. I made something over $600, which if I do that consistently with that tiny fraction of my stake, will make be rich beyond the dreams of avarice. Of course, I don't do that all that consistently, and some trades lose a little.

I'm still holding a little CCJ which really took a whipping. I'm not sure that's done with yet, so didn't pick up more. If you're going to play long odds (or long time-frames, which also increase risk) you don't swing for the fences, you just put in a little -- because the payoff is supposed to be real good if you win, and you might lose, so don't put much at risk on things like that. I think they'll either recover, or get bought by some other miner at some point, and the potential is for a fat 2 digit increase there - someday. The real question on things like that is would I have made that 2 digits on other, less risky trades over the same time period, and the answer is not one I know. My gut says it will turn out fine at the level I'm in.

Hoping for a nice bounce to get out of some of my other longs now, but hanging on to the precious metals for the moment. Bad news, which I sort of expect, tends to be good for them, and they are in general good for long terms. I'll put a stop under the flighty silver tomorrow, and can keep it loose, as I'm showing 14% gains on it now. Gold not so great, but that's gold -- its slow.

The blood didn't quite run in the streets enough today to make me want to get in there and buy with both hands. I'm guessing there's more to come.
Screenshot-3.png
Does this scream "double top" to anyone else out there?
Bearish as it gets.
Posting as just me, not as the forum owner. Everything I say is "in my opinion" and YMMV -- which should go for everyone without saying.
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Re: Doug's log

Postby Doug Coulter » Wed Apr 13, 2011 4:19 pm

Maybe I'm nuts (ask my wife) but I took Silver off the table today. 15% profits in a few weeks is "too good to be true" and it was looking like stalling out. Take the money and run!

I am sorta wondering what happened to the dividend I was supposed to get from BTE, since I held 1k shares on the ex dividend date...hasn't shown up yet. Hmmm. Hasn't ever been this late before, and I often would trade in and out with an eye to that ex-div date to capture it.

About the only thing I see out there cheap now is uranium stocks, but with the media hysteria, it might take awhile for them to recover. Have a tiny amount, may get more, but they've been bouncing along the bottom for a month or more now -- doesn't seem like any rush, and that "buy low" opportunity may show a nicer spot soon enough.

So, I'm doing the "sell in May" thing, a little early, and for the first time -- during the boom, it was a dumb idea. After Mar 9, 2009, it's been a stupid idea. This time, the old saw might be right again. I'm attempting to miss a rather crowded exit ramp on the possible end of QE and other developing situations. Still have some gold (not much)...been out of palladium for awhile, looks like it's going to be on sale again, so I can catch another nice quick ride, again.

Banks started out way up today, but at one point my own bank STEL, dropped almost low enough to look like backing up the truck again. But I didn't and the opportunity passed. I think it will come around again soon enough - it swings wild with only a few traders -- tellers, branch managers, and me.

Side note -- as a macro view type of thing (not yet tradeable) I see water, for irrigation and potable, as the next "peak energy" kind of issue. I'm not trading anything now, but homework done before the test is the stuff that pays off. Not sure when this will strike, but it will be an OMG, media flurry at some point. We are already eating entire rivers before they get to Mexico, Israel is also doing the same kind of thing to make the desert bloom. Aquifers are going down in the places where most of our food production is, now extra to grow more corn for ethanol.

Could be one year, or ten. No escaping it's going to become real important and probably "all of a sudden" if our ability as humans to predict even obvious crises stays about the same.
EG, nearly non existent. So, time to look into and keep track of developments so as to already be in the know when it matters.

Some places are already going to multiple supply piping systems (though not in my backyard, in all the meanings of that one) so the "sinful" use of potable water to make grass grow or wash cars can be cut back. Good luck tearing up the streets of any major city to do that one! I'm more than a little weird on that one. I've discovered that just the water that is collected on the roof of the lab is actually enough to get by on if the extra is stored in precipitation season. Some of what we get is so pollen laden it's mainly good for the garden and flushing toilets though -- you have to use judgment on that one. In my case, that's purely convenience -- I own many potable water artesian springs. They're just hard to get to with a water truck. And I kind of like the wildlife they support, so I never want to tap them completely out anyway.

Of course, that will never happen with my lifestyle. I use well under 5 gallons of water a day, per person here. That's not a typo. It's more than possible, once you develop the right habits.
Posting as just me, not as the forum owner. Everything I say is "in my opinion" and YMMV -- which should go for everyone without saying.
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Doug's log: woulda-coulda

Postby Doug Coulter » Thu Apr 14, 2011 12:15 pm

While I believe Curtis is absolutely correct that you shouldn't play the woulda-coulda-shoulda game if you are going to agonize over it and immobilize yourself even doing it up front, I also believe that if you can do it without the emotional baggage and learn from it that it's a valuable thing to do. It's how I learn, and not just in trading markets.

So I'm going to take up the silver trade I just closed the other day (at ~15% profit) here and do that and see what conclusions I can reach about it.

Here's today's chart for a couple months of SLV, with some indicators I use (and am not fully happy with, which I'll get into on a thread on technical indicators later).
Screenshot-5.png
Chart for SLV


I had bought in at the $34 level (roughly 3/21), more or less, a few hundred shares worth, which is actually small for me. As Curtis advises, and I almost do, I scale in and out of things in "units" of money, I couldn't care less whether a unit means 1000 shares or 38 of a given stock -- percentages are what matters, absolute price per share doesn't unless it's extreme at one end or the other of the range, which affects trading patterns a bit. What constitutes a unit for some other trader might be a very different number, the only real rule is that they can't be too small -- or commissions take too much, or too large, so you don't have flexibility or enough of them to do trades that appear and are good ones. I probably divide too fine, I consider my stake to be roughly 35 units altogether, or about $10k.

Now for starters, that's a darn nice gain for under a month. "Too good to be true" even, unless one has a compelling reason to think that's going to just go on forever, that's maybe one of the better signals to close a trade. In this case, yeah, it might go on awhile, but silver being silver -- might not, it's known to tank from time to time, and stay that way long enough to tie up money that would be better used elsewhere -- you can't just let all your dough sit in something hoping it will recover its price -- dumb if its not going up as fast as something else you could have your money in instead.

I sold on the "dead cat bounce" after it had gone down -- that's typical, and nicely, this bounce was better than they often are. Especially if something went down "in volume". I use volume as a confidence multiplier -- if a thing makes a big move, but in low volume, chances are there's a lot of noise in that price signal. If something moves in larger than normal volume, it means big money or a lot of little money believes it, and in this game we are trading human behavior -- volume is a good "tell" of what people are thinking -- those who put their money where their mouth is, and they are the ones who matter, not some pundit or analyst whose disclosure is "I have no holdings in this stock I'm writing about' -- no skin in the game, I'm not listening to you pontificate, it's a waste of my time.

Now, SLV is up 2% from todays open as I write -- I coulda got more profit with very little wait. That's bad, of course. But it's also a fact that you can't see the future - that magic right hand side of the chart doesn't appear until it does. And it doesn't care what I think or what I do -- I'm not big like the Hunt brothers were, and I can't move the tape much. There of course are people that big who still try those stunts -- and very high volume is an indicator that someone just might be doing that now. I don't know that I buy into the rumor that JPMC is crazy-huge short silver and trying to drive the price down so they can cover -- seems tinfoil hat, and there's plenty of that going around that turns out to be at best, incomplete information. Of course, if that's true and in the extremely unlikely case the government makes them cover or at least admit it, we could see the short squeeze of the century if they try -- but in truth they wouldn't have the money, the government won't make them fail while we are paying to bail them out still, and so on. I'd call that one "extremely doubtful".

Now, I fully expect all the precious metals, especially those with industrial demand, to inverse track the dollar at least, and maybe more as the "fear premium" is priced in. And in fact, that's mostly what I think I'm trading here against a backdrop of the falling dollar. It's these short term bursts of gain I crave in my trading. Long term, assuming the fear premium is averaged out, all you do with the PM's is hold even in actual purchasing power, and I need to do better than that.

Remember, after the Hunt brothers failed, silver stayed in the dumps for decades....you don't want to be stuck in that kind of trade unless you plan to live forever. Here's some perspective, which sadly doesn't go back far enough on TD Ameritrade, but silver was ~$11 after the Hunt brothers failed....as you can see, you didn't want to own it then -- and it even tanked in the crash!
Store of value, my a** -- had you needed the money then, which of course was the very best time to buy anything even with a dartboard selection, you were totally hosed!
Screenshot-6.png
Longer term perspective


Since the value of the dollar has been dropping re everything else for the entire time we've had paper money....Silver wasn't that great most of that time, and in fact, was a loss no matter how you look at it -- nominal or actual.

So, looking in the rearview mirror, and assuming that now or nearly now is the right time to sell the stuff, when was the right time to buy it to open the trade? July 2010 is my call there. There was also a doubling trade you could have taken back in early 2007 to early 2009, which wasn't real bad (but you could have done better elsewhere) and another from late 2008 till now, or somewhat earlier. But two things -- A: "who knew?" -- silver demand for photography was going down, and all "real' jewelry was gold. B: Other things were doing even better then, go look at a long term plot of say, POT for example. Here, I'll do that for you. Ahh, perspective, and I get to eat the fairy cake too.
Screenshot-7.png
Perspective

Isn't google nice? And yes, I rode that POT gravy train, in and out of it a dozen times during that boom time and actually did it well enough to see bigger gains than just buying and holding it, just holding a core position and trading in and out of it with play-money. The profits from that are what built the building I'm living and working in, and a couple new cars, and another bunch of land...not bad, and I'm not complaining. I could have kept it, and traded with it and have even more money now -- but too greedy gets you in plenty of its own kinds of trouble, and frankly, I'm glad I spent it on the things I did. The saying is, "Bears do well, Bulls do well, but Pigs get slaughtered" and it's true, often enough.

So much for the worship of precious metals...I'm not in that church myself, but just trade them like anything else. I should have added GLD and S&P 500 to that chart, and it shows a few other interesting things, but mostly off topic for this post. You can go do it -- it's illuminating. The gold/silver ratio has been collapsing, and should it mean-revert (likely someday) then either gold's going to shoot up, or silver down. History more often has it the latter way, but I do hold some gold at all times -- both physical in the lab, and a decent chunk (a couple "units") on paper.
So, my money is where my mouth is here, always a good feeling.

The question is, should I have held the silver longer? At the time, that selloff in much larger than normal volume, and the fact that on-balance volume was tanking -- I couldn't do anything smarter, I couldn't see the right hand side of the chart yet as it didn't exist. And, we don't have the fullness of time for perspective just a few days later anyway. I think the first bank of mattress is a nice place to put a 15% gain made in under a month -- do that repeatedly and you'll do just fine! It will even cover for the mistakes you make in other trades, and leave you well ahead anyway.

I am looking at what I think is the lead-in to a fairly good sized correction, I plotted that double top with the descending peaks and dips both, in another post. So I'm getting defensive just now, and as these plots show, silver isn't a very good inverse dollar, so...I think I came out OK on the woulda-coulda-shoulda game, this time. What I've seen over and over is that things going concave up -- exponential, can't keep doing that forever, and while that last burst may have a lot of profit potential, the other side when they fail is steeper yet, and a bad bet to assume you can catch it quick enough - sometimes the failure is a big gap down while trading isn't possible....waiting to go over a major top to sell is dangerous, and while I'm definitely a cowboy, there are limits...just about always better to buy high -- after an uptrend is confirmed, then sell higher, before everyone else is on the exit ramp and driving prices back down.

Going forward, I'm watching but not buying, some things that will do nicely if we do get a substantial downturn. Those would be inverse treasuries (TBT, TMV) and inverse "banking", or FAZ, SKF. None of those are good long term holds, due to the nature of what they are -- rebalanced daily options trades wrapped into an EFT -- they have time decay in other words, so holding them for any time hoping to "make it back" is generally not wise. Of course, you can do inverse all the indexes (or practically anything) but the indexes tend to be slugs, and that "anything" is what I do my homework, on going, to identify -- and I'm not out of the study room there yet so I don't have much to say except putting my money where my mouth is -- and I'm getting out of my longs every day, including things like DIA and QQQ that I'd hoped would be "safe" "long term" holds that needed no attention. Wrong! All the risk, but a fraction of the reward, forget that junk. Give me beta in both directions! I'll do better with my particular attention span (too short for many in this game).

The risk here is that all the pundits I respect (a tiny fraction) and even the ones I don't are all calling for this downturn. More often than not, it pays to be contrarian to that herd, as they are wrong more than right. In this case, it could be the sentiment is so strong to be self-fulfilling, as it is whenever everyone is in the process of buying into it - which is what I see going on at the moment. Once everyone is all in, or all out, that's when to look for a major reversal but we're not there yet, just seeing signs of people getting "out". Might as well be ahead of the pack a little.

Ah, and it looks like crude is going back up again -- nice I closed that short at a profit the other day too. I believe this is an unstable price point for crude, and it's going to have to go somewhere soon enough. I will try to be patient enough to wait before making any large moves there, though. A big enough move up will make the rest of the world go into the crapper, and I don't see how a large move down can really happen and be sustained -- but there might be a big enough down move to get long again at a nice price. For sure, in a finite world, it can't keep going up exponentially.

This against a backdrop of the context I point out elsewhere. Anyone with a brain will realize that this party on fiat money has to end. That's not rocket science (or even fusors). But, the all important and as yet unanswered (and unanswerable probably) question is not if, but when. Easy against that backdrop to be premature, and humans do have a decent tendency to muddle through better than the panicked ones expect. We'll just have to wait and see.
Posting as just me, not as the forum owner. Everything I say is "in my opinion" and YMMV -- which should go for everyone without saying.
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Re: Doug's log

Postby Doug Coulter » Wed Apr 20, 2011 9:29 am

Here I am logging yesterday, but a day late this AM. I'd had to go out and pay bills (phone and property tax) yesterday, along with some work on the #2 fusor, so I neglected to post.

For whatever reason...I decided to start picking up a little long and some short positions again. I can't say it was rational, just gut. I picked up a "toe back in the water" silver position, tiny (100sh), some FCX again (love those guys), and some QID which I will definitely have to call a mistake, and have sold it at a big loss pre-market already this morning -- down a few percent.
Also added a small increment to my paper gold position, now at 150 shares. It's not doing that fantastic (compared to the real zoomers) but that's gold for you - I may decide that's where I park money I'm not using, rather than the money market account, by default. I'll be watching the risk-reward on that one. The long term plots look pretty good.

I guess that means I shouldn't have sold the silver in the first place, yup. The thing with silver -- it goes up explosively, when it does. but it also goes down even faster, often as not at times when I can't do anything about that -- I just see a gap down from one day to the next. I was encouraged to pick up a little (tiny amount for me, half a "unit") because the futures were looking good over at ino.com. Same with FCX, since copper started going back up -- and gold.

I note something interesting. I'd been fooling with a silver stock called PSLV, which is supposed to be more "real" than other paper silver. Until recently, it had lagged "paper" or "futures" silver by quite a bit in performance, so I quit messing with it, and had sold my position at only a slight gain compared to what SLV was handing me. I should have waited (you hear me say this all too often). It seems that PSLV has a lot more "fear premium wiggle" than "normal" SLV does, and when this stuff hit from S&P, really took a leap up. I am resolving to watch that ratio in the future, as it might be a good indicator of the fear level. I think of the pm's prices in general as being a trend, more or less inverse the purchasing power of the dollar, with some fairly large wiggles on the line, which is what I mostly play, which I call the fear premium. When that goes off, things like gold and silver fall -- even though the underlying trend is still up. When that comes back, it's a certain percentage added on. Buying when fear is low, and selling when it's high often gets you a lot more income than just holding (and even holders have to sell sometime to get the gain, and they should sell at the same times a trader would -- high, when everyone else is buying).

This is the same idea Warren Buffet mentions when he says buy when others are fearful, but sell when others are complacent/greedy. It's just that in this case the price vs fear equation is reversed for "real money" or precious metals. I put that in quotes because real money to me is whatever people want in exchange for what I want. There is no dictum from above that says gold is "real money" -- just a belief system. I recently sold a bunch of old high quality audio tubes for much more than their weight in gold, and the guy who bought them wouldn't have wanted the gold -- he wanted those WE 350-b's much more, and effectively gave me gold for them. Lots :) Things are "money'" because people think they are, full stop. Recognizing the nature of such things is a major leap forward in understanding how things work. They are not laws, other than human nature and inertia.

The true "bugs" of course believe only in physical metal "in your hands". Fine as far as it goes, and I'll not say you shouldn't have some if it keeps you warm and fuzzy, but that's hard to trade, and costs more. The bugs fear some sort of instant meltdown that will invalidate their paper positions. Could happen and if you're a bug you have all your money in things like that (which is stupid) you have to worry about minor risks of strange events like that. I'd think a trader would anticipate that sort of thing and just be out in time, simply by the "too good to be true" rule, they'd have taken at least some off the table by the time any such outlier event was going to happen -- that kind of thing only happens after the torches and pitchforks in the street, if history is any guide, it's not usually much of a surprise to anyone paying attention.

Zowie the market just opened. FCX up 5.7% ish -- silver up 1.5%. Guess the old gut isn't so bad today (yesterday). Pretty astonishing. I should trust it more and would have bought a lot more of those if I had, I suppose. On the other hand, the QID (short the nasdaq) tanked hard, and I can't say I felt less confident about that one. This is one way discipline and rules help you -- you don't commit major money till all the stars align, not just the one in the gut.

Just sold the FCX at 9:37, as it was trying to fade the huge gap -- there'll be another chance, and that was a basket or two of groceries profit in less than 24 hours. Small time by some standards, but I only need that much a month for groceries and my cash is freed up again to repeat something like that. "If only" I'd bought a thousand shares...but I don't play that game.
Posting as just me, not as the forum owner. Everything I say is "in my opinion" and YMMV -- which should go for everyone without saying.
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Re: Doug's log

Postby Doug Coulter » Wed Apr 20, 2011 10:53 am

Here's an interesting comparison, though the particular shot here isn't quite the best to show what I mean, quite. A lot depends on when the two were normalized...
I'd bet you could make up an extremely good "fear premium indicator" via comparing these two, or equivalent ones in the gold market. When the fear is on, the less liquid physical stuff zooms more quickly (and conversely).

SLVcomparo.png
SLV and PSLV


I'd say the fear is "on" among the bugs, or could that be greed? Does it matter?

Ah, here's a better one from my trading platform.
SLVsomparo2.png


Can you see why at first I thought PSLV was a slug? Look at the time interval around 4/04 - SLV was going up nicely, and PSLV was flat as a pancake. So I dumped it. A whole lot of this game is getting your time perspectives correct and here I'm shamelessly telling you I'm not always that good at that. Take that you pundits who never show their errors (and who probably don't have skin in the game). Punditry is one of the peripheral scams in the markets -- like many others, they don't trade and don't make their money by being good at it, they don't have to risk that, they've found a way to skim you without having to play in the real game. Other examples would be more or less zero management ETFs and their ilk that nevertheless capture management fees. When you work out what a fraction of a percent -- but of billions of bucks -- pays them -- you'll see what a gravy train they've create for themselves at basically no risk. Smart, but not trader-smart.

Just saw this and now I'm laughing. Looks like I wasn't alone mis-calling silver (at least up till this moment) :mrgreen:
http://www.minyanville.com/businessmark ... 1/id/34069

All his comments apply -- this time we were the bug, rather than the windshield. At least I didn't go short -- I bought back in, rather.

So, let's grab a sack of perspective here and see how we both blew it. The trick of course, is that this is easy in hindsight -- choosing the correct perspective period ahead of time is the hard part -- and that timescale changes all over the map depending on news and market sentiment. This is what I call doing my homework. Rather than agonize over some wrong decision or missed opportunity, I study things so I don't miss out next time. After all, he who is lost, hesitates -- so if I discover I'm lost, and already know hesitation is ruin, the thing to do is get found again.
Screenshot-11.png
Silver perspective

Here's a chart with properly drawn trend lines (which was a bit of a trick, I had to let some outliers go out of the lines to get something decent -- and when you can't yet see the right side of the chart (the future) that's almost impossible to do.

I had sold out around 4/11 or 4/12 (I forget) when there was that dip that touched the bottom trend line. Double huge DOH! That's when you BUY, dummy! Only when the lower trend line is convincingly broken do you go short, Toddo. And it wasn't -- on properly drawn lines (with the benefit of hindsight). Now we see the top one broken -- which generally means either we're near some kind of blow off top (and it's time to set fairly tight stops and/or just get out before the correction) or...a genuine breakout, of which this is just the beginning. You don't in general buy into one of these unless a few periods confirm it's a real breakout -- which is somewhat less likely (all other things being equal, and they might not be) than a breakdown and a bounce down off the trend line -- you can see that at a little after 3/14. On this chart, which from that standpoint was drawn using future knowledge. If you were in realtime, like we all are, you might have drawn lines such that the dip on 2/24 would have gotten you. Always remember this when someone gives out a fancy analysis based on the past -- back then, you didn't know what you know now, it's all too easy to be smugly superior when you cheat and actually do know the future (from that perspective).

Now we are the top of the current trend lines. I'm not going to buy more now, unless I get a gap down that fades back up, or some other come hither -- like continued strength. The closer to a blowoff top you are, the more money a day there is -- but the risk of a sudden drop goes up even faster, and always remember: "Pigs get slaughtered".
Posting as just me, not as the forum owner. Everything I say is "in my opinion" and YMMV -- which should go for everyone without saying.
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Re: Doug's log

Postby Doug Coulter » Thu Apr 21, 2011 5:55 pm

Well, I'm not doing a very good job here, except as an excuse for the comment of the day. Silver is obviously in a runaway blowoff, and heck, I'm back in a little, to see if I can get lucky (stay lucky?) and get back out when the inevitable blow off happens -- let's hope it's not over the weekend. Also picked up some FCX in both accounts, again -- copper's up too, and a little more GLD, why not? And some PALL, though I really missed the bottom two days ago (if that's what it was). Spent most of today doing other things, so I didn't watch too much, but if things "keep" over the weekend, I've made maybe $500/day for the last few -- well above what I need to do to keep my lifestyle intact, and that with most of my stake sitting on the sidelines. I'll probably get more aggressive later on this year, as I'm hoping for a little more to support a lab helper here who looks like coming on board -- stay tuned for that announcement, but things are looking up for that and the main show (fusion).

Have a good weekend everyone! I need to go catch up on some needed sleep, it's been quite a week!
Posting as just me, not as the forum owner. Everything I say is "in my opinion" and YMMV -- which should go for everyone without saying.
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Re: Doug's log

Postby Doug Coulter » Mon Apr 25, 2011 3:44 pm

Well, I went into the long weekend long metals, and that turned out to be a decent move after all. Silver gapped up this AM, then did a scary fast downmove in volume, and the hardest thing I did today was buy yet more right then....and it went right back up. Scored a little MCP right at the open this AM too, and will probably sell it in a few minutes for a nice profit -- maybe, that's one of those "too good to be true" deals, but with MCP, hindsight tells us that when it zoomed to 40 or so, then turned back down, we should have held our noses and bought more -- 70 something now.
Holding some gold, lots of silver, and some FCX, though I sold half of that a minute ago. Had PALL over the weekend, and bought some more on the gap down this AM, just like the rest, and it recovered too. So, a good multi thousand dollar profit day, I can stand more like this.

This is high risk. No one knows how the fed's new policy of doing press conferences is going to play out. Normally, they produce a very carefully worded statement that people pore over to make trading decisions based on, and look for every little rewording and quirk of tone. Free form in front of the press, anything could happen, Ben could blink at the wrong time, or not wrinkle his forehead just so, and make either the "haven assets" or the "risk assets" tank -- but probably not both at once, though stranger things have happened temporarily. I guess I should get some tranquilizers in stock for that time. Because in the end, they don't control much -- congress does, and after any initial shock, investors will tend to remember that, if not be buying the effing dips as one of the pundits has been saying.

So I have mostly metals right now. Oil was super good to me, but all my faves are so overbought right now, and I don't think oil can stay were it is, I'm willing to wait for another setup, though if I see tankage - I may short USO for a little ride there and plan to get right back out of that. Shorting one of those ETFs (if you have the account type that can) is a better deal than going long one of the short ones, as they both have admin costs and time decay....so you get a little edge doing a "real" short when you do that. I'm waiting for BTE to get below about 58 -- if it does that even for a minute I'll be in for a few units right away again. But till then, it's meandering around (current price is way overvalued even given the dividend and the current crude price) and no point -- it might go back to the ratio of it to oil again anytime, would be "down" at this point -- likely in my estimation. So, time to wait on that sort of thing.

The thing about oil (and it's interesting, there are now oil bugs just as religious as the gold guys) is that it going up really does mean the destruction of the world's economies. So even if it makes you rich temporarily going long -- it's not going to be so great a victory after all. You'd better spend it quick on things that last if it happens, you'll be needing them later. Yeah, they aren't making any more, everyone uses it, all that; remember they were saying that about real estate not long ago? With food, it's really the same deal -- having the AG's go up too much is going to generate the same sort of universal malaise...I'd rather invest in a garden along with the commodities myself (reminder to self, get off butt and go plant, it's time). Plucked and ate a 1 foot long, 1" diameter asparagus spear yesterday, about a pound in one stalk. To those used to those little woody bitter ones from Mexico -- let me tell you, it's like the difference between battery acid and candy when it's about 1 minute old and actually healthy. I still feel better from all those vitamins a day later.

So as the day draws to a close (for trading anyway) I suspect those feaful of what the fed is going to say will be selling and the markets will be going down (at least the indexes). Looks like it's happening now. The big question, as always, is this a dip to buy, or should one run with the herd? OR neither. In my case, neither I think. Busy morning, then watch today, mostly. Copper down in afternoon trading, taking FCX with it, so in my super nimble account, I'm out. In the other one, holding to wait and see.

I also have a bit of CCJ long term holding, bought at Fukishima minimum. We'll have to see what that does over some time, but I think I'll be boasting about it someday. Of course, holding it now while it just bounces along the bottom isn't actually as smart as it would be if I could call the turn, but....I'll give it a few months after it's out of the daily news.

Some weird action today. TSCO (tractor supply) tanked mightily. Why? I'd been in it in the past, it's a nice outfit, but normally quite stable and staid. I suppose those of us who aren't insider trading will find out later -- as usual.

While metals are my thing these days, it's important to note a big difference between say gold, thought of as a safe haven, and say, palladium which is precious in its own right, but mainly driven by catalytic converter production. They don't track, in general, or any more so than everything real inverse-tracks the buck. So a fear event that can put a fat premium on gold or silver might actually drive the others down, and vice versa.

After all, that ounce of gold still only buys you a colt peacemaker and a night on the town. These days, you don't get the hooker too unless it's a replica knock-off peacemaker, so it's not even a perfect store of value. The only way to actually make net money is to play the wiggles induced by the fear on, fear off trades. Not a bad place to park any spare change while you don't have a better place, but....when that fear premium comes off, it's a bad time to have to sell it, too.

Silver's so exponential blow-off looking, it scares me. Todd might be right on his (strong stomach) short of it. I'll wait till a turn, myself. Like they say, the market can stay irrational longer than you can stay solvent if you bet against it.
Posting as just me, not as the forum owner. Everything I say is "in my opinion" and YMMV -- which should go for everyone without saying.
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