Accelerated Knowledge Letters

[deboy]

An introduction and some thoughts for 27th May 2009

Hi there everyone,

My name is Joy and i've been playing this game since the freefall (stocks that is....) of april 2002. Managed to amass a tidy sum in my first year of trading (shorting stocks/indices) and convinced myself i was a genius!
Naturally i wasn't a genius for very long and the markets soon taught me my first lesson.
BANG!
There i was right back at square one.
What a ride up!
but, bloody hell, the descent was twice as fast and scary!
How on earth did i manage to make so much and LOSE so much so quickly?
Was that real?

Needless to say i was hooked, still had my initial capital and had to find a way to beat this game.

The next year or so was tough and was when i really cut my teeth trading; eeking out profits here and there with the occasional home run, but i still hadn't learnt to control my losses..
(yeah i know..but some people need to be told a hundred times before they listen/learn..)

Still i was profitable and the appetite was burning.
I began developing models and collecting my own data, staying up late into the night searching for an elusive pattern that could give me an edge..

(i have just found another one this evening, which is why i'm writing this at 3 in the morning! lol!
but when you've found a nugget of infomation you need to act before it's too late; the next couple of years taught me that.)
Thankfully i'm now up 10.8% for the year and 112% since Dec 2003

So, let's get to the markets and see where we stand, i can bore you with my trading history another time.
It;s the future we're interested in..

STOCKS
ok, so i'm still a bear fundamentally but this technical bull rally has produced some nice profits for me.
I sold out half my positions today (during UK trading) in PIC, AZN, BG (uk stocks- Pace Micro (tech), AstraZen (drugs), British Gas (gas)) as there was a definate switch in sentiment towards the end of last week. The fact that my CSI (CURRENT STRENTH INDEX)indicator moved from a healthy 24 immediately to -1, raised heightened awareness and rather than wait and see, i banked half the gains.
I can always re-enter.

As for INDICES (analysed post NYSE close)
My MSL (Market Sentiment Levels) indicator has picked up support and resistance levels which will confirm bullish or bearish technical bias. We are in trading ranges in the NDX, SPX, and DJIA; all which held up well today.
Infact SPX has broken through the resistance to the upside and both the Nasdaq and Dow have moved away from the lower support line of the range.
I'm happy with my allocation to stocks (uk,us,asia,) at the moment so won't add anything here, but if i was feeling aggressive i'd buy the SPX futures at 910 with a stop at around 885.

I think i'll wait for a Dow theory type of confirmation from the Nasdaq, as it's been the leader through this rally so far.

CURRENCIES & COMMODITIES
Closed my long GBP vs USD today for a massive 2000 point move.
Entered long AUD, NZD vs USD.

Nickel ETF looking to burst through resistance at 16.5 with vigour and volume. Still 25% up from where it was purchased and further to go, (i'll take more about this another time.. it;s probably time to post!)

enjoy your trading, it;s getting interesting again

joy

 

[deboy]

Thoughts for 28th May 2009

Hello again,

Well what an interesting day that turned out to be then. The kind of day that makes me feel good about doing nothing. Not because i'm lazy but because i'm not exactly sure what is going on. It;s taken a fair few losses for me to realise that at these moments my best bet is to just sit on my hands.

STOCKS & INDICES
The trading range that has been developing is still toying with me and today the SPX was rebuffed from the upper resistance line mentioned yesterday @ 907.
(i should make it clear at this point that these trades are not day trades so the entry points are not to the tick, and the timeframe for trades entered are more like multiple days as opposed to minutes. I'm afraid daytrading is not my game and i only watch the tape when the action is taking place around these areas picked up by my MSL indicator (a sentiment based indicator).
Sometimes when i have a day and candle like this, i would play a short, and part of me wants to - DJIA below the lower MSL level, and my CSI turned back down today to +4 only (see attachement below..sorry it's so small), but for the same reasons i didnt take yesterday's marginal encroachment of this resistance line i will not enter this trade.

other reasons for this Mr De?

Well, a couple of them
1) the NDX held up the most and there is a divergence occuring between the US indices and a Major FX pair that has been indicative in the past. IF these break down then i'll enter during the day.
2) Even though i've moved back 25% into cash my asian (hong kong and singapore) stocks had a good night yesterday so there are still some bulls about. I need some more time to decide whether or not to hedge, pull out, or reverse.

CURRENCIES & COMMODITIES
There has been moderate movement against me in the AUD and NZD but these trades are acutally a hedge against the FX risk within my portfolio of long term positions. (US stocks, ETFs etc) with the view that they AUD and NDZ will outperform the GBP in the long run (say 3-5 years)...yep really.. i'm not a day trader..
I do have thresholds of pain though on these FX trades and if certain levels are broken then i'll have to re- evaluate; but in the near future i'm comfortable.

NIckel - good day up 4% but on miniscule volume. Don;t really mind if it pulls back.
I'll just load up some more.

Hmm.. i should really post this now.
Would like to have mentioned the BONDS and CREDIT SPREAD situation,but i guess that will have to wait till another time.

take it easy
Joy De

 

[deboy]

Thoughts for 28th May 2009 - brief update

Morning all,

Well i needed some more time and here's the state of play as i see it.

The FX pair may have tipped its hand and i'm feeling the market is wanting to go higher.

I will enter a cheeky DJIA futures position once myMSL level of 8358 is surpassed..

 

[deboy]

Thoughts for 29th May 2009

There i was, all poised and ready for the action when 8358 was hit, and sure enough it popped up for a quick 30 points but there was no buying there at all.
I ended up quitting the trade at break even just before 5pm GMT and watched the market hit the lows of the last couple of days and then bounce all the way up again to finish 100 points higher for the day.
I had a hunch it would be an up day today but didnt expect it to be like it was. I guess we're sizing up for a big move..
Anyway,the stock markets were the least of my concerns today as i had added to my position in agriculture futures the night before.
I bought CORN,WHEAT and OATS with allowance for fairly wide movement, seeing as though this was an accumalation to an already profitable position.
Corn's pretty much where it was when i bought it as is Oat's, but Wheat (as it is prone to ) had an exciting time screaming up to 644 only to settle back to 630.

Ahh.. i've missed Wheat.

A lot has been said about hyperinflation and the comparisons to the 1930's, but if you look at the figures it just comes back to supply and demand. And if you look for the numbers you;ll see clearly that the figures are skewed with supply still exceeding demand. There's only one way the price will go until that changes so i'm positioning myself accordingly.

That's how i trade.

I look for the fundamental picture and constantly form and reform an opinion on what this means for various asset classes. Then I develop technical indicators to derive optimum entry points for trades. Exit points are only pre-determinded for short term trades (intra day to 2weeks).

STOCKS & INDICES
US Markets have moved back into the range given by the MSL indicator. The start of any major move should occur from:
DJIA 8517,8387
SPX 908,845
NDX 1435,1355

CSI moved into negative territory and is now -10
My Buying Selling Gauge (BSG) however is static.

My Gold stocks all moved up today.

Overall on stocks, I am less bullish than this morning as i was expcting volume to appear. It didnt so i#m wary again.

Sometimes i just need to listen to what my un biased CSI is telling me.

CURRENCIES & COMMODITIES
Nickel and Zinc keep chugging along.
Dollar was up and so was Gold which was interesting.
Grains were all up (watch 412 for CORN to add/enter position- jul contract)
Looking to add to COTTON position

signing out
joy

 

[deboy]

Thoughts for the w/e 31st May 2009

Written Friday 29th May 2009 – 10.30pm GMT

Hi there readers,

Well what a way to finish the week!
Sure put a smile on my face…. (apart from the fact my laptop has just lost internet connection so I’ve just lost the whole letter I was writing!)

Nevermind, I’ll just start again.

The Dow raced 100 points in the final 20 minutes of trading after a pretty lacklustre day of action for me. As expected we tested, bounced and re-tested the line in the sand at around 8358 and popped up for a frantic finish. I’m sure some scalpers out there had a great day but I was focused elsewhere.

I entered a position in NATURAL GAS yesterday to go alongside my CRUDE OIL play. Entered at 3.97 after the 9% rise yesterday. Usually after a large rise like that you expect a retracement of some degree but today we clung to the highs as Crude continued to race ahead. I’ve got no target for this at the moment with a mental stop around 3.50. I could end up holding this position for quite some time.

I also entered ROUGH RICE today at 12.16 on opening. Stop at 11.67 and immediate target of 12.64. This adds to my GRAINS position which I’ve been accumulating since March and takes the overall position size to near my maximum permitted for 1 trading idea. Rough rice has been one of the slower grains to join in with the overall commodity price increase that has occurred, but I’m fairly sure that this will be about to change. I mean, come on, them Asians aren’t gonna go hungry even if we do have a ‘global depression’, especially seeing as though they (China and India) have voted in socialist governments who are expected to feed and probably clothe them…

Which leads me nicely to COTTON.

Was expecting it to test support at 53.21 where I wanted to enter but we gapped up and I had to bite the bullet and enter at 57.3. A smaller position than I would have entered but I’ve had a ‘feeler’ position in this market since the 9th April which has built my confidence here. Of course it could all evaporate tomorrow, but the fundamentals are in my favour here.

This is actually the most active trading week I’ve had since October and March. I had my most profitable year last year and I needed a rest so I figured that this year I would be constructive as opposed to aggressive or defensive.

What on earth are you talking about Joy?

Well, by constructive I mean that I placed during the ‘panics’, small positions in various assets that I thought would well, not bear fruit, but would produce buds of possibility later in the year.

For example, in October I was 100% in cash and proceeded to buy Asian, US, and UK stocks that had strong balance sheets and progressive products. 2 of the companies I bought have since been taken over by private equity firms (Tepnel life & Dmatek; UK).
If I had been aggressive I would have bought any momentum type stocks or speculated on bankrupt banks having a dead cat bounce and the like.
Conversely, had I been outright defensive, I would have hedged my stock purchases with an offsetting short position in a semi correlated index eg FTSE250.
What I did and continue to do is take advantage when the fundamentals are in my favour.

Currently I still have half the stock position I built up since then and all of the commodities that I have accumulated. I’m long the Nasdaq still and am waiting to see how this market reacts.
I just don’t want to take any excessive risks in the stock market right now. I am of the opinion that there are better risk/reward opportunities elsewhere.

Time will tell.

STOCKS & INDICES

New MSL for the SP500 are 880 and 924. We finally made it convincingly through 907 (prior level of resistance) and now are within touching distance of the 200 day Moving average (MA) at 928. I guess the ‘magnet’ effect will take place.
As for the Dow Industrials, we are 74 points from a new high with the 200 day MA at 8795. If we hit it we will need the Dow Transports to confirm the high by posting a new high for itself, otherwise we will have a Dow theory non-confirmation. ( Basically for those who are unfamiliar with Dow theory, it just says that a high in the Industrials should be accompanied with a high in the transports and if one fails to ‘confirm’ the other then caution should be warranted. )
As it stands the Transports have a further 200 points to climb.

My CSI slipped to -22 today.
Not a good sign.
My Buying selling gauge increased +1 for the sellers and static at 3 for the buyers. So buyers still outnumber sellers.

Nasdaq – at a potential reversal area as my MSL is at 1435 but above it I have a target of 1492, otherwise I’ll close my trade on any close below 1355.

COMMODITIES & CURRENCIES

Nickel up 8% for the week.
Zinc up 1% for the week.
Agriculture up 2% for the week.
Gold closed at 978. Looking to test the highs?

Dollar lost ground to JPY, (in which I have just entered a short, with stop 96.85) and also NZD, and AUD

30 yr T Bond climbed to 119.

All in all a very profitable week and I look forward with excitement to the start of June.

Enjoy your weekend.

Joy

 

[deboy]

Thoughts for 2nd June 2009

Let;s get straight to the point.

STOCK & INDICES

The Dow posted a 200 point gain on decent volume, claiming a new closing high, around 60 points from the 200 day MA.
THe Dow Transports also had a massive up day (over 4%) and is 50 points from a new high.
This is a dow theory non confirmation and until the DJ Transports closes at a new high, we must be wary of a reversal.
SP500 smashed through the resistance of 924 and the 200ma to close at 942.
The Nasdaq was up almost 3 % to close 1477.
OVerall it would seem like a very healthy day with my CSI indicator returning to positive figures at +4 (from -22).
However, my Buying sellign Gauge (BSG) increased by +1 on the sells to become +2 with the buyers still static at 3.
I will need to watch this closely.

Gold stocks pulled back

COMMODITIES & CURRENCIES

NICKEL ETF up 6% today to 17.35 on massive volume
ZINC up 6% too.

WHEAT now 671 (added position at 622, see previous Letters)

CORN 443 (added postion at 426)

ROUGH RICE 12.53 (bought at 12.16, with immediate target of 12.64)

OATS being sluggish at 256 (bought at 256)

COTTON 57.63 (added postion at 57.19)

US Dollar had a bad day and my AUD and NZD positions are looking good.

I closed the USDJPY short for a small loss of 120 points.

BONDS tanked today and GOLD backed off from 990 to close 974.

Questions for tomorrow?
Will we see a follow through in the stock market rally?
Will the DJTA close at a new high and confirm the bull swing still in force?
Will my CSI continue to rise WITHOUT my BSG favouring the sellers?

I knew June was going to be exciting!

A very jubilant (and trying to keep calm)
Joy

 

[deboy]

Thoughts for 3rd June 2009

Dear readers,

The Dow Transports only made a gain of 16 today leaving them still 34 points short of a new high.
The longer we go without a confirmation the bleaker the prospects but at least the DJIA held its ground.

My CSI moved back into negative territory at -3 so hightened awareness is warranted.

Still stocks and nasdaq position are holding (albeit tentatively).

We are watching the upper bounds of my MSL indicator for all stock indices as a level of support, but if these are breached (please see prior letters for support levels) we will swith tact.

On the positive note though, all GRAINS and OIL, and NATURAL GAS positions taken are showing good gains and after yesterdays major rally, the fact we gave little away today is taken as a good sign.

Only a short letter tonight as we await further clues as to where the market is heading..

your patient analyst

Joy

 

[deboy]

Thoughts for 4th June 2009

The markets giveth; the markets taketh away..'

Now aint that the truth.

After such a nice few days, complacency was bound to kick in and the market did it's best to give me a wake up call.

This is not the time for me to be off guard.

The fight is well and truly on as to which asset class will 're-flate' the world economies.


STOCKS AND INDICES

After a really negative day for the majority of the time the technical picture could have been a lot worse today.
The DJIA, SPX, NDX all fell but DJIA and SPX bounced nicely off the support levels as defined by Market Sentiment Levels (MSL) indicator. 8587 for DJIA and 924 for SPX.

The Dow TRANSPORTS fell a futher 85 points from the high meaning it needs to climb 135 points higher to keep the DOW THEORY bulls in the game.

My CSI is still negative and my Buying Selling gauge (BSG) has just moved to the negative with sellers now outweighing buyers.

CAUTION

I think if either the DJIA or SPX fails to hold the MSL levels i will start hedging my stock postions. (initally via shorts in either the SPX, FTSE 250 or HANGSENG)

NDX long still open


COMMODITIES & INDICES


My GRAINS positions took a beating today with WHEAT down past my last entry point. I'm going to let this ride for a while as i am still in profit for the whole trade but as you can see, trading wheat is a very volatile affair and not to be treated lightly.
( if futures are too risky for you then you can play this via ETFS that you can either buy or trade on margin with various companies)

COTTON too took a dip down and we may end up testing the 53.21 (MSL support level) that i mentioned prior to adding this position. Action around that area will dictate whether i enter some more or leave the trade.

NATURAL GAS and CRUDE too were down. 3.64 needs to hold for gas and 60 dollars for CRUDE.

As you can see we had a down day in pretty much every asset class (stocks and commodities including GOLD) but BONDS had a strong day and the Dollar staged a bit of a fight back...

Hmm...

What's going on?

Long term i'm fundamentally a bear for the Dollar but any sharp sell off in stocks will lead to a flight of capital to supposed safe havens of GOVT BONDS.
I'll use that rally to enter a short again.
Would you lend money to basically what are now technically insolvent Governments?

Who believes in this rally (stock market that is) ?
Who has faith in the US and UK efforts to save the financial system as we know it?

Why have the Americans sent a convoy over to meet with the Chinese finiance authorities?

Hmmm..
I'll post my ideas on the subject another time as it requires more time than i have now to discuss it..

Old chinese curse..

May you live in intersting times

take it easy
Joy

 

[deboy]

Thoughts for 5th June 2009

The Pound (Sterling) sold off today on the news the BOE were keeping interest rates on hold at 0.5%. The dollar had a weak day too meaning my short AUD and NZD trades are looking healthier and healthier.

After yesterday's shake out in GRAINS and energy we had a nice positive move up to recoup over half the move.

WHEAT is back to 635
CORN is at 445
OATS and ROUGH RICE are now the leaders at 264 and 12.76 respectively. (see chart)
I would add to the position here but i am going await a further confirmation from my MSL *(market sentiment levels) indicator.
COTTON is almost at breakeven and did not test the support of 53.2
however
NATURAL GAS did.
Right off the bat today, it dropped to 3.50 and then found further support at 3.64 before proceeding to finish the session racing to 3.85.
I'm glad i had no fixed stop in at 3.50 as with a move like that i could easily have been stopped out before the up move took place.

Believe me, that is the biggest thing i've had to learn how to control.
'Just where to place the stops?'
&
'When to ABSOLUTELY always play with stops?'

I didn't find answers to these questions easily and i certainly don't have the answers for YOU.

All i know is my risk tolerance or another way of putting it is..
I KNOW MY THRESHOLD OF PAIN.

On to NICKEL and ZINC which both corrected today.
The Nickel ETF which i use for exposure here pulled back from the 200 day MA which it hit with almightly volume yesterday (17.30) to close around 16.50.
I won't be suprised to see it fall back to 15.00 - 14.50
where i will be accumalting more.
Then again i cant rule out the possibility that it will scream through to 18.
Either way I'm buying.

(another little tid-bit of advice...always prepare for every eventuality. for when it comes to pass, you will be in a far better position to act..ie decide and pull the trigger)

STOCKS & INDICES

Both the DOW IDUSTRIALS and TRANSPORTS moved higher today and the transports are now just 67 points from the all important confirmation for DOW THEORY followers.
The NDX is now at my 1492 target.
I'm reluctant to close as my CSI held ground today and my BSG indicator showed Sellers moving back down to 3 from 4, with Buyers staying at 2.

I think there may be one last spurt up.

SPX target 978

Let's see.

Signing out

Deboy

 

[deboy]

Thoughts for w/b 8th June 2009

Sometimes in this game it's easy to get caught up in all the emotive moves and 'noise' that is generated day to day. As I only day trade on a few occasions (2-3 times a month if that) I am generally looking for the next 'swing'.
October and March saw me position myself for the bull swing in both stocks and commodities and in Dec i played the swing down in Bonds.
So the question i need to answer is where should i be positioned now?

Let's check my indicatiors. Thankfully these don't suffer from any emotional confirmational bias that may slip into my psyche from time to time..

STOCKS & INDICES

The Current Strength Index turned postive to +6 Friday, bringing to a halt the recent 2 week decline, but the indicator will have to move a great deal higher from here to reverse the negative trend that was signalled last week.

My Buying Selling Gauge has moved back in favour of the bulls with Sellers back at +2 and buyers now at +3.

As the indicators are not ' all lined up' i will wait a while longer before either removing my stock/indices positions or potentially adding to them.

I will short the FTSE 250 on a closing break of 7588.
(initally to hedge my UK stock postion and then increase if necessary). Also asian indices.

Nasdaq long will be closed below 1435. (stops moved here as per the MSL indicator)

Market Sentiment Level (MSL) indicator remains the same for DJIA, SPX.
The Dow Transports still have failed to confirm the continuation of the rally. 60 odd points to go.

Options expire 19th June so this may be of significance.

COMMODITIES & CURRENCIES

The dollar gained on Friday with a negative day for GOLD which was down some 23 dollars.

Gold should move inversely to the Dollar and is basically the play on 'real/ hard currency' versus the 'fiat' money system we are all in.
(Fiat money has been introduced the world over ever since we all left the Gold standard. For readers in the UK, if you haven't noticed on your £5,10,20,50 notes that it says..'I PROMISE TO PAY THE BEARER THE SUM OF.....'
This was because, before fiat money was introduced you as a citizen and holder of the 'note' could go to the Bank of England and get the corresponding amount of Gold ie £10 worth of GOLD.
Of course you can't do that now, as the entire 'fiat' money system is based on TRUST,
TRUST in the almighty DOLLAR.

Hmm...

I think the trust is waning.
Every time GOLD goes up the Dollar goes down.
Bonds too ( ie loans to the Government) should also go down in price if the trust is subsiding, as creditors require a greater interest rate on their loans.

So why did bonds (i thinking specifically US T Bond) drop along with GOLD?
Bonds dropping indicating a move towards higher rates and possible more inflation yet Gold moves down indicating the fear of inflation and fiat currency meltdown is over stated?

Hmm

We'll have to watch this closely.
It;s no secret that the central banks around the world have a strong hand in the gold markets. Wouldnt be suprised to see the price of gold at $800 again sometime soon especially if the IMF does get permission to sell it;s Gold holdings.

As for other metals. Nickel and Zinc are doing very nicely and require very little thinking time.
The extra GRAINS positions i've added are taking there time in getting going but like i have stated before this is a fundamental Long play and i'm happy to hold this for a while.
The previous stop positions for each of them hasnt changed.

The next 2 weeks should be pretty interesting.
Enjoy the week.

Joy

 

[deboy]

Thoughts for 9th June 2009

Welcome to new readers and old.
Thanks for the kind messages so lets get on..

We started the day with a sell off in GRAINS and we are actually below where i entered the new positions.

Wheat has fallen to 598 which is right on the MSL level, and i;m tempted to add more here. If youre not in already, you can enter here with tight stops at 595

Rough rice has been well and truly rebuffed from my 12.64 (MSL) target level and i'm half kicking myself for not taking a profit (a quick small profit that is), especially now that Oats and corn have fallen back too.. (watch 236 for a long entry point for oats)

Good thing i've learnt to be patient.

I've moved in and out of perfectly good positions before only to be immobilised when it comes to re-entering. I have my stops and that;s what they are there for!

Remember these are trend following trades and not day trades.

Cotton may still test 53.21 and Natural gas is holding up above 3.64.

I wanted to enter coffee on its weakness today; looking to enter new 123 (after its fall from 141) but it only reached 126 before closing 130. I'll keep my eye on this.

STOCKS & INDICES

The CSI indicator eeked out another positive day and the SPX found support at the previous MSL level of 924. (no coincedence there is a confluence of moving averages there) before driving forward late in the day.

The Dow industrials were stagnant today and the Dow transports fell further from a new high which doesn't bode well for the future. The longer it takes for the 2 Dow indices to confirm each other, the less significant the event becomes.

All in all a pretty un impressive day with decliners leading advancing stocks and more volume to the downside aswell.

Bonds sold off to new lows raising risk premiums for investors.

Caution is still warranted.

'til tomorrow

Joy

 

[deboy]

Thoughts for 10th June 2009

Another interesting day but where to start?

I think i'll make today's post a bit charty. Pictures paint a thousand words..

STOCKS & INDICES

It feels like the markets are still gearing up for a decisive move (in either direction) and today was another day in waiting.
For the bulls, the Dow Transports lead the market and closed within 20 odd of a new high, and the Industrials held their ground.
The Nasdaq moved forward to close above my 1492 MSL resistance level, with up volume being 4 times that of down volume.
If all three close tomorrow at new highs and the SP500 joins them above 949, i'll be a buyer.
For the bears, my CSI had another down day and sits at -6, and is trending downwards. Worryingly my Tawainese and HongKong stocks have sold off the last 3 days, and yesterday didn't bounce back like i was expecting . If they dont again tonight, i'll be wary of any pop up as it might just become a 'pop and drop'.
Let;s wait till the morning before playing..

all of this is just technical talk.
Fundamentally i'm still sceptical that this rally is the start of something big and long lasting.
The problems that came to the fore (read mainstream) in summer 2007 still are far from being fixed, infact i dont think any politician out there even understands the situation.
None of them saw the problem coming and now they expect us to believe they know the solution,
Phaaah!

Anyway i'm waffling again..excuse me...

I;ll get back to some charts..

COMMODITIES & CURRENCIES

Chart 1 shows WHEAT- a good strong up day from support. If you entered as per yesterdays advice, expect a re-test of the highs keeping stops at 595 (and yes i did add to my position today)

Chart 2 - CORN
hasn't looked back since breaking from 412.

Chart 3- OATS
still below 255 where i added to this trade at the end of May, but has held above my MSL line in the sand at 236

Chart 4 - ROUGH RICE
smashed through 12.64 and i will add to this trade on a successfull re-test of 12.64.

Chart 5 - COTTON
ah..cotton..
still flirting with 53.21
I really want to buy this...
but i;ll wait..

Chart 6 - NATURAL GAS
3.64 tested again
3.64 held again.
closed nicely up.

Oil is now past $70 too.

BONDS sold off to new lows today.
I doubt very much this is because investors believe the economy is turning up and the FED/BOE will soon raise rates, but more a a gradual recognition that the excessive loans to the money supply will have to be paid for eventually by someone...(another story for another time..+)
Dollar sold off which all helped the commodity front.

I haven't even mentioned NICKEL and ZINC yet.
Both up 3 an 2% respectively.
(the ETFS can be bought or spread traded).

Looking forward to tomorrow, keeping an eye on USDCHF and USDJPY.
Potential interest here...

JD

 

[deboy]

Thoughts for 12th June 2009

I am so glad i've put the stock and indices part of my porfolio on the back burner and been aggressive with industrial commodities.

While stocks deliberated where they will go, NICKEL and ZINC keep soaring.

I have had position in both of these since march and dont intend of giving them up anytime soon.

NICKEL didn;t need to test the 15.50 area and went straight to 18.00 and looks a little stretched (chartNICKEL below). But as you know this a LONG term play and on any pullback i'm a buyer for sure.

But why am I so bullish here?

Well, it boils down to fundamentals (again.)

Supply and demand as always..

The supply is tight, and by that i mean there isn't much of the stuff about and all that is required needs to be mined out the ground. So, as we need more mines to extract the metal, we have more time until the supply comes to the market. Until then we have a shortage.
BUT no-one is opening mines right now. No one can get the funding. So, the timeframe till supply meets demand is pushed further to the future.

Joy? Aren't you a bear on stocks though? implying that the recession isnt over and that global consumption (demand) is decreasing?

Yep sure am, and sure demand IS decreasing but the problem is supply is not increasing even to cover the demand that is there now. And demand is going to increase..

There are many 'electricity' energy bulls out there, convinced that this will superseed the oil loving world, (ask the australians,isrealis, and scandanavians, who are embracign this technology). The electricity 'revolution' requires batteries and one of the main components in batteries (at the moment) is NICKEL.
(eventually this will be replaced by another rare metal, which is even more obscure to invest in..)
but
for now, everyone who produces batteries needs nickel and even if they dont buy the stuff, i know the chinese will..
Nickel is a important indgredient of steel and the chinese need tonnes of the stuff for all their highways and power stations.
I'm gonna keep buying it until there is so much of it around that it becomes as worthless as money!

oops..sorry no need to be facetious.

Zinc is the same play, but an even bigger bonus is that in March, Zinc was trading at below the price it takes to produce it...

(aside:: apperently it cost $55 bucks to produce a barrell of oil..)

COMMODITIES & CURRENCIES

Grains are still holding up well, with rough rice and Corn still leading. WHEAT is really testing the 598-595 area and may even test 570, where i will expect massive buying to occur.If it does test 570 and no buying comes in i will exit the that last postion added and wait for a better entry point later (low 500;s).

Cotton breaking to the upside at 56.

I entered a commodity short yesterday, LUMBER at 198. Target 173.
Fundamentally i don't believe the housing market bounce will last so the demand for lumber will continue to fall. (Also, with the nervousness wheat is showing, this short will partially offset that trade if commodities all fall in unison...)

AUD and NZD still doing well.

STOCKS AND INDICES

My Current strenght indicator continues to deteriorate, as the rally gets weaker.The only bullish interpretation i can see with it is that yesterday we read -17 and today we are +1. If we rise tomorrow we will have put in a lower low (previous low was -24)
(chart below)

And the only reason i'm seeing that pattern over anything else is because, finally, the Dow Transports put in a new closing high and the Industrials did so with it. A whole heap of longer term traders (Dow Theory investors will see this as a (mild) positve, which could fuel the rally some more.

ALso this week saw another long term signal, the Coppcock indicator give a 'buy in this area' signal...

HANG ON A MINUTE>>>>

i was writing this 8.55pm GMT (5 mins before US stock market closing) and suddenly both the industrials and Transprts have fallen below the highs...

9.00pm CLOSE
DJIA aand DJTA have failed to close at new highs, meaning the last DJIA high ofMAy 8th is still unconfirmed.

SPX failed to hold above the MSL indicated at 949, all sits on old support at 942.
NDX is at least above the 1492 level i penciled in previously,.

Wow..tomorrow could be wild.
Especially as next friday is triple witching (futures and options expiry date..)

'til then,


Joy

 

[deboy]

Thoughts for the w/b 15th June 2009

Dear readers,

What are the markets waiting for?
Just where is the next bubble being blown?
Which asset class is going to contnue its march up and which is going to fail?

As we know, a market consists of the sum total knowledge and expectations of all its participants, so at any given moment in time, all we can infer from the price is the current state of mind of all investors/traders/speculators (participants). If prices rise, the mood must be positive and if they fall, the mood becomes despairing.
As a trader if you are not in tune with what the market 'is feeling' then more than likely you'll lose all your money.

For example, fundamentally i am bearish on US and UK stocks. However sentiment was extremely bearish in March 2009 and so i entered a long position (bought stocks, indices) sensing that a rally was due. I was bearish but I had to act according to what the market was saying and not what i had pre-ordained in my mind.
My Current strenght Indicator (CSI) and my Market Sentiment Indicator had confirmed my suspicion of a rally and so I went against my 'economic wisdom' and followed the market.

Sure enough stocks have rallied to this point in time.

My outlook for the economy has not altered too much since then, but now my nervousness about the duration of this rally is increasing because my indicators are starting to lean towards my argument of the economic climate.

Recently my CSI has turned negative and is trending downwards and my Buying Selling Gauge (which compares buyers to sellers) has switched in favour of the sellers, all while bullish talk in the media is rampant and with supposed 'green shoots' sprouting everywhere.

I think it may be time to completely get out of all my (US and UK) stock postions before any dramatic correction. I offloaded half the position during the last weeks of May and nothing in my data has convinced me to add back to this position.

So where do we stand right now?

Well, in STOCKS & INDICES

The Dow transports have fallen back and still leave the Dow industrials high as being unconfirmed, but on the other side of the coin the Coppock Indicator is telling investors that this is the area to buy in..
Now i dont follow these indicators religiously but both have been reliable in the past. Dow theory follows the notion of VALUES ( ie fundamentals) and the Coppock indicator is a momentum follower (ie technicals).
I prefer to follow my own indicators which are firmly on the bear side.
New MSL for Dow Jones Industrials are 8839 and 8598.
Any breach of the lower support line will see me take a net short position until my CSI turns bullish again. (I may hedge my asian side of the portfolio)
If you are trading in the UK watch the FTSE 250. If this breaks 7588 on a closing basis, watch out below.

GOLDSTOCKS have sold off recently but as this is a small commitment and a very long term play, I will add on serious weakness.

COMMODITIES & CURRENCIES

Nickel, Zinc, Sugar and cotton have all held up well but the Grains are correcting and doing there best to shake out the late comers to this rally.
It looks like WHEAT will test the 570 area where i will look to add more. If 548 breaks down then i will close the trade completely.
It all depends on how the others (Corn,oats and rice) act.

Bonds recovered along with a rally for the Dollar.

If the stock markets do sell off, i expect the treasuries to surge, and potentially the dollar. Commodities too will probably get hurt but not to the extent of stocks.

Triple witching here we come.

Enjoy the week
JD

 

[deboy]

Thoughts for 16th June 2009

Everything took a bit of a beating today.
Stocks and commodities, gold, metals you name it..(well actually treasuries bucked the general sell off and actually finished up for the day), but on the whole is definately a red day for me.

Mind you it could have been worse..

STOCKS & INDICES

My CSI broke to new lows to -26 dragging the indicator further into bearish teritory. I'm sure glad i took its advice and offloaded the majority of my stocks and indices over the last couple of weeks when it first went into bear mode. My BSG is now 5 to 2 to the sellers.

I closed the final portion of my Nasdaq100 trade today too which i've had open since late February.

I'm keeping my asian stocks but have implemented a 100% hedge selling the same amount in various asian indices. I'm probably going to stick with these
until i have a stronger conviction either way.

The remaining stocks i have left, i will implement a hedge that covers half the amount remaining using the FTSE250, as this has broken the support of 7588.

You may be wondering why i am only hedging half?

Well, lets observe what happened today.

STOCKS & INDICES

The Dow Jones Industrials fell straight to the 8588 (potential support) area given by my MSL, and the transports tanked some 4%. The S&P500 fell from the resistance at 949 and sits jsut below support at 925, and could now fall back to 880.
The Nasdaq sold off and i am out of the position but it may find support at 1435.
For these reasons ( tentative i know) there is still a chance of support for this rally coming in. It's triple witching week and anything can happen, so i've done what I needed to curtail any anxiety and leave a little bit of scope for further participation.

This whole play started in October so should i clear the table tomorrow I'll be happy with what i've got.

COMMODITIES & CURRENCIES

Cotton, Rough rice, corn and oats all fell right back. Wheat finished bouncing off 570 to 574.
I expected support for wheat at 570 and it came although moderately.
Corn fell through 412 to 403 and if we dont hold tomorrow we may test 387,372.
Oats didnt hold so now may test 195.

I've given a fair degree of my gains in these grains :innocent: back now and am in that awkward mind set of do i scratch the trade and look to start again or do i sit tight?

Well, actually it;s not that awkard.

This was always a longer term position and the postion still stands. My stops are there if we drop further but until then, the fact that i'm not over leveraged and comfortable means i can ride this out a bit longer. It's getting a wee bit uncomfortable but hey..you take the rough with the smooth.

Oh, Natural gas had a good day too finishing above 4.15.

Like i said at the beginning, it could have been worse.

take it easy
Joy

 

[deboy]

Thoughts for 17th June 2009

Just a quick note today.

Support was lost for the DJIA, SPX and FTSE250.
The shorts implemented have moved straight into profit.

Gold stocks rebounded giving extra protection.

Grains held on, although very tentatively.

Nickel, zinc and natural gas all rose.

A full update tomorrow.

JD

 

[deboy]

Thoughts for 18th June 2009

I knew this week would be eventful and it's only Wednesday.

After 5 days of falls finally some support came in for the GRAINS. WHEAT bounced off 555 (100 day MA) but is still below 570. Corn rallied from 400 and closed 408. Oats finshed at 214 and Rough rice fell back to 12.09.

We are approaching my stop point and i have to make a decision.

Do I quit this trade? or do I add to if this support test is successful?

Hmm.
I'm going to do neither.

I don;t want to push the boat out just yet as i'm beginning to think that all commodities could be sold off alongside the stock market as investors once again scramble for safety. Bonds have rallied hard since the sell off of stocks began and we could see a test of the lows in everything.
I'm going back to a cautious stance.

Nickel, Zinc and Natural gas still are climbing and could continue to buck the trend. No need to worry about anything here.

Lumber was stopped out.

STOCKS & INDICES

I have very little remaining in the way of UK and US stocks now, with just the asian and goldstocks remaining. These are now 100% hedged. After the terrible day on Monday and Tuesday, you would have expected some sort of a rally, but the action has been weak.
My CSI broke to further new lows today (-29) and my buying selling gauge (BSG) is still in favour of the sellers. Sellers at 2, Buyers at 0.

The only way upwards will be if the DJIA breaks through old support of 8588 (old supports become resistance and vice versa) and the SP500 breaks through 926.
Otherwise the DJIA could fall to 8360 next and SP500 to 880.

The FTSE 250 has clearly broken through 7588 and i'm short. I;ll add to this position if we re-test that area and fail, but close the position if we have a close above 7588.
(For those of you who followed this trade, i'll be exiting when my CSI turns bullish again, and that could be for some time yet.)

Unitil tomorrow,

Joy

 

[deboy]

Thoughts for 19th June 2009

OK, let's get straight to the action.

STOCKS & INDICES

I went short at 8570 (DJIA @ 20:20 GMT, chart below).
The industrials did indeed rally to 8588 and i entered a short as my Buying Selling Gauge (BSG) posted +4 to the sellers with my CSI still hovering at its lows (-26).
The BSG is the widest it has been (in favour of the sellers) since late March and i'm betting on a sharp fall from here.
A protective stop is just above the prior high with an initial target 8355 although i may let this run until my CSI turns bullish.
The SP500 failed to get anywhere near the prior support level of 926 which makes entering this trade easier.
Who knows, the bulls may come out to play tommorow in time for options expiry, but a risk of 70 pts is well worth it here with the possibility of a serious break.

The FTSE 250 closed 7241.

COMMODITIES & CURRENCIES

WHEAT fell back to test the 100ma 555 level and finished 561.
CORN fell back to 403.
OATS was rebuffed from 219 and closed 212.
ROUGH RICE had the best day closing at 12.39 after rallying from the 12.06 support level.
COTTON screamed up 250 points to 57.5 only to give back half the rise late in the session to close 56.2.

NATURAL GAS is trading at 4.04.
NICKEL (ETF) was up 3% and back over 18
ZINC (ETF) was down 0.3%.

It literally is crunch time for the GRAINS. IF stocks tank, will they follow? They are all near important support levels and if these fail, then i'm getting out.
If stocks rally then i expect these to be in sync too.

Either way tomorrow has got my full attention.

JD

 

[deboy]

Thoughts for w/b 22nd June 2009

Well, on Friday the DJIA sold off to close below 8588, as did soft commodities, base metals rose and the GBP had a strong day too. Not a great deal of movement in the prices in actual fact.

Seems like i'll be waiting for Monday to see what happens.

My CSI is down considerably this week and the short stock indices are nicely in profit even with the little bounce on Friday. Feel much more comfortable now I'm net short. I've sold out almost all my US and UK stocks and only hold goldstocks and asian stocks, and these are fully hedged. I think it will be a while before i'm a buyer again in equities, whether they are Asian or US/UK.
I may add to the short index positions if the SP500 closes below 911. Target would be 880 to start with.

The GRAINS have all held right on support and once again i'll be looking to exit if these fail.

COTTON had a bad end to the week and if 52.5 is broken i'll close the trade. (sept contract).

Not much else to note.
Just got to be patient for the time being.

enjoy your week,

JD

 

[deboy]

Thoughts for w/b 29th June 2009

Trading is a tricky game with enough traps and pitfalls to be thrown in your path; only time, patience and experience helps you avoid them.
The markets try their best to confuse you and take back all the money they have given you, yet at all times you must remain calm, focused and disciplined.
If you have any weaknesses this game of trading will seek them out with precision.

For me It took a while to recognise that i always wanted to be right, insisting that i knew best, and that the market would figure out my thinking soon enough..

Of course i lost money everytime my ego got in the way but thankfully i realised that it was ok to get things wrong and to make mistakes, and sure enough i started to become comsistently profitable.

THis last week i've had to bite the bullet and close my Grains trade. My mental stops were hit with WHEAT, and i found myself getting overly confused about the whole situation. I've learnt from my past that this was a sign i needed to get out and re-evaluate...with a CLEAR HEAD.

So, the GRAINS trade was scratched out, which on the face of it is a bit annoying considerign it was profitable but it is just one of those situations where i have to face up to the fact that it could have made a lot, but didn;t. C'est la vie.

I have actually re-entered OATS *(spet contract) tight stop around 206.
I;ll leave the others to find their feet again.

NATURAL gas is still doing well, and so are the BASE metals with NICKEL ETF trading over 19 now.
It;s so nice when you have trades this easy.

As for STOCKS and INDICES,

well, the FTSE250 is still below 7588 and i'm still fully hedged here, but i closed my actual short positions during the week. THe SP500 short got scratched out when resistance was breached at 911, and i closed out the DJIA trade for a small profit.
The fact that the Nasdaq100 and SP500 have both re-entered the range given by my MarketSentimentLevel indicator (MSL) is have dropped by shorts and am just 100% hedged.
Nasdaq - watching 1511, 1442 as boundaries of resistance and support
SP500 - 956,912.

CURRENCIES
AUD and NZD still doign well against the USD and i'm looking to buy CAD vs USD, also as a LONG TERM trade - *months not minutes*.

I suspect that the most money will be made (and lost) by being in the correct currencies over the next few years. It is interesting to note how few people realise the destruction of purchasing power that occurs when a currency drops in relative value.

The GBP lost half its value against the Japanese yen since late 2007, and the USD lost 30% against the JPY in the same time. UK and US investor would have had to make at least 30-50% gains in other assets just to stand still on a global perspective.
Just think about those poor traders/investors who actually LOST money during that time. How much are they down overall?

I'll post more on this and any other developments as they occur.
It's time to just put your feet up, enjoy the sunshine and watch some tennis..

take it easy
Joy,