Thursday, May 29, 2014

Something odd

Usually as the stock indexes drift/melt up the Volatility Index declines. I watch and trade the VXX.
Today, in the middle of the day, during the slow part of the day I notice the VXX hitting the highs for the day. That strikes me as odd.
Perhaps it is just that the VXX is "oversold" and needs a small rally.
Or maybe it is the start of something.
I don't know.
But this is a good example of what tape reading is.
Imagine you are sitting on a street corner. You sit there day after day. You get to know the comings and goings of the usual passersby. So when some shady looking character shows up that you haven't seen before you perk up and become interested. And if you see another one show up and they get together, you think something is up. And you move your chair behind a tree.

Just sittin' and watchin'

And if there is a way to profit by your observations that is called speculating.
"Speculare" from the Latin for "to spy and observe"


Friday, May 23, 2014

Time for a Bounce in Dry Bulk?

Keep an eye on the dry bulk shippers. It looks like something of a bottoming process going on. A lot of that has to do with a possible bottom in the Russell Small Caps. Diana Shipping (DSX) and Dryships (DRYS) with strong performances today.

Particularly in DRYS. An early dip below support on high volume and then a close near the top of the recent range. I look for a break out above in the coming days.
We'll see....


Miners weak

A bearish chart pattern is forming in the gold miners index (GDX).

Conversely, for a long only account, there is a bullish pattern in the gold miner short fund (DUST).

I watch AU all the time. It had been the strongest of the miners, but has also recently gotten weak.
So, a rally in gold would be a surprise at this time.

I am still long TC on the chart signals.

Bought some DUST today.

As usual, I add as the price proves me right.
Never add to losers, only winners.
That way you control risk!

Friday, May 16, 2014

Wanna See a Bull Market

Here is a chart of India small caps as represented by this small cap India fund.


And what will Indians buy if history is any guide?

Silver. Contrary to this article.

India accounts for about 20 percent of world silver consumption, mainly for jewellery, but also for investment as an alternative asset.

Just thinking, again.....

Do ya wanna pick a bottom?

Well, do ya? Punk!

I'm going to try picking at IRBT.

I promise I'll wash my hands afterwards.

Got a Yen For a Rally?

The Yen is forming a price pattern that portends a sharp rally.
I presume that would mean the USD will decline since they Yen is one of the major counterparts of the USD in the Dollar Index.

Will real assets rise? Dunno.

Wednesday, May 14, 2014

Who is Smarter, Stocks or Bonds?

They were having a shouting match on CNBC a few minutes ago. The debate was over why the US Treasury market is so strong. Yields on US 10yr bonds are at about 2.6%.
In the past the bond market was a fairly reliable indicator of the direction of the stock market and the economy. When bonds went up it was because inflation was low. Since we seem to want some inflation now as an indicator that the economy is humming along the low yields on treasuries are troubling.
And the US Treasuries were a "safe haven" and if the price is being pushed up it may be interpreted that there is a rush to safety.
But, the stock indexes keep going up. With the exception of the small caps lately.

Perhaps there is another explanation. And Jack Karugian (sp?) on CNBC today may have been on to it.
I think it has to do with the concentration of wealth in the hands of a relatively few. And I mean the very rich. It is my impression that the very wealthy do not have to have high returns on their money to be satisfied. It is not like they need to live off of the yield. They mostly want their money back. They are not as concerned about the return on their money as the return OF their money.
And as the pool of wealth at the top gets too large there is not room for it in stocks. And if there is no overwhelming opportunity due to a sluggish economy then bonds are the place.

On a related note.
The governments of the world have been "printing" money for 40 years, right?
Well, where has all that money gone?
It has gone into corporate profits.
And the common people have the increasing benefit of low interest rates. So it doesn't pay them to save, and they can go deeper into consumer debt.
The best of both worlds!


History Rhymes

One of the things I've noticed over the years in trading is how stocks tend to have a personality. What I mean by that is that the way the price acts tends to repeat. Sometimes I see this in the chart.

This may be an example.
Or it may be that I am just seeing zebras in a picket fence.

How this pattern would be traded. Carefully.


Thompson Creek Metals is looking set for a rise. Perhaps to $4.

control risk,

Monday, May 12, 2014


It looks like it is time to buy some SCTY. Solar City.

SCTY Profile

"Buy late and sell early"

Who said that???


Friday, May 9, 2014


Here is an interesting chart of Molybdenum prices.

Who'da thunk it given the way MCP is getting hammered.

And on a similar note: A few months ago I was enamored of a niobium play in Nebraska. A microcap company run by Mark Smith formerly of Molycorp. I had bought quite a few shares and then got cold feet and took a loss on the shares. I see they have tripled since......

Maybe there is something to it.


Out On A Limb

Well, I will go out on a limb here. My feel of the markets lately is that they want to go up. This is at odds with what the talking heads are telling us on CNBC. Gartmann in particular yesterday was gloomy.
But any respite from Ukraine will send the markets soaring.
And small caps, despite being the weakest so far, seem to be wanting to rise over the last few days.
Perhaps just oversold, as they say. (I hate that term)


control risk,

Thursday, May 8, 2014

Permian Basin

Cramer, the babbling stock tout, does have some good ideas. I shun his particular stock picks mostly because they are so prone to exploitation, but when he talks about big ideas I listen. Lately he has been pointing out the productivity of the Shale gas plays. In particular the Permian basin of Texas.
And this chart is pointing to a growing affinity for Permian plays.

The rising triangle is on of my favorite price patterns. Especially in the context of a bottom.

 As a longer term holding this may be attractive. The yield is over 7%.


Mario Draghi was speaking in Europe before the US markets opened this morning. There were some wild gyrations in the Euro currency. First up and then down. I was watching gold at the same time.
Could it be that the reluctance of the ECB, (the Germans in particular) to lower interest rates is all that is keeping the currencies of the world from falling together?
It is intriguing that the US dollar is near to long term lows and gold is weak.

Perhaps it is a foregone conclusion that the ECB will eventually capitulate, the Euro fall, and the USD rise. Therefore why buy gold?
Or perhaps gold is just a relic of a bygone age.....
No, gold is a trading vehicle.  But,the only one that I can bury in my backyard and it lasts forever.

The Euro and the USD are mirror images.


Tuesday, May 6, 2014


I put CDE on my watch list this morning only because I was expecting a sharp rally in silver and wanted something with some "pop" to trade the move. Later today, a few minutes ago the buying volume suddenly exploded in CDE.

So I bought some.