Tuesday, May 24, 2011

Baby steps

10:22 am (Hawaii) In two words, my life could be so different. Sleeping pills. They could harness the power within, sending me off to sweet slumberland long before midnight. I could (ideally) be up by 2 am for premarket trading, be consistently prepared for the 3:30 am opening bell and sustain proper execution and energy through the trading day as the final bell rings at 10 am. Maybe hang around to keep tabs on any after hours activity until 2 pm. Or get out and enjoy the mid-day.

In reality, I've always been a night owl, more by body clock, work hours and nature than by insomnia or addictions. Today, I'm a little frustrated, not mad. I had my entry points set for AGQ and EXK after they bolted higher at the open. I was willing to let them cool off and come back to a Fibonacci level, each of them, that would be a comfortable entry. But before that happened, my attempt at an all-nighter failed. I crashed sometime around 5 or 6 am. 

This is what I wrote at 4:25 am: New retrace levels: EXK 8.97, AGQ 180.62. EXK extremely strong so far, finally a minor dip in the last couple of minutes after hitting a high of 9.24. Daytraders are so done with XG; all the action is in silver and other gold miners who didn't get a big bump like XG did yesterday. Haven't sold or bought anything this morning. Still 90% cash.

EXK and AGQ did, indeed, return to those levels just briefly. Then they took off for a second run to the peaks. I was completely in REM land. By the time I got up around 9 am, there was just one hour left in the session, my one holding (XG) had fallen from 11 to 10.50 (my entry wsa 10.73) and I was miffed. While 78% of my Metals list was green, I went and picked up one of the few plays that was down for the day. Even a monkey tossing darts at a board would've done better.

The saving grace, I believe, is that gold will be steady in the near term. XG simply had profit-taking after a great move to an all-time high, and the rest of the gold miners really caught up today. EXK closed strong, and against my policy of letting hot runners come back down, I grabbed a partial position at the close. The volume and gap up on the daily chart enticed me, and the fair probability of Spot Silver moving up another buck or two before the weekend sealed it. So now I'm back in these two small, growing miners, as I was two or three weeks ago. Still heavy in cash (80%). 

EXK is well off its all-time high of 12.75. This is strictly a momentum approach because that's the way silver behaves with all the manipulation and cult-like following. I'm not expecting 12 or 11, but it would be nice. XG is in new territory after being just above 2 one year ago. Though it dropped about 3% from my entry point, it's a small, partial position and I'm willing to stand through the storm. In fact, 10.43 is the level where I previously considered adding more shares. For now, I'll just wait this out. Greece's economy, and Portugal's could be in symbolic ruins soon, and Europeans don't wait around hoping for miracles. They have a history of flocking to gold. 

Interesting that AGQ gapped up and stayed up, but never went ballistic. Volume (3.1 mil) was nearly double of yesterday. I realize technicals and candlesticks mean so little in the world of silver, but it's worth noting that AGQ has always "followed" its gap direction, at least in the past seven months.

Once again, Spot prices have been stable and/or higher since the onset of gold futures trading in Hong Kong. I believe paper trading schemes there will eventually resemble those of the CME Mafia. Every party has its role in this food chain. There are no excuses for the leveraged. Everyone knows exactly where the train tracks are. If you are tied to leverage (margin) and can't undo that knot that keeps you strapped to the track, the mafia will get your wallet, your jewelry and leave you to rot. I'm willing to risk taking a small hit in XG and EXK, but never will I go on the tracks like a fool (and his gold). Whether its CME and/or the soul-less machines that slice fractions of a penny off any stock that moves, margin is not the answer. It's almost as if those high-frequency computers can sniff out precisely where the most leverage exists. Where it is most vulnerable. It would make sense, because that would also be where leveraged traders are quickest to leave the table. 

As for my positions, economic forces could do more damage than anything. Need to be awake. Need those sleeping pills.

Update 11:10 am (Hawaii) This is what I missed while snoozing in bed. Goldman Sachs makes a u-turn on commodities.

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