Monday, September 26, 2011

Technical difficulty (updated 315 pm)

 FAZ returns to the lower megaphone range, but for how long? 

FAS in a near-term pennant/flag with room to go higher? 

10:28 am (Hawaii) Price still matters.

There's really no reason why technicals need to be discounted in a market as schizo as this. Almost everything is subject to headline risk, more on the bear side than bull, and today's move up in the indices - Dow +272, +2.5%, 11,043; Nas +33, +1.35%, 2,516; S&P 500 +25, +2.3%, 1,162) - was no shock. Yet I tried to trade against it early in the day even while it should've been clear that selling FAZ and buying FAS was best in the financials.

I finally quit on FAZ as a daytrade at 65+, taking a second small loss on the day. Totally avoidable, and even my own chart with megaphone patters and the fairly recent pennant/flag pattern, FAZ looked ready for some profit-taking. FAZ is at 61.71 after hours, off the intraday low of 60.86.

FAS climbed 11.3% to 11.72. Once it gapped up at the open (while FAZ gapped down), it should've been clear as day. The machines that own this market often trade on patterns and technicals, particularly when there is no headline risk in the near term. Gap up, finishes strong. Gap down, closes weakly. That's just what happened in FAS and FAZ.

One true oddity is that AGQ and ZSL finished in the red. AGQ hit a near-term low this morning at 96.75, but rallied and is at 114.74 after hours (-3.3%). ZSL is down 7% to 17.99. How can a bull ETN and a bear ETN on the same metal (silver) each be down that much? Yes, there is something fucking rotten in Denmark. That's paper silver. No regrets about steering clear of paper silver for weeks and months now. I'm still convinced that the puppeteers are generally long gold and short silver. The price action says it all. Bear Stearns' massive short position was left on JPMorgan's lap, and with the backing of govt power, they keep shorting silver and/or covering shorts.

AGQ 1-year

ZSL 1-year

That's not going to cause me to unload a single ounce of physical metal. I just like to know what the realities and probabilities are.

Gold spot price

Silver spot price

Gold at 1520 or so earlier today must've been painful for some people. DGP is well off its day low of 49.66, now at 52.79 after hours. That's still -2.2% for the day, putting DGP at early July levels. After four down days in a row with massive gap downs, can this support level hold? The practical reasons for owning gold are still in play. Whether people believe price is manipulated by puppeteers or we've simply had a massive profit-taking run, gold may not get any cheaper here at the 1600 level. 

DGP 1-year

DZZ 1-year

This just might be a good time to average in with the physical rather than try and time a grand slam homer. If spot silver keeps selling and later bounces off 21, it'll make some sense to me based on the snapback/rubber band theory I posted recently. It's more fantasy fun than concrete and factual. But it's enough to make anyone think about what could happen if all the stars lined up and gold sold at an untethered, unleashed price. Silver would become the tail of that comet. 

My Regular watch list is 62% green, 37% red, 1 neutral. Many of the leaders traded on solid volume today. FAS was atop the list with strong volume and FAZ closed at the bottom on fairly soft volume. In other words, there are still a lot of traders holding FAZ, probably since the recent dips to 55, 53, even going back a month or two to 50. Whatever dips happen (maybe as low as 40-44), I still see FAZ at 100 eventually due to Euro and US debt crises.

Noticed that GSVC is off the board or something right now. Basic info on my trading platform is "n/a" though Yahoo Finance has it at 14.15 for its last trade. It's going through a secondary offering real soon, not my cup of tea though I tried trading this a couple of months ago. It was a classic case of buying high and selling low. Sure the market was going through effed up gyrations, but price does still matter. Any buy of GSVC below 12 and any sell above 18 would've been Basic Trading 101 regardless of whether you believe in this company (the next CMGI?) or not.

Winners on my Regular watch list were WNR (+10.4%), YOKU (+9.1%), CRR (+8.1%), EXK (+7.5%), TSO (+7.4%), C (+7%), STR (+5.3%), SWY (+5.2%). A load of big winners (above 2%), even NFLX (+2.4%).

My Metals watch list was 43% green, 56% red, 1% neutral. AVL (+17.2%), SVM (+7.5%), EXK, GSS (+4.9%), DZZ (+4.8%) were the leaders.

My focus is still narrowed down to FAZ (and now FAS), paper gold (DGP, DZZ) with an eye on paper silver (AGQ, ZSL) and the leader of retail, AAPL, which rallied from its intraday low of 391 to 402 (-0.4%).

Maybe today was the only big-gain day of the week. Maybe we're in for choppy waters, but range bound. Maybe selling is mostly done for now. Maybe buying also done. I like FAZ below 60. Like it better at 55 or 50. I have more confidence that spot gold has hit a bottom than silver. All cash works fine right now. If the indices are up and precious metals still finish red overall today, I'm not going to fight facts, even with momentum in PMs late in the day.

Update 2:01 pm Could be a trap. Could be the bottom. Gold is going back up at some point. I'm willing to wager that the process has begun, so I got a handful of DGP before after-hours trading closed. 

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