Got my mojo workin' (sorta)

Trader, Burma-China border

3:10 pm (Hawaii) A nice break in the work action on a sunny, hot day in the islands. I look at how I handled this week's trades and wonder, am I regaining the confidence I had a few years back? This week revealed my weaknesses en masse: Monday, rushed out of a trade in WNR, loss equalled 1% of bankroll, only to see it trade back above 18 the next day; Tuesday, a technically sound (by my parameters) and instinctive entry into SLV that netted a nice profit for a few hours of holding; Wednesday, profited from another SLV trade though overnight I was not confident at all. Later today (Wed) I quit too early on another SLV trade and took a very small loss, but it would've turned into a decent profit had I stayed firm.

For the week, I'm ahead and grade myself with a C+. But more importantly, I feel better about my decisions, even the mistakes, because I have a clearer set of goals and parameters. In my down trades, I know precisely where I failed technically. That doesn't explain why I feel some mojo returning, and I'm not going to live off a sense of overconfidence, not after all the positives and failures I've endured. But for the first time in awhile, I feel a little more in tune with the market, willing to run for cover and willing to take calculated risk more than once a month or once a week.

I may have reservations about staying in anything silverish overnight anymore, especially in the next several days, but that has nothing to do with spot silver's continued ascent. It's popping again, now an all-time high at 45.57. (That's SLV 44.45 in my conversion of -2.5%.) Holeeee crap! How much of this is genuine demand and how much of it is another round of short covering? Just about everyone deep into spot silver or some kind of silver calls is starting to refrain from further buying, or has already sold a substantial amount. So who's getting deep into the gray metal? Are the Chinese gobbling up every ounce of precious metal out there? 

Nothing that rockets like this over a sustained period of time goes on at this trajectory forever. The time will come for that pullback. But it ain't today. 

Update 3:28 pm (Hawaii) Check that. Spot silver now 45.66. 

Update 3:31 pm (Hawaii) Spot silver now 45.71!

Update 3:32 pm (Hawaii) Spot silver now 45.79. Astounded. Totally astounded. I don't even care that I'm 100% cash. This is a spectacle. 

Update 3:52 pm (Hawaii) Spot silver holding at this level, now 45.76. Despite the big jump yesterday and today, silver plays (miners) haven't been riding in the big parade with SLV, and there's talk that SLV is heavily shorted. Why would I think that JP Morgan is filling up this hot-air balloon and getting ready to pop it sometime soon? I've seen outright manipulation before, and it feeds on the exuberance of bulls. I hope SLV isn't another DNDN naked-shorts-gone-wild scenario, but it kind of feels like it. 

Update 8:07 pm (Hawaii) It's one thing to get that swagger back. It's another to recognize the potential for great gains ... and great disadvantage. Tomorrow, the last trading day of the week, and the long weekend could be a puzzle with no solution. 

• Brazil has raised interest rates

• Spot silver could easily be manipulated with markets closed for Good Friday and Easter

• Rumors of China revaluing/devaluing the yuan could be bullish for precious metals

• Rumors of massive shorting of SLV

One argument could be that the increased pressure on the US dollar (yuan, overseas rate hikes) would be the exact reason why silver and gold must be held down as long as possible, especially with spot silver going parabolic this week. More so with precious metals options expiry on Tuesday. It wouldn't take much time for the powers that be to take SLV down massively in a matter of minutes. 

What is a simple trader with mojo to do? 

Spot silver is at 45.83, not far off its high tonight (46 or so). The Asian market, or probably just China, has wolfed down a big ol' serving of silver instead of eating dollars for dinner. For those who trade according to price action spot silver and SLV have been glorious to watch and profit from. For those who are wary of some of the evil machinery that operates the "free" markets, there has been no easy ride even with a commodity that has practically gone straight up for weeks. Nobody wants to be there holding the bag. Nobody wants to be there when that plug gets pulled and the life-support machine goes quiet. 

Sometimes, though, it's just better to be dumb in this market, and lucky enough to be out when it hits the fan. 

Update 8:24 pm (Hawaii) Spot silver just pierced 46 for the first time. Now trading at 45.95. Hong Kong is buying the hell out of silver. 

Hump Day Reading Time

Trader Dan Norcini: The US bond market has become the most important market on the planet (Apr 20 2011)