Sunday, July 26, 2015

July 26 - GLD potential bottom

Equities still falling but seems like most of the easy money on the short side is gone.  There is a solid chance of stabilization this week, if not, we might be opening ourselves to that long awaiting correction that many were expecting in September.  I have spent quite of a bit time backtesting to see what kind of adjustments I need to make to ensure I don't miss these potentially big moves.  For the last few months, I have been doing mainly hit and run trades focusing on capital preservation and jumping out if things looked mixed.  I have decided to split my positions now into short term and longer term ones 50/50 roughly depending on the setup meaning the longer term positions will have much wider stops and I will probably let them run a bit more aggressively.  It is also possible I will pick up deep in the money puts that are reasonably far out in lieu of the long term positions.

Equities aside, I am still sitting on my DUST puts from last week.  They took quite the hit and were down about 35% at one point at miners continuing dipping for 2 days after my entry.  We have a potential reversal at hand but I am willing to let this one bounce around.

Fat Pitch has a very good review of gold's situation and presents a promising case for a bounce here.

Here are a couple charts that I found notable that shows the contrarian angle to speculators has picked bottoms quite well.

After looking at this, I wondering if there could be some kind of algorithm to scan financial news to see how bearish people are as a contrarian indicator.  For sure seeing CNBC with a big report on gold miners crashing gave me comfort, albeit limited, going into my gold miners long.

After some froth DUST finally made a solid down move Friday.  Whether we make a sustained bounce in GLD is unclear but so far this looks promising.  If this was a top, I am targeting a fairly large retrace around the low 20's in DUST.
GLD first area of resistance around 110 I will be watching carefully.  It is possible we have a snap back rally that cracks through resistance.  Also possible is for the bounce to just form another consolidation zone that is met with another move down to stronger support around 100.

Long wick candle on the weekly south of the lower BB.  It is a very strong signal and could lead to a decent bounce this week.  What happens, if we get a bounce, by the second or third week is uncertain.

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May 15 - Closed out IWM puts for +120% and picked up DAL and HD Jun calls

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