Tuesday, November 9, 2010

Thrilled With this Morning's Sales of Silver Wheaton (SLW) - Wish I Had Shorted

While I am very happy with this morning's exit of Silver Wheaton (SLW), [Closing Silver Wheaton under Parabolic Conditions] I wish I had watched it closer as I could of had the perfect day by exiting at the top and then riding it down.  Can you imagine riding a stock up 29% up and 13% down in the span of 7 days?  That's like hitting for the cycle.  It is down about 13% from its intraday high, and about 12% from where I sold the stock this morning.  This is how parabolic moves end.

Chart from this morning

Chart now

Easy come, easy go in the world of momentum trading - indeed we saw the exact same thing in Las Vegas Sands (LVS) a few sessions ago.

Back to SLW - it's fast approaching that gap at $30, but the whole commodity complex to be is one big Silver Wheaton.  When these trades reverse this market is going to enjoy very ugly skid marks... all shorts have been eviscerated (hence they cannot provide support by 'short covering' i.e. buying on the next downturn) & huge air pockets exist on countless charts.  I can only find one blogger out of about 40-50 blogs I scanned this weekend (ex daytrader types) who is actively shorting this market on the intermediate term...

The farther we go up, in non stop fashion, the higher the risk for people who are buying with no thought process and little risk control.   Maybe the selloff will be from here... or S&P1300 or 1800 or 2500; I don't know because this type of market is foreign to me - but once again we live in an artificial atmosphere, no different from NASDAQ 99 and housing 2006.  The only question is, are these days more like April 1999 or February 2000.   I wonder how many Fed induced wealth destruction cycles we need to go through before anyone not named Ron Paul points at the Fed.  Based on America's destructive policies we can expect another version of 2008 sometime in the next 3-5 years... which is sad to say, especially in light of the cheerleading by certain market types of Ben ... completely parallel to the worship of Easy Al in 2003-2005.  If oil can get to $120+ the fallout is going to happen far sooner than 3 years.  What happens if we have another recession now?  $2 trillion in QE next? What will that do to oil? $250?  Then another $4 trillion in QE to fix that issue? Causing oil $350?  With the world screaming bloody murder.  There is a reason central banks repeatedly fail. Ben is in a box.... inside of an ivory tower.

We're back to testing lows of the days.

EDIT 3:30 PM - I put the same SPY puts on, but in smaller scale (just over 3% exposure) this time around due to overnight risk.  Still hoping to revisit 13 day moving average.

No position Long SPY puts in fund; no personal position


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