I am a firm believer in mean reversion, the proverbial rubber band stretching too far and then snapping. As you know, for fundamental reasons, as well as philosophical, I’ve been a vocal bear on precious metals, having just closed out a short position in AG. Prefacing those beliefs at the forefront, I can tell you that silver, as well as gold, have indeud breached the outer stress bands and might be due for a bounce, perhaps a very big one.
Using my algorithms inside The PPT, which specializes in finding mean reversion plays, silver and gold are being flagged as being OVERSOLD and the inverse ETFs being OVERBOUGHT. Before I show you the statistics, just know that I am not a fool and understand that mathematical models are meant to be broken, when speaking of statistics and correlations. So, I enter this long AG trade, which is now my largest position, with eyes wide open and a bias against it.
UGLD
GLL
Gold Oversold
Silver Oversold
And GLD
Based upon what the algos are telling me, this trade should be profitable within 3 trading days, peaking out in 7. It’s also worth noting that this trade is contingent upon silver remaining down today, therefore allowing the Overbought and Oversold indicators to register on a closing basis.
Technical scores are in a state of constant flux, ranked on 5 core principles.
All categories are ranked on a scale from 1-5, 5 being the highest/best score possible. There are other factors that are built into the scores, which are not seen here. We like to call them “Sub Rosa” and “Sixth Column” factors, that include price fluctuations in all major currencies, commodities and bonds. We’ve tried to fine tune the scores based on historical precedence, all to do with correlation. However, eventually, correlations become unreliable, as time and news events change the trading paradigm.
We’ve adjusted for this by allowing our algorithms to “reset” every 3,6 and, 12 months–which accent our core historical algos. This might sound a little complex, but it isn’t.
It’s a tool that helps me survey the market from a high perch, find things that are hidden that I would most certainly miss if doing it manually.
I am giving this AG trade until next Friday to yield 5-10% on my money.
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Wasn’t there some guy posting earlier today about his prowess with gold investing and monumental gains? Just saw this beauty: ”
Gold Sinks Into Bear-Market Territory, Down 4.1%”
gold have been in bear market for a while now…. and it can last
if this works, you are a wizard.
I bet Ben Bernanke does not have one rubber band in his desk drawers.
I have been talking to a spider monkey about gold and silver trade for an hour…. she is still scratching her head – I am serious.
By the way for the gold miners lovers out there – I have warned you far in advance of this collapse.
http://ibankcoin.com/partridge/2013/02/15/gold-the-requiem/
GOLD DOWN 75…. just warming up
This is capitulation and has all of the hallmarks of a blow out.
A bounce should come next week.
bounce should come.. I am not sure when…
Huge Buying on Weakness day for Gold today.
Weak hands transfer to strong.
Jake,
this is no weakness, this is capitulation… and I have seen it before…. not sure if anyone also here did.
What do you think happens during capitulation, numbnuts?
We’ve only seen it about four times in the last 12 years…. (rolls eyes).
_________
haha I have been trading it for 20… keep on rolling
I”ve been trading stocks since 1990. The gold bull is about 12, that’s to what I was referring.
I only trade bull markets and we’ve had no parabolic blow off, so… no end to the bull yet.
Unless your vaunted 20 years of trading have given you some experience of a secular bull that ended without a blowoff top, perhaps?
____________
And JG *refuses* to end sentences in prepositions.
An alternative route, Jake, could’ve been, “that’s what I was referring to, numbnuts.”
Sorry, old habits die hard.
If you like, I will revert to trog-speak when conversing w. you.
😉
__________
dude,i dont even know why you think you have to argue with pin heads.my old man,who retired as a body and fender man used to buy 15 pounds of silver for brazing at 3.00,yes three bucks. and partridge,i been holding precious coins since the age of 11, 51 years ago…………
11 + 51 = 62
62 > 47.5
BANNED!!!!
QED
we were talking about trading gold and silver stocks…
holding coins is a different story..
I hold coins, a lot of them, although for the most part their value has nothing to do with PM value…
“When I first got into the game it was brainstorming and trading/investing with The Dr and others, but no one ever called someone a “dumbass” just for stating a thesis they didn’t agree with. Then I get on Twitter and finance sites, and there are all these armchair QB’s, calling me all sorts of names. . .
Maybe I am neolithic, but I believe that one shouldn’t speak ill of someone, if they are not ready to meet the other in physical combat. Why should I let someone call my family and me all sorts of horrible things with no recourse, is enduring that civilized?”
— Rhino
An articulate bang-on post about rude anonymous comments.
Shut up, dumbass.
Jake
Max Keiser said the same thing about bitcoin yesterday
BitCoin had a blow-off top, in case you didn’t notice.
That said, I haven’t been following BitCoin closely, save for the stuff about it soaring in the last couple of months. I have no idea how long its even been around for instance.
Gold is, first, a commodity. It’s been traded for 50 centuries, and is subject to the same cyclical patterns as most tradeable assets.
I would say the same of BitCoin, but do not even know the extent of its market… I would hazard a guess that it is less liquid (or tradeable) than gold, on a global basis.
_________
What % are you currently invested in PMs? 20, 40?
jaaaaake
Que?
______
MCD is the place to eat. Sell your AAPL’s and grab a burger…
I’m lovin’ it, along with all of my other old man stocks: KRFT,WMT,MO, PFE,JNJ,MDLZ,T,GE, ABT, ABBV,GE. Long “Merica”
http://www.youtube.com/watch?v=N2qCIQnfDKY
Lol. That was appalling; as is the fact that I sometimes crave that shite.
I don’t think these statistics matter in a state of liquidation such as the one we are in, but I believe based on the statistics, that your trade is planned perfectly..
Nice one
You might be correct. I hate the idea of silver.
I will blow out if it goes against me.
I’ll be honest boss – if you ask me long or short PMs right here right now my answer is to stay out – this is simply to big of the move …
that is the main reason I closed my shorts…but no way I would long them here.
I actually think that’s prudent.
I did not buy anything today (as I’ve stated I won’t til the turn).
However, a guy I would describe as “the world’s cheapest man” actually came down and bot a potload of physical silver off our desk this afternoon.
This guy has a nose for value like a fat pig in a truffle hunt.
___________
Was it Jim Sinclai?. What a douschebag.
Today blows the chartists and sentiment tea leaf readers out of the water. Some of them blog here.
However, I do not proclaim to be a blogenius but I do follow the strategy set in place by the G8. It’s clear they will not allow run away inflation no matter how much they “print”, which in itself is debatable.
“This might sound a little complex, but it isn’t.”
Yeah, but I have an IQ about room temperature, not 155!
Just keep the room damn hot and you will be fine.
Hey Chris, are you still there with RGLD ? I”m bleeding but holding.
My buy order $59.24 didn’t hit.
Wait and see next week.
Crazy action. What exactly is left to buy? Bonds are fucking ripping anything global growth is crashing or about to. The pc is dead. Kind of a sizeable part of tech. The emergings along with copper and oil are dog shit. Wtf?
The dont fight the fed rally is running out of go to sectors. Blindly buy the SPY? Hope that the rotation from one fucked sector leads to a more parabolic move in another? Crazy.
I get it. But, that doesn’t mean I like it.
It could be a low for a good while now, but this is massive damage. I’d prefer to pay higher prices when it begins to coil after it bases.
You could easily get a 2% open monday. That’s a nice trade. I just have trouble with those.
Looking at physical gold and GLD is interesting. GLD fees/costs/inefficiencies causes it to slip vs. physical – the total slippage equates to a 142.50 resistance for GLD, so let’s see what happens.
The EU was dumping Cyprus gold today. This perfectly timed symbiotically with a GS gold downgrade yesterday.
The Chinese are using North Korea as a bi-proxy to threaten the Japanese. Funny the new PM is on a mission from the Kirin Ichiban gods to devalue the Yen.
You don’t think the Chinese would mind a cheap currency export competitor in the region do you ?
A couple of years ago GS came out with a sell oil call. Sure enough the price of oil came down for about two days then went on a tear to the upside. Month or so later GS said it was time to buy oil again… Just before it nose dived about 20%.
GS also called 200 for oil.
The North Korea Doughboy is China’s bitch. For whatever reason, they are dumping the responsibility, bloodshed, hatred and financial bill on us.
Why haven’t we started a GLOBAL BOYCOTT yet ?
Blood is serious, but money gets things moving. Politicians talk, but the American consumer ACTS.
If the situation gets resolved quickly, let the boycott go another 6 months just to keep it on their mind. It would be nice if several countries joined in.
I’m not talking about tariffs. I’d like to see billions of people in many countries flex their muscle.
http://youtu.be/qHkWv1vHtHk
$XME is not as oversold breadth wise or price wise as it was in 2008. There is room for more down side.
Amen brother!
This will only come off as insincere, since context is tough to convey here, but that unwind this evening is ruthless, and (not that you need any sympathy) my apologies.
Here’s to better times Fly, you called mid-April as a top (relative of course), and you will be proven dead on in my opinion. I hope to see you +35% for 2013
Decidedly off topic but that distinguished looking gentleman in the picture accompanying this post Sir Fly…….well, it simply bugs me.
If you look closely, you will notice the whiskers of his beard directly beneath the lower lip have an egregious tilt toward his left.
His left. ….LEFT I say!
This causes no little amount of consternation in the house of the Heaterman.
It makes me ponder things such as conspiracies, New World Orders, Bilderbrugers, Jekyll Island peeps and the like.
Is the man in the picture a member of any of those nefarious groups?
Is the picture supposed to deliver a sublime subliminal message subliminally?
Or………
Is it just late on a Sunday evening with nothing else to do but harass the woman of the house?
holy fucking fuck.
The Fly has based this trade on mathematics. This week we’ll see what happens when art and science collide.
Because art says down.
Sputtering Godzilla needs healthcare ebt phone electricity and education. Never fear when a socialist is near.
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