Fading Gold < 905, Long Gold > 990

Gold has been sloppy lately, but if you look carefully, we are in a sweet position to play gold either way.  

For the next few weeks I am downgrading gold, and am setting 905 as a point to short it.  I don’t know, maybe it’s all those “cash-for-gold” commercials that are getting to me.  This is a heads-up play, since we are waiting for Gold to come to us… under 910 is a nice psychological point.  With VIX trading near 30 even, the “safe-haven” play is almost out the window.  Gold will not trade well with VIX back in the 20s.  

The risk part to betting against gold is that other psychological point… 1,000.  Odd, no?  It just seems 990 was that double top in the past few months.  It will take a lot to get gold above 990, so as a trader who wants to fade gold, we don’t have to worry about that.  If the VIX were trending up, then I would go long gold.  The channel is pretty clear and clean  850~950 and that’s what I’m basing this strategy on. 

I’ve been following these commodities, trying as much as I can to link it to world events, but I can’t quite put the past 3 weeks of gold/precious metals rally to anything specific… China? No.  Inflation scare? Nope.  Maybe I missed something.  Nevertheless, I’m thinking on the other side too… what can happen in the world that can get gold above 1,000?

Meanwhile, this commodity looks better for bulls to play from a technical move.  There’s so much room to move above, BUT it is best to wait for a confirmed bounce off that nice trend line that started since mid-August of 2008.  There’s one problem with this commodity- not that many great companies to invest in this sector …

————————-

Other notes:

– PPT Score for GLD:  1.62, last Friday it was at 3.51.  Big drop.

– Oil right back at that 60 spot.  It must consolidate here to be bullish.  Too much “noise” on TV concerning this sector.

– Ags strong.  Highlighted IPI unusual activity last Friday, stock moved 7% Monday with PPT-Hybrid score of +28%.  

– “Vince Carter” screen pumped out 22 stocks yesterday!  aap arrs asia azo cern coms cree int mfe mvsn nktr orly palm pas pbg pzza rvbd sgp smg tklc tndm twx urs

5-day chart

3-month chart

Comments »

So, I was at this Chinese restaurant eating this wonderful and tasty chicken with cake noodle, and some other random green vegetables and stuff.  The place is called “Royal Palace,” and it’s in some ugly beat up building.  Hey, they even serve your food on plastic white plates, you know, the one with the red designs around the edge; the bathroom ain’t great either, I mean the urinal is about 3 inches away from the sink, so I felt even more dirty after washing my hands.  The waitress could have been a little more friendlier too.  But that’s okay, I mean, despite eating in a “royal palace”, the food was great.  Well, that was until I finished it off with a customary fortune cookie.  I actually had two fortune cookies because my girlfriend doesn’t eat them.  She claims it’s not a cookie, and so she will be eating a lie.  Um… What the heck?  Anyway, I break open the first one.  In great anticipation I pull out the little white paper and read it.  It says… “That wasn’t chicken.”

Well that sucks.   Tasted pretty good to me.  Anyway, with my stomach turning a little, I break the second one open, hoping it has something better to say.   I pull out the little paper and it says…

… awesome!  I leave a tip, and I take my queen to the beach.

  LFC, CNTF, SNDA, BIDU, ACH, CTRP (?), GA, FMCN

 SPWRA, NCTY, ZNH, CHNR, FEED,

Comments »

I detected strength in Ags and Education/School stocks on a few screens.  Leading the way for school/education stocks are STRA and APOL which had fine intraday patterns verses ESI and EDU which were lagging.  The relatively smaller plays, like LOPE and LINC had little love.  APOL had a nice jump in its “PPT-Hybrid” score two days ago.

As for the Ags/Fertz, the leading stock in that sector these past few sessions has been IPI.  We never mention IPI without mentioning POT which has been extending its rally above its buy-point at 90.  IPI is trying to follow, as it is testing that key 28 level.

Continue to use STRA/APOL and IPI/POT as your correlation stocks.

——————————————————————-

Here’s the Duke Statue LiveCam, if you want to see random tourist…   http://www.honolulu.gov/multimed/waikiki.asp

Duke Paoa Kahinu Mokoe Hulikohola Kahanamoku (August 24, 1890 – January 22, 1968) is generally regarded as the person who popularized the modern sport of surfing.^[1] He was also an Olympic champion in swimming.  [from Wikipedia]

Comments »

A rare IPO… this ain’t 2006 anymore, where everyone with an idea was going public.  Anyway, what’s there to know about Digital Globe?  Well, three things:

1)  they provide images to Google Earth and Microsoft’s Virtual Earth… two relatively under the radar ground-breaking technologies.  It’s the kind of technology that 20 years from now will be the standard in some kind of important area in life, kind of like how 20 years ago no one had a cellphone.

2)  Digital Globe (DGI) and GeoEye (GEOY) are the only two companies that own this commercial type satellites.  So basically, it’s a duopoly.  We’re all still waiting for Google to make this stuff profitable… probably when they start moving R&D away from social networking projects and start investing in these more complex imaging/virtual projects.  Anyone else think 1984 was a good book?

3) Like GEOY, DGI will take on a dramatic road.  This past Tuesday, GEOY’s stock dropped over -20% at one point after news that some of its images were not taking color shots.  Did you see that massive volume attack on that selloff?!  Picky picky.  Investors are real picky.  [oh yeah, here’s the original scoop on GEOY]… isn’t it interesting that that news would be leaked 2 DAYS BEFORE Digital Globe’s ipo?  Hmmmm.  DGI is playing hardball, in my conspiracy driven opinion.  Well, like I said, DGI can’t escape the drama either- basically any money poured into DGI this summer will be on pure speculation… let’s see, they have 2 satellites in orbit, and this fall (!) they are sending another one up there since one of the two is about to stop working.  In other words, this satellite must launch.  A simple delay in this launch will punch investors in the scrotum.  If it does launch, then so will the stock.

Yeah, so here we go GEOY and DGI.  It’s nice to invest in duopolies, like Coke vs Pepsi, and monopolies like NetFlix, so this one should be interesting- I mean, since we are already nationalizing everything, I think it’s a good time to bet against privacy… GO SATELLITES GO!

Comments »

As you know, I’ve been dumping longs and moving to shorts ever since the VIX hit my medium term transition target of <34.  When it got too close to 30, I dumped almost all longs.  This is the hardest part that many traders have… transition from short to long and vice-versa.  I can never tell you the exact top/bottom, but if the VIX gets to a level where I feel people are getting too complacent, then I’ll make the transition… transitions can take days, but usually I’m not too early. 

Sectors I’ve been eying to short are retail and energy, more specifically, online-retail/travel and solar-energy.  To give you some ideas try…

NILE, ZNH, FLWS (too late), LULU.  Avoid shorting stocks like HANS, GMCR.  They are BOTD candidates, so they can cause trouble to shorts.

Energy, you know the solar names.  They sure are getting hit:

STP -14%, SPWRA -7%, YGE -14% are top 3 swing shorts.  I haven’t shorted these yet.

Going back to the VIX, it only went up 5%, but notice the intraday trend is up, so I expect it to go higher in a few days.  However, a slight pullback closer to 33 would be another good entry to add to shorts, but if it does dip past 30, then it’s time to redraw our “vix levels.”

Aloha!

-gio-

Comments »

Nothing much to say about today’s tape, other than the divergence in some of the major indexes.  Commodities seem to be heating up, with gold moving, but silver moving faster.

Notes:

• GMCR had some profit-taking today throughout the day after re-testing highs.  Closed at 80, sold half yesterday at 84.
• OSTK shorts are working.  Target still single digits.
• FLWS sold out at loss -7%
• GEOY not a good sign for leadership index.  Can’t wait for DGI ipo this Thursday.  DigitalGlobe and GeoEye essentially operate a duopoly in the United States.  Google owns GEOY.  GEOY’s earnings last night.
• HUM approaching short sale point <30
• VIX down relatively hard for a <1 point move on SPX.  Bounced off 31.50, so getting ready for next wave of short setups.

My “Vince Carter” Screen spit out 3 stocks today:  [[QSII]], [[TEVA]], [[SNDA]]  …I feel like an idiot for selling QSII.

Feel accomplished:  2 things I did today that improves me…

• added 2 gb of RAM to one of my computers.  Works conspicuously faster!  Will add 4 more later.
• Subscribed to Pandora.com, internet radio.  Hat-tip to @jrroche

Comments »