"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat
Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput
Trader Dan's Work is NOW AVAILABLE AT WWW.TRADERDAN.NET
Trader Dan Interviewed at King World News Markets and Metals Wrap
Please click on the following link to listen in to my regular weekly radio interview with Eric King over at the KWN Markets and Metals Wrap. You will especially want to hear this week's recording as it is a companion to the piece I posted last afternoon (Friday) about my theory on the mining companies commencing hedging programs once again.
http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2013/6/29_KWN_Weekly_Metals_Wrap.html
The comex gold contract is about $120,000 so perhaps smaller investors cant use comex to get their physical gold. But if the big players are paying a premium to buy the physical gold, why not just take delivery and get it at the spot price. Unless, of course the big players can get the physical gold without a premium and then they dont need comex. So maybe the premiums that people are paying are only for small amounts of gold
ReplyDeletesmall players always overpay
ReplyDeleteHi Dan,
ReplyDeleteYour vision both on technicals AND Fundamentals is so much appreciated, especially to evaluate which criteria to take into account into the fog created by so called specialists who, one day shout about backwardation, then Cot reports, etc...
Thanks a lot for sharing all your knowledge!
I like to share as well, as TA is a passion to me, even if it's not my real daily job :)
Especially to Hubert, who mentionned that TA was useless in a manipulative environment, I'm trying to explain my last moves and why they are based on T.A.
First TA is all to me about probabilities, not certainty.
But let's make a comparison with poker here for those who play Hold'em. At the beginning of a tournament with small blinds, it doesn't cost much of your stack to call with a small pair, hoping to get the trips on the flop. Yet your probabilities are only 16% to make it. 84% of the time, you won't meet trips on the flop. But if enough players called before you, and you are close to last position for example, the explicit odds and implied odds make it worth to call.
It's exactly the same when I try sometimes to be contrarian and catch a falling knife.
I do it with a small amount and because I can put a stop loss which costs me little if I'm wrong.
I do it because my risk/reward ratio makes it Worth, even if I'll be stopped more than 50% of the time.
It was the case here, when I bought a small quantity at 1200$ :
- monthly time unit, the Bol Inf is at 1300 $ : we are totally out of the bollinger, which makes it "likely" that we'll go meet this level in july.
- weekly and daily time units : we were very close to the mlh inf of the Andrew's fork, acting as a support.
- 1205 $ level is a retracement level of the 750-1940 $ level which is acting as a stairway on this downtrend (1490, 1348, 1206 precisely).
That gave some ground on a potential bounce around the 1200 $ area.
So when markets indeed started to stabilize on the shorter time units and bounced up, I could decide to put a stop loss under the lows in the 1190 area, for a risk or +/- 10,12$ on my bet.
Now the target is at least the Bol Inf of the monthly time unit, or the next Fibo levels at 1320 then 1348 areas. Even by being careful and getting out fast as soon as we reach 1300 $, that gives me a risk/reward of about 10/1.
So I would need to be wrong more than 90% of the time to make this call unprofitable.
If I'm right even 25% of the time, it's ok on the long run.
Voila, just to explain why I did it and why TA helped me do it. Now I'm happy with a winning position whatsoever, because I raised my stop loss to the level of my buy order, so I can't lose anymore, only win.
I don't recommend to anyone to do the same. It's my style, it's agressive, and it means I'll be hit by stop losses many times. Every person trading should find his own way to trade, on his own. But I wanted to share to show that T.A is definitely relevant, even in a "manipulated" environment.
Reasonable and very prudent. I also am still in loss position in many areas, but picked up 12% on a similar bet on miners. Thinking I will probably hang in some but will consider liquidating the whole thing before this weeks beat down on the U3 numbers, waiting to see how markets react to the chatter. Way too much volatility and Fed Speak nowadays and markets react way too fast. You method however, is very sound. Thanks for your posts here Hubert.
DeleteHubert Du Haut,
ReplyDeleteAgree with you that T.A is relevant at determining possible levels of support and resistance. Just a shame when some technicians claim they can predict future price direction and self proclaim they are expert gold price "forecaster". Often, they're merely saying stuff that we already know- price could go up or it could go down. Really!?
I just love it when guys that should know better like Richard Russell talk about PM's being oversold. Who is he speaking to? 8th graders? Bear mkts repeatedly get oversold. My other beef is with the Sprotts of the world expressing the lame idea that gold is in a shortage situation. Nothing here, move along; steve in sparks
ReplyDeleteLooks like an end of day selloff occurring before the 4th holiday.
ReplyDeleteAs usual, gold stocks are the first ones dumped, regional bank stocks are held on by a death grip, they are the last ones sold in a crisis.
CRB Index is likely to plunge even further, lead by the grains, which means "Animal Spirits" will eventually return and money managers will once again be diving in head first into retail, consumer discretionary, and banking stocks after the selloff.
http://quotes.ino.com/charting/?s=NYMEX_CL.Q13.E
ReplyDeleteCrude Oil 9 cents away from $100/barrel
hi ,
ReplyDeleteOne thing that amusement in trading Via mananipulation ..
Get majority disconnect from reality in the end those who are not well prepare will get burn ( i mean not now which i mean in the end , the end in my term mean once you lose all your money )
....
I short Yen / dollar when it is at 77.5 - 79, closet all short at 93-96. ( i do alot of trading and investment, so organize my port according this part of my position )
... TA is useful from time to time... BUT not always just like every indicator.
When i am wrong then I hold my position and wait till the time flavour in my trade some time it is short, some time i just need to hold on to the position awhile longer.( i am not leverage type and i do my homework)
Most of my trading base on logic and sentimental and lastly the most importantly fundamental.
If everyone is on the same boat the boat will sink (logic).
If everyone is rushing to trade on one side of the trade(sentimental)
If a commodity is above cost for a long period of time then there will be a lot of supply coming online in the future (fundamental)
I am off the gold bull when everyone was a bull, I start to invest in gold again when market is bearish. Lastly
The more the market is bearish the more i am bullish.
I buy S&P index back in 2009 when it is only about 750 point( my entries position) , during that time almost everyone was bearish about the market.
I ride the rally untill 1400 and start reduce my long till 1480 ( do some short term trading from time to time) .. from there i am begining to short at 1475 toward 1575.
My S&P short still in Red but i not worry some much my selling position is quite high just need to wait for a while.
Market is your enemy, you can hunt in a group but always remember above cloud there is sky ... the most devastating storm often come with short period of notice ...
Dan is good in his way of trading ....
Traderdan is sacrificing alot of his precious time which is noble deed ....
Cheer.. and becareful on your trade ... never never over leverage your position in future or any other leverage trading vehicle.
Cheer
"Traderdan is ... noble deed." - I fully support that compliment!
ReplyDeletere (Predator1976) your trading:
'waiting until the position is in profit again' - i know that, and have practiced it successfully in the past.
but then i was a smaller unit inside a bigger portfolio, so when an idea proved being wrong (or "too early"...), i could extend my overall equity by just extending a limit-figure.
(this were golden times for me.)
later (when this opportunity did not exist anymore), i had to learn to put my position into an adequate proportion to my overall equity.
in other words: 'don't leverage too much', 'undertrade', 'do worst case scenarios', etc.
now directly asked (to Preditor1976):
if you intend to ride out your trading, you have to keep your positions very small, because nowadays swings are 2 to 3 times what they were late 90ies.
so even when you are not acting at the very wrong end of the swing, the mkt may go so much against you, that it will have the same effect, as if in the 1990 you bought at the top and sold at the bottom.
in regard to that, can cou still run positions big enough to increase your portfolio substantially? (i.e. to create enough profits to be able to make a living from your trading?)
regads, alex
Hi alex..
ReplyDeleteIn my early young day , I start trading when i was 18 years old.
I learn my hard lesson in my early years of trading.
First 3 years is my worst years. ..
Later 2 years start doing better, for the next 10 years i am highly leverage until before the 2007 and out of market.
Reinvest again start of QE.
My portfolio is divide into, currency, bond, PM , equity, oil and soft comoditity.
Trader have small fund and have to live with daily trade...which i do that in my first 10 years of trading.
now i am investor, which i earn more then being trader.... big position with precise target.
I am now investor and sometime short term trader ..
I only try to warn you guy, under this high movement don't over leverage and make sure you have fund to back you guy up..
I see this before in 2007 , back then how many people survive...
Let the time prove ...
cheer
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ReplyDeleteThis is a weekly time unit representation.
ReplyDeletehttp://s22.postimg.org/cgsyyzn35/gld_w.jpg
Gold's uptrend from 300 $ marked a pause when trying to go through 1000 $. If formed a reverse head and shoulder down to 750 $, bottom which was the start of the second leg up to 1940 $.
If I consider this second leg, 1200 $ is already the 62% fibo retracement. I'd like to see it hold, because usually 50% or 62% still make ground for a "continuation of the uptrend" case, while a 78% retracement (1030 $!) would make me itch.
78% retracement at 1030 $ this summer would also mean that we not only break the 62%, but also the mlh inf of the Andrew's Fork (in red on chart), and the uptrend support line accross the 1150 area, not to mention the fibo retracement of the 300-1940 $ uptrend near 1130 $.
If this happens, I'd probably call it a capitulation in the market.
But unfortunately, I don't completely discard that option, given the current environment, and the fact that 1030 $ correspond to the top of the reverse head and shoulders, now acting as a long term support.
I'm still very careful, despite the drop.
A final acceleration of the downtrend into a panic mode should 1150-1200 $ area fail is still possible.
As a long term investor in gold, I can only try to remember that patience is a virtue.
hear a lot of commentary about the explanation for gold's drop being the speculators leaving the gold ETF's. Hence, as Dan observes, "the tonnage has fallen below the 1000 level".
ReplyDeleteHowever, from what I've concluded, not much silver has left the silver ETF space. How is it so then, silver drop this much also?
can somebody explain, please?
Wow, futures just ramped on some jawboning from Carney.
ReplyDeleteLooks like we'll see new highs in the U.S. Dollar tomorrrow, and bank stocks and consumer stocks will once again market new highs.
Who knows where gold goes from here but its obvious that $100 crude is only emboldening the consumer to spend even more money since he knows he's getting a fat raise soon and the U.S. economy is headed into a multi-year boom.
Thanks to the greatest Central Bankers who ever lived, all competing to bragging rights as to who ramped stocks the hardest and longest with their "words".
Anyone who remained in the system and stayed fully invested in Fed-sponsored, TPTB-supported stocks throughout the last 5 years were amply rewarded with huge wealth gains in their trading and retirement accounts.
Jobs report day tomorrow !
ReplyDeleteIf the McDonalds in Butte Montana hired two more part timers the DOW will rally 200 points and gold will get hammered.
True Dean, plus friday when usual suspects tend to hit gold.
ReplyDeleteFor the record, I went out of my trade and sold out at just above 1250 when I saw the market was stopped by 1260.
My initial target was 1300 $, but I bought gold at 1200 $ on a contrarian trade, against the tide.
In those circumstances, it is important to get out of your position quickly if the engine stops.
That way I still make a profit of 50$ on my position, better than nothing, especially in a bear trend.
I'll stay longer as a bull when the trend reverses higher, with ma20 going up, etc...we are far from it yet.
Even if I thought it's likely we'll reach 1300 $ because of the monthly bollinger, I don't like the way gold prices stopped during 2 days near 1260. It is so weak right now, so who knows?
I'll wait for the next opportunity for a quuick get in/get out contrarian trade, or longer bull trade when the trend reverses.
agreed. i went short a small quantity at 1251 yesterday, expecting a move towards 1200. (chart looked like getting tired and turning.)
ReplyDeletei will be very cautious, prepared to leave quickly if i am getting suspicious, because i think a period of unregular swings (with no direction after all) will come now.
i intend to cover between 1220 and 1200 latest.
at the time of jobreporting i will stay short though, but kept my pos small therefore.
(just my 2 cents)
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ReplyDeletesee the commodity structure in various currency( not in US dollar ) .... looking bullish ...
ReplyDeleteambush inflation going forward ...
Its not that often that one sees liquidation of anything into a complete void.
ReplyDeletecovered short(1251) at 1214 now.
ReplyDeleteit doesn't look look like making more to the downside for the time being, and if i realize prof i will have may head free for the rest of the day.
PS: it worries me, that the s&p500 got weak after 195k payrolls (no matter how they are counted).
PS2 @Dan: it is ok with me, when you throw out that facebook-idiot on top. (muhammed...)
New lows in DBA today.
ReplyDeleteFood prices collapsing everywhere, another huge tax break for the mighty U.S. consumer.
Record number of jobs in the hospitality sector and finance, just look at those regional banks go today.
Nobody needs gold or bonds any longer, the more paper fiat we print, the faster our prosperity increases.
Japan and the U.S. now the top performing markets in the globe with the mighty, mighty U.S. dollar making new highs.
Yellen will be able to easily double the QE purchases if necessary any time there is a hiccup in the LEI's.
Heck, Ben has driven commodity prices down so low, even a 40% rally in the CRB index won't really matter much.