Interesting Dichotomy In The Metals
10/24/2010 7:20:07 PM
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Trade Actions:
None at this time . I would like to see what comes out of the
G-20 meeting this weekend. Maybe by Mid-week after certain dust settles.
Start Moving Up The Stops AGAIN
Market Outlook/Potential Opportunities:
Unbold is last week's commentary. Bold is this week's commentary.
I see nothing changing here. The market will take out stops like ours and continue to tread higher. I still see several possible scenarios that the stock market could take, but the one that I would be betting on is higher, at least for now. Now per my last week instructions, hypothetically we got stopped out of a couple of positions only to see them go higher. Reality is that I stayed with my positions and let me explain why. I should of explained this better last week what it is that I look for when I put in a stop. In this environment, I am trying to look for a key reversal type of day or even week in order to get stopped out. Last Monday was kind of a dull listless day down from the get go. I did not want to put my stop in at that time, but I also could not take back what it was that I wrote to my clients. I want my stop installed after a early morning rally, followed by a key reversal back through a day's pivot. We have talked about stops off of pivots points in the past and I will write about them again if need be. Sometimes I like to follow the logic of fool me once with your swan dive down, shame on you, you ugly market. Fool me twice with a secondary swan dive down and shame on me for not having a stop in place. Fool me a third time with a swan dive down and I need to check my brain in at the door as I do not want to receive Get Well Cards from the IRS.
Tough call going forward. Our minimum targets are almost met. I would expect a rolling type of top with a lot of backing and filling. Different sectors taking turns trying to run higher then failing, then moving ahead again. I do believe that the rest of the year will be a bullish tone. Move up stops in order to protect profits.
This week we will be going with a straight stop on all positions. Nothing fancy. I am still seeing an acceleration to the upside but with the G-20 meeting this weekend, it would not surprise me to see a turn. Also, had we of been using a straight stop we would of been out of all of our positions. Instead we are waiting for that stop to get hit again in order to take us out. Remember the fool me twice rule. We were not as lucky on KWT and GLD. The market here hit our warning stop. After a one day rally, the market hit the stop again. This is where we got stopped out.
Boy Oh Boy! Did the Oil market bounce up to close the month on a strong note. Interesting, I saw it coming on in the Futures market but there seems to be a little bit of a lag in the ETF market and therefore I am finding the Oil trade to be a tough call here. I do feel slightly bullish here. Problem is that I am not willing to put my money where my mouth is. We are already long two energy plays with KWT and NLR, so that is good enough for me. Here again, some of you might of been stopped out. I myself am still long these two markets. No change here either. These two appear to be going higher, but backing and filling might happen. I am not interested in the Oil market at this time but if the Dollar continues to stay weak, that should transfer into higher oil prices.
Well we are finally out of the KWT trade as it sliced through the stop twice. Remember the fool me twice rule. This was a tough trade for me to swallow. I was optimistic on this one. NLR is still showing good relative strength. I hope that we can stay with this one. The profit target looks to be 27 on NLR.
Well call me a FOOL, but Gold and Palladium are looking good here. I bought a Palladium futures contract last week. Buy GLD and PALL at the Market.
Well we are long and profitable, but talk about being late for the party. The hors d'oeuvres are already gone. Maintain stops in case of a reversal, but I do believe the stage is being set that hard money will accelerate over paper money.
Nothing has changed here. We were late but still profitable and even though it looks like we are in nosebleed territory, the monthly chart suggest these markets could really accelerate to the upside here. Still maintain stops.
The acceleration happen, then back filling to keep the week hands guessing. Will we accelerate again ? This is anybody's guess. We just like to ride the wave. We have our stops band if we get knocked off the surf board, so what. We just catch the next wave.
This is a very interesting dichotomy. We got stopped out of Gold, but Palladium is accelerating to the upside here. We are going to have one of two scenarios here. Either Gold has finished its correction and will start moving up, leaving us in its wake or Palladium will take on one more sharp rise before falling back along with Gold. Should be an interesting week in these markets following G-20
Well I have to admit that I broke away from the Fat Pitch methodology when I made the trade for TBT. I had preconceived notions about what interest rates might do and that influenced my trading decision here. Because of that, I am finding it difficult to take a measurement on a stop. Truth be told we should of been stopped out of this a long time ago, waiting for a better opportunity. We got some relief as this market has now corrected in our favor. Still I would not be surprised to see this market once again swing against us for the short term, so the choice of what to do is up to each individual. I just cannot seem to measure a stop loss here and I am going to try and stay with the position for now.
The Bond trade is finally moving in our direction.If the price is right, I might throw one of these virgins into the fire and just stay with one position. Truth be told we should throw out both positions. Our money would of been better served somewhere else. I am finally breaking down here and putting in a stop on both of them. One cannot tie up their money forever here.
Current Long Portfolio
| Bought PIV (Value Line Timeliness Select) at 11.45 | It closed at 12.74 |
| Put in a Sell stop at 12.65 | |
| Bought PALL (Palladium) at 50 It closed at 58.9 | |
| Put in a Sell Stop at 56.6 | |
| Bought FXI (China) at 40.2 | It closed at 45.67 |
| Put in a Sell Stop at 45 | |
| Bought QQQQ (Nasq 100) at 42.5 | It closed at 51.6 |
| Put in a Sell Stop at 50.7 | |
| * Sold on a Sell Stop at 48.3 | |
| Bought NLR (Nuclear) at 19.9 | It closed at 22.2 |
| Put in a Sell Stop at 21.6 | |
| * Sold on a Sell Stop at 20.9 | |
| Bought TBT (Ultra-Short 20 year Treasuries) at 38.20 | It closed at 33.4 |
| Put in a Sell Stop at 31 | |
| Bought TBT (Ultra-Short 20 year Treasuries) at 35.8 | It closed at 33.4 |
| Put in a Sell Stop at 31 | |
| Bought EVX (Environment Service) at 41.5 | It closed at 47.8 |
| Place a Sell Stop at 46.7 | |
| * Sold on a Sell Stop at 45.3 | |
Current Short Portfolio:
None
Recently Closed Positions
| Bought GLD (Gold) at 121 |
| Sold on a Sell stop at 129.7 |
| Bought KWT (Solar) at 13.25 |
| Sold on a Sell Stop at 12.5 |
Thank You
If you want to contact me send me an e-mail bill@stockbarometer.com
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Author: Bill West
Bill West
Fat Pitch ETF Advisory
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