Wednesday, May 04, 2011

Review and the Note

    Our newsletter consists of 2 parts:  the first is a review of ALL trades that trigger the alerts from the previous newsletter, win or lose.  The second is a fresh list of new alerts for the next day.   We wanted to share with you the first part of the newsletter that just went out to our subscribers:
    We wrote last night that “Our focus tomorrow are the gold and silver miners” and we wish we had remembered that this morning when we kept getting chopped around in everything else. Note we didn’t list SI_F or SLV last night in the support list– the edge we think is now with the miners and not the commodity.   In the afternoon though the miners set-up and we got off a decent trade but everything else was tough.   Let’s review everything that triggered:

    CLF we wrote would be “cute” to break 90 and quickly scum to 89.3.  It actually worked very well if a) you caught it and b) you took the quick trade.  After that it grinded down all day.    One thing that came up repeatedly today was our rule of  “buy the first test but never the second”.    First test 89.3 worked fast and well, second test was a complete avoid or short.

    UA didn’t come close enough to our 62.5 alert for us to get involved but we wanted to include it to show what a nice support long-set up looks like — see how it’s choppy without an stair step down movement?  That’s exactly what you want.  The stair step down moves following descending EMAs are the most difficult support longs to catch.    Stock spiked down away from EMA into S2 and bounced.

    DE we bought on first square and it worked well until it hit 9 EMA, after that it re-tested and stopped us out (second square) and wasn’t enough of a bounce to take partials.    Scratch trade.

    WLL bounced on 64 near the open (64.02 bounced 37 cents) but second test was failed.   If you wanted it long after that then the place to do was after the EMAs flattened out (blue rectangle).   It doesn’t always work but if you want a support long trade and missed the bottom, then that’s the place.

    We got in near on reversal at noon  near our alert on MOS but took an early scalp exit in it as by that time all we wanted to do was un-do the damage and go green.  We nailed the 200 SMA bounce alert though and know some of you banked coin in this- nicely done.

    Here’s the reason we went red in the morning — AGU 83 we tried catching 2x and lost on both.  Finally got it again when it stabilized but just like MOS, by that time all we wanted to do was to go back green and made a hasty exit and  missed the big run.   AGU had earnings out this morning, and had a lot of volume and was just stair stepping down.  We should have left it alone or gone in with smaller size and wider stop.

    Up until we hit the miners we kept churning our account, barely green.      Here’s what went down in the afternoon (we put out real-time tweets of entry and exits so hopefully that helped).

    GDX SIL hit our supports and even though we didn’t have much confidence left after our morning we thought it would be worth to go small and put some feelers out there.  We bought the basket GDX SIL GDXJ.   As we wrote last night GDX 57 was pretty huge number, with 2 trend-lines and 200 SMA all converging (reason we wrote that miners would be our focus for today).

    We bought small near 37 and SLV bounced on 50SMA, so far so good.  Then we noticed that SI_F GC_F was starting to weaken but miners were not.  We thought about our divergence post that started our whole silver short obsession

    What got us interested in shorting silver was the fact that the miners were pulling back while the commodity went ballistic.  Today we saw the miners hold their ground while silver made a new low — miners sold off first, they will likely bottom first.   As we tweeted at this time we added to the basket (4x add on position size) as the divergence gave us more confidence.    Trade worked great and we hope many of you caught it.

    GDXJ didn’t come to alert but we added it in basket anyway.

    Very nice bounce at 37
    SIL 25 alert worked perfectly

    And GDX 57 even more perfect.

    We wrote in the newsletter last night “Our focus tomorrow are the gold and silver miners” and on top of that the last thing we did last night before going to sleep was to write this note (to re-affirm focus) and leave it on the keyboard:
    GDX 57  GDXJ 36.5 SIL 25

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