selling SAN +251%, EMC +151%, UEX +71%, URE +57%, SGC -12% and shorting ERTS
Some selling to preserve profits. All these trade in Canada :
SAN, Santoy Resources for a gain of 251%
Originally called almost 7 months ago on August 7/06
EMC, Energy Metals Corp for a gain of 151%
Originally called 6 months ago on August 28/06
UEX, UEX Corporation for a gain of 71%
Originally called 6 months ago on August 28/06
URE, Ur Energy Inc. for a gain of 57%
Originally called 4 months ago on October 23/06
SGC, Sunridge Gold Corp. for a loss of 12%
Originally called 3 months ago on November 22/06
We are not bearish on these companies but we see major downside in the charts of these stocks before their long-term trends and support levels are reached, at which time we may re-enter. Sales such as these provide us with the capital to do so if the time comes.
Here's how the action represented in this blog, started in August 2006, now tallies :
Before this post there were 19 sells noted. Of those, only 4 were losses. The average over all 19 sales was an overall gain of 25% The average loss was -14%. The average gain was +35%
After the sales noted in this post, the average gain of stocks sold will be +41% (based on today's closing prices) with 5 losers out of 24 sales.
The stocks held before these sales are up an average of +40% After these sales the remaining holdings will be up an average of 27%, not counting dividend gains or our profitable calls on gold and silver.
Our plan has been stated for some time to lighten-up on holdings going into what we expect to be the start of a long down-trend in the general markets this spring. We believe that yesterday will, in time and with the benefit of hindsight, prove to be the first clear indication of it.
If the broad market rally continues, we've got plenty of good holdings and will continue to realize gains. However if yesterday's collapse resumes and continues through March then we'll be glad to have booked the gains represented in these holdings we're selling. A win/win situation.
We note that extreme moves like Tuesday's are often followed by a minor move in the opposite direction, which we did see in Wednesday's weak bounce, then another major move in the initial direction which we expect to happen Thursday. We also note that often when a month starts with an extreme move, that direction is likely to hold for the rest of the the month. Ergo we are not bullish on March, especially given that the extreme gains we've enjoyed the past 5 months mandates consolidation if not retraction.
The Canadian markets we expect will fare better in the long run than US markets, but for now both markets are extremely overbought and we believe there is a lot of easy gains and margined holdings to be shaken out. As noted above, we may re-enter some of these stocks in time but for now we are happy to step aside.
Looking forward, in the general markets we expect a trap rally to levels circa last week's highs at best before a new bear trend emerges. However those who follow the DOW as measured in gold or most foreign currencies will know that this is actually a continuation of a bear market that began in the spring of 2000, but when measured in the collpasing US Dollar it appears as if the US markets have rallied in past few years. Click on this text for an illustration and explanation.
Back to our main point here, a small rally would serve to shake out the amateur shorts who may have piled-on at yesterday's lows and will also trap the overzealous bulls who would buy in at very high levels. That's the ideal time to short, and if the markets do break to new highs then perhaps cover with tight stops for minimal losses. That's the cost of doing this business.
It may prove a bit premature, but in case there's no continued bounce at all we'll add to our short holdings a position in ERTS on the NASDAQ market at $50.42. We feel that the chart looks right for it, and if the economic fallout is indeed finally happening we believe that frivolities such as video games and video game consoles will be among the first expenditures to be curtailed. This also fits into our standing plan to increase short positions. We would likely cover over $60.
We remain gold, silver, and uranium bulls.
posted by C. Guinness @ 2:26 AM
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