It's been awhile since our last post in this blog. Time for an update? Let's go back a year and move forward from there.
Last May we bought UUP, turning bullish on the U.S. dollar while the world was extremely bearish. Few things are safer in life than betting against mass sentiment, especially when that mass includes doom-mongers and all the neophytes adopting gold as their path to riches after a decade-long bull market.
As it turns out, we bought the dollar at the exact low. We remain very bullish and confident it'll go far higher.
Note that these charts can be clicked to see a larger version.
As seen in that post linked above, we were also very bullish HAO. That didn't go so well. It did rise 40% by the following month, with plenty of volume to sell into, but we didn't sell and then virtually anything gold or penny-stock related began a long, slow decline.
We'd expected that and had been predicting it correctly for some time, but we can't ignore a set-up as great as we had in HAO back then. It's now 50% lower, which is actually decent on a relative basis since most penny stocks in the resource sector are down 80-95% since then.
While we've called gains of well over 100% a great many times on penny stocks in this blog, the bottom line is that this one's been a failure for us. At least so far, and that's not likely to change any time soon if ever.
Also in that posting we wrote :
"
For the next while we expect, generally speaking, to see markets and precious metals going down and the US dollar going up.
Those hoping to snag cheap silver as a long-term holding will wish to wait a few weeks and seek a price in the mid-low $20's. Aggressive speculators may try something in the mid-$30's, possibly as early as today and with an advanced understanding of the concept of tight stops and re-buying if need be. Those who bought recently in the $40's, especially the high-$40's, are completely reckless and extremely unlikely to ever make money via speculating."
This chart speaks for accuracy the first paragraph :
And we'll let this chart speak for the the 2nd paragraph quoted above :
Later that month we posted this strident warning. The chart above of the DJIA proves how prescient this warning was. As does this chart of Goldman Sachs :
Don't laugh too hard at the Apple short call, it proved profitable as subsequent posts will show when we recommended balancing it with a hedge.
The suggestion to consider the leveraged market short positions proved extremely profitable for those who traded on it.
Finally,
last May we added FXP which is an effective China market short. A few months later, it was 100% higher though we booked profits much lower for a gain of "just" 32% on that half-position.
In June we offered nothing new, or valuable, really.
In August, we booked some big gains on short positions and entered TBT too early, though we warned "
we'd not be surprised to see it as low as $20 but if it gets there we'll possibly buy more." It went below $18 in fact, and has bounced around since. We've not yet bought more, nor do we plan to soon. If markets continue lower, which is quite possible, TBT might hit the $12 range. We'd be tempted to add then.
In August, as seen in the link above, we also wrote that "
it's a great time to short silver" and we did so at virtually the exact top (see SLV chart above). We also wrote that "
Gold is up nearly $200 this month so far, as a "flight to safety" which ironically will eventually prove to be anything but safe, as is everything else that goes parabolic including silver when it was at $50 at the beginning of May. Gold might not be at a top yet, but silver was in early May when it crashed and now its bounce seems over and the next leg down begun." and "
we're of the very unpopular belief that silver below $30 is not far off."
Silver crashed to below $30 just weeks later, and gold marked its high that month. Going forward, for both "precious metals" the phrase "new low" will probably be heard much more often than the familiar "new high" of the past decade.
The ZSL calls suggested were soon up hundreds of percent. The TNA calls suggested never came into play for us as the "
one more big downward move" we were waiting for didn't happen until 2 days before the August options expiry, which was too late. Plus the bounce we were expecting had already happened, with TNA popping up 27% in just 3 days.
In September, we sold half the ZSL silver short position for 62% gains and further commented on silver through the month.
We were back in November, booking gains and commenting on China, as well as re-loading our China short to a full position and rescinding our previous stop. A couple weeks later FXP was over 30% higher but we held on, and shortly thereafter it was below the "
well-defined support" we'd cited. Now it's back above our entry level and it's starting to become better known in the mainstream, and officially admitted to some degree, that the China economy is in trouble but we're of the firm conviction that a lot of rot remains hidden.
On a logarithmic scale, we find that FXP is just $1 under its almost 4-year long major downtrend, and $2 below its 200-day moving average. Perhaps the China market bounces and FXP drops from this technical resistance above, but if not then it's a must-buy above $30. We might add to our position in that case, with stops on the additional short entry on closes below $27. We've no stop on our existing long-term short.
In December our only posting was an outlook for 2012. At this point everything we mentioned in it is at roughly the same level it was when we made that post. We've yet to take another short position on Brazil. Too bad, as BZQ is up over 50% since early March so we probably missed the boat for now. Timing is everything ...
Which brings us to January, a month in which we went long GS when virtually everyone was bearish and we booked a good gain just two weeks later but too early as time would tell. It's now lower than our exit however, yet we're not considering a re-entry at this time. Aggressive speculators will consider our outlook for 2012, linked above, and perhaps go long GS with the stop levels we'd offered in mind as those still apply in our view.
The Best Buy short we suggested near the end of January was well-timed. Here's a chart :
But timing also worked against us. We prudently lowered our stop level before the March spike in price and were stopped-out with a very small loss (1%). Being totally correct in our thesis doesn't make it a given we'll make money trading on it. No regrets using prudent stops though. Those who remained short are sitting very pretty, and we suggest might wish to book at least some profits unless they're intent on riding out volatility and holding until the bitter end.
The VIX calls turned out to be basically a bust.
February. We were again early shorting Apple and this time took a loss of around 5%. It finally topped about 6 weeks later. Could go higher, certainly. Could also be at its all-time highs.
We were also early re-loading on our silver short ZSL, losing roughly 4% when stopped out. It's now much higher, but at least we still have half our original short position (see above) and the 62% profit we booked on the first half more than made up for the small loss on the re-purchase of that sold half-position. Again, no regrets using prudent stops. That policy saved us potentially massive grief and loss on AAPL.
Against widespread belief, we predicted in February that there would be no "QE3". We received several questioning emails and even mockery over that call. So far, there's been no QE3 nor will there be we believe. Even if there eventually is such a move, the 3rd time won't be a charm - it'll be too late and prove to be too many trips to the proverbial well, in our opinion having virtually no effect in the real economy or in the stock market.
In March we offered general commentary, but no trade ideas. SRG popped nicely from our entry, and we remain bullish on it with an over sized position (for a penny stock).
In our paid advisory we went short gold in the last week of March and that's paying off well. We've subsequently been made aware of a gold advisory service that boasts a better record on trading gold and silver than we do. We'll give it a shot as subscribers and report here in the future if we feel it's also worth your consideration.
We receive no remuneration or incentive directly or indirectly in any way, shape, or form for buying or selling the positions we do, or for mentioning any positions or companies in this blog. If we hold existing positions we divulge the fact. This blog is merely a diary of some of our thoughts and trades and is in no way whatsoever to be considered investment advice of any kind. Always without fail consult a competent, experienced, and honest broker or investment advisor before making any investment or speculative decisions.
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