Wow, just wow.

Obivously this guy has recently been shorting the metals and painting dire predictions.  We will see if you are right.

I dont think he can do that from his jail cell.

SIM, congratulations for getting out when you did.  Hope you're enjoying your business.  I may soon get back to my work full time as well.

Like yesterday, we're getting a pre-Shanghai pop in gold.

Like yesterday, I'll watch two intervals to figure out when to switch to my shorts:

• 9:00pm - 9:30pm EST  (opening minutes of Shanghai and Hong Kong)
• 1:30am - 1:50am EST (I'm not exactly sure what makes this interval such a good indicator, but it corresponds to Shanghai back from lunch break.)

Weakness in either of these intervals is a big flag to switch to the shorts early (instead of waiting for 2:30am EST).  This is trebly true since the bottom fell out of the Asian bounce starting around April 9th.

This modification has continued the profitability of the time-of-day gold trade for the month of May (though I'm only slightly in the black for the month so far).  Instead of focusing on conditions which indicate when to add longs in anticipation of an Asian bounce, I've switched to looking for conditions which indicate when to go short early.  Also, I've been betting twice as much on the short side as the long side once I realized that Asian buying did a 180 degree shift from stiff to limp.

I'm expecting something similar to yesterday (a pre-Asian pop, followed by an Asian drop), but I'll let the price action tell me what the market might do.

Going short during Asian hours and covering during early NY hours has been my money maker for the last couple weeks.  The silver lining for the losses I racked up early in the month trying to play the long side of the Asian gold bounce: it became very obvious that I need to do the opposite!   (That long Asian bounce gold trade has been a loser 5 of the last 6 days!  Even with a falling market.)

I'm continuing to do more study on past instances of weak price action during Asian hours.  I'm convinced there are very strong indicators here of future price action in gold.  (If that is true, we're not close to a bottom yet.)

Here are some stocks to look at for Tuesday morning.  these change every day.

from Larry Connors.  I thought it interesting because there is Morgan Stanley and a couple of metal companies mining etc.

Larry would buy for a short term pop up.  usually he holds for about 5 days or less.  He also likes to buy on a drop tomorrow.  sort of like what is done with pivots.  but he does not use pivots.   He likes to buy on a short term oversold condition.  His computer programs over many years show he has a winning method.  

Do not blame me for any stocks on this list.  He comes out with a new list every day.  I am simply the messenger.  

Here are 7 Stocks you Need to Know for Tuesday

 

1. Thompson Creek Metals Company, Inc. (TC)

Last % Change: -6.35% Edge: +7.17% RSI(2): 4.95 Days Down:2 New Lows: 5-Day: yes 2-Week: yes

Just above its 52-week low, Thompson Creek Metals Company, Inc. is deep in oversold territory. If it can obtain the funding it needs to open its proposed new mine, it could see substantial gains in production and revenue. Investors are eagerly awaiting the earnings report scheduled for tomorrow.

2. Morgan Stanley (MS)
Last % Change: -4.35% Edge: +3.61% RSI(2): 3.05 Days Down:2 New Lows: 5-Day: yes 2-Week: yes

Bank stocks dropped across the board today, with all the big names seeing at least a 2% loss. Despite recent downgrade threats, some analyst’s expectations for Morgan Stanley are to outperform price estimates.

3. Amedisys, Inc. (AMED)
Last % Change: -3.51% Edge: +3.30% RSI(2): 22.27 Days Down:  N/A New Lows: 5-Day: no 2-Week: no

Top hospice and home healthcare company, Amedisys, Inc. met its projected revenue goals for Q1 is its report last week. Analysts expect further growth in the stock and in its earnings per share going forward.

4. Apollo Group (APOL)
Last % Change: +1.88% Edge: +1.04% RSI(2): 41.73 Days Down: N/A New Lows: 5-Day: no 2-Week: no
After news of industry-wide cutbacks and fraud within student-aid funding, the education sector dropped sharply on Friday. Shares of Apollo Group dipped below its 52-week low and are still in oversold territory.

5. Health Net, Inc. (HNT)
Last % Change: +.045% Edge: +0.73% RSI(2): 30.45 Days Down: N/A New Lows: 5-Day: yes 2-Week: yes
Moody’s raised its outlook for Health Net, Inc. from stable to positive on Friday. Investors are keeping an eye out for the presentation management is giving at the Merrill Lynch 2012 Healthcare Conference tomorrow. The stock currently remains below its 50 and 200-day moving average.

6. ArQule, Inc. (ARQL)
Last % Change: 0.00% Edge: +0.69% RSI(2): 10.95 Days Down: N/A New Lows: 5-Day: yes 2-Week: yes
After beating projected revenue estimates at its Q1 reporting last week, ArQule, Inc. shares are below its 200-day moving average and are very oversold as of the close today.

7. Kodiak Oil & Gas Corporation (KOG)
Last % Change: -1.80% Edge: +0.69% RSI(2): 17.32 Days Down: 1 New Lows: 5-Day: no 2-Week: no
Kodiak Oil & Gas Corporation announced it is raising a private offering of senior 2019 notes from a previous $100 million to $150 million after todays close. Selling of the stock has been aggressive over the last 2 trading days.
 

I've got a particular method for monitoring and position sizing for the Asian gold bounce (long) trade.

This trade started failing in the 2nd week of April, and has been a consistent loser since.

From 2007 until now, there is really only a single time period where this trade performed consistently badly: from November 2008 through May 2009.  (A 7 month period!)

This does not correspond to a particular kind of price action in gold, but seems to correspond to market fears about deflation.

I am taking this to mean that consistently bad price action during Asian hours is an indicator of serious deflationary trouble.  (I don't know how true this is, but I'm going to assume it is true for now.)

Another thing is that I believe it is also an indicator of Chinese and Indian gold imports.  If this is correct, Chinese and Indian imports for April and May will show a strong drop relative to prior months.  This has been verified for Indian imports in April, but further data is needed to verify the rest.  (You can see a LOT of articles still coming out touting the very strong Asian imports for Q1 2012, but if I'm correct, that data is stale and misleading.)  I'm dying to know if I'm right about this.

SilverWealth's last post really got me thinking and got me to look at the bigger picture.  That turned out to be very helpful for me in dealing with the down/up action of the last couple hours.  (Unfortunately I lost almost all my momentary short profit, but I was able to prevent a loss and turn it into some long profit.  Small profit -- it's booked and I'm off to get some sleep.)

SilverWealth can say whatever he wants!  Sure works for me.  I'm sure most feel the same way.

(By the way, the reversal in commodity prices seems to be mostly due to surprisingly good GDP data out of Deutschland.)

Does this London bounce portend to higher PM prices? There could be nice corrective run here in risk if Plunge Protection get moving on the S&P. The Euro looks to correct to resistance lining up with others ready for a corrective turn. I also like the USDJPY a little lower making for a possible long entry.

Eric King dispatched Embry (slender-framed regular known for his high leg-speeds, long reach, and versatility across multiple terrains) to seek out SilverWealth and run him to exhaustion.