Here is a kamikaze variant: http://runredhot.com/?p=4338 (short gold, long gold miners because of the recent breakdown in correlation). Could be ingenious, but I don't think I have the guts for this one.
Dow Gold Ratio
June 22, 2011 - 6:58pm
#63
Food for thought
June 22, 2011 - 7:20pm
#64
re: variants
It's funny you mentioned that, because I watch a ratio just like that in order to keep an eye on the excitement level in the gold/miners market. GDXJ/Gold Ratio.
http://stockcharts.com/h-sc/ui?s=gdxj%3A%24gold
When everyone is bullish, excited, piling in, the ratio rises. When everyone is in a funk and walking away, it falls.
Got a feeling that things have shown a bit of a pulse this week after such a long hard slog? Well, there it is right on the chart these last couple of days.
I'd have a hard time trading it though. It's just not in my DNA to be short gold. :)
June 23, 2011 - 3:23pm
#65
Bought some FSG
I added to my DGR trade today by buying some FSG.
June 23, 2011 - 3:43pm
#66
Me too
... and I said I never would. Looked like a good day to do it with gold down quite a bit vs. the SPX this morning.
June 24, 2011 - 11:11am
#67
FSG
I added to my DGR trade today by buying some FSG.
Trying this out, bought some FSG today 28.45. That's my only DGR trade right now. I'd like to hold it through to at least Sept. Any thoughts on how badly this may/will decay over time?
June 24, 2011 - 11:35am
#68
Pailin
Welcome aboard the DGR bandwagon!
FSG is so new and thinly traded that there's not much track record to backtest or anything. See my comments above regarding a backtest of some of the other ETF's, decay, etc. I'm sure there will be some.
I paid 29 for mine yesterday, so you are already looking smarter than me! (That don't take much sometimes)
June 24, 2011 - 11:43am
#69
FSG - Eric Original
I put a bid in pre-market for 28.55 (based on daily Bollinger bottom). I was instantly creeped out when I got the trade for .45 at open. Thinly traded indeed. It feels like a sucker bet, but I guess what the hell, I've been throwing money away all over the place lately, why not some here too? Can you tell I'm grouchy :)
We'll both be grinning idiots if gold goes really green and indexes crap out. I guess we'll wait and see. Do you have a horizon to close, or just day by day? I'd like to hold this until Dec 31 (get full gold "season"), but the weirdness has me spooked on planning to be in that far out.
June 24, 2011 - 12:04pm
#70
pailin
I think there could be a lot of weirdness all summer long and through October. So my original plan was to put this in place and forget about it until Halloween. But as a result of thinking through things on this thread, and getting concerned about decay and tracking errors, I guess now I'm a little more day by day. If, whether by luck or guile, we get nicely into the green somewhere along the line, I might just take it and run.
June 26, 2011 - 1:01pm
#71
FSG
Is truly a day trading vehicle. Unless you catch it perfect.......well. Keep in mind that until some new form of stimulus is announced, the equity mkt can only trend down. Probably take some huge losses to get another stimulus. That will pressure miners and it may pressure physical. After all, one of the reasons that commodities including gold, are up is the QE parade. Without that, well we just lost an engine Maverick. I say if you are not trading everything from the short side now, stay out and wait for the train to leave the station on the upside before you commit. You and I don't know where the mkt will bottom. Why slit your throat trying to guess.
June 27, 2011 - 2:58pm
#72
short equity index on close today
buy dxd today on close. On pace for lowest volume day so far this year. This is window dressing for quarter end. No QE announcement yet. Going to take big mkt sell off to get that. Layer into it. Some on the close leave dry powder for tomorrow if necessary.
June 27, 2011 - 3:07pm
#73
yup
Was thinking the same thing, to pick up a little DXD. Not paired with any more UGL for now, just as a stand alone.
June 27, 2011 - 11:30pm
#74
Little uptick in the DGR
If you go back to comment #62 on this thread, you'll note that I was kind of expecting an uptick in the DGR, and then when it didn't come I kind of gave up on it.
Well now it looks like we got it after all. Back up to 8.05 today. Maybe has a little more to go, maybe to the 50 day at 8.14? Anyway, if you were thinking about putting on a DGR trade, you've got a better entry point now than just a few days ago.
http://stockcharts.com/h-sc/ui?s=$indu:$gold
June 29, 2011 - 4:23pm
#75
FSG sucks
I'll be dumping my FSG soon.
I don't mind that it's down. It should be down since the DGR ticked back up a little. But the volume is so horrendously thin, and the tracking seems to be horrible. Plus it's got more leverage to it than I'm comfortable with. I like my DGR pair trades to be more of a set-it-and-forget-it proposition.
With DXD/UGL, you can pretty much glance at the Dow and at gold and you pretty much know where you stand.
With FSG it's just WTF?! every day.
June 29, 2011 - 6:23pm
#76
Eric Original wrote:
With FSG
With FSG it's just WTF?! every day.
Yeah I hate it too. I should have done more due diligence before jumping in.
July 4, 2011 - 11:01pm
#77
Mercy!
Oof! We sure got blown out of this one in the last couple of weeks. The DGR spiked back up from 7.80, past the 50 MA around 8.14, past the 200 MA around 8.36, and all the way up to 8.49! My position has gone from green to red in a hurry. Still own it though. The long term trend for the DGR is still down IMHO, but nobody said it would be quick or easy. Be interesting to see where we can finally begin to hold some ground.
Or are we entering a new age of preference for paper over real stuff? I doubt it.
http://stockcharts.com/h-sc/ui?s=$indu:$gold
July 6, 2011 - 7:53pm
#78
I cried "Mercy" at just the right time
Bounce back down to 8.26 so far this week. Whew!
Still underwater though...
July 6, 2011 - 7:53pm
#79
Had to post this commentary
Had to post this commentary with all its links. Awesome info!!!!!
http://www.pinnacledigest.com/blog/stewart-thomson/gold-analysis-liquidity-flows-maul-macd-rsi
Will enjoy all your feedback
July 6, 2011 - 8:05pm
#80
crackor
Of course, I'm a closet gold permabull myself, so I'm sympathetic to the article. But the point of the Dow Gold Ratio trade is not simply to be bullish on gold. It is to maybe hedge your bets a bit by figuring that even if gold might be flat or down for a bit, it will still show relative strength vs stocks for years to come.
Still, I am never bothered by a gold permabull article. It's talking my language. Thanks.
July 6, 2011 - 8:44pm
#81
Another Dow/Gold investor
I put 25K in DXD and UGL both back in May when I read Eric#1 was going to. It made and still makes sense to me. I've lost about 2K (both are loosers) but I can't imagine the Dow continuing to climb.
I'm a buy and hold investor so don't check my account much, never read this site much for other reasons anymore either. (thanks so much for answering my post, Eric #1)
I will admit, while UGL hasn't disappointed DXD sure has.
I'm not sure of the 1x ETFs like DOG (although I consistanantly bought thinking the Dow would drop would be leveraged enough for me. I like the 2x leverage I'm getting.
'DROP DOW! DROP! (What on earth is keeping the Dow up now that QE has ended??)
I hold this as a long term thing and plan on keeping it that way unless I find any novel ideas here that would do the same thing (I'm in an IRA so I'm limited in what kind of trades I make.)
I kind of think the big moves will come later in the year. Once gravity returns to the Dow and sanity to the PMs.
I honestly believe (but take it for your own checking) that within our life times the ratio will hit 1:1
OFF TOPIC: Two weird things happened to me today: 1. I went to my diabetes doctor today and as I was leaving he said, "Buy a lottery ticket. You will win tonight." Which was awfully unusual and had a kind of preturnatural sense so I bought one. And in the line returning from Mexico this afternoon, a little child knocked on the car door and when I reached to give him a dime, he handed me a vial of Ketamine which is awesome since K is a big driver of my investment decisions. My husband under the influence, just stood up and said "Gold will be up tomorrow." We'll see tomorrow if he's right.
May we all reap the profits that we deserve.
Ogúnlaná
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If you were thinking specifically about the Dow Gold Ratio, and not really about the miners, I'm surprised the DGR has flattened out in the 7.8-7.9 area. I thought that after dropping from 8.5 to 7.8 in a month that it was due for a bounce. Maybe back to 8.10ish? But no such luck. The DGR is feeling weak, like it wants to drop some more, and your post from tsitrader would fit right into that like a glove.
http://stockcharts.com/h-sc/ui?s=$indu:$gold
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