Pailin's Trading Corner

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Sun, Sep 25, 2011 - 5:46pm
DefiniteMaybe
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Potential Swing Trade: Any Thoughts?

Hey Traders,

I’m an amateur trader and I would like you traders to weigh in on a potential swing trade I see coming. My thoughts are to short silver over the next couple months using Dec/Jan12 SLV Puts in the 20-25 range.

I started by looking for similarities in the price of silver for 2008 and 2011. The similarities may be due to what’s going on in the financial markets. In 2008 it was a liquidity crunch due to the Lehman Brothers bankruptcy and banks postings loses due to MBS’s, CDO’s, CDS’s, etc. This time around the liquidity crunch is being caused by European banks and their sovereign debt holdings. Though not exactly perfect, there is what I believe to be an approximation in silver price for the years in question.

From the charts I put together a table of key price points and their respective dates for silver beginning with the tops in silver on 3/5/08 and 4/29/11 (see below). I included the 200DMA as a guide to determine relative high and low swings points versus the daily close and to produce the RELATIVE column. (Based on Adam Hamilton’s analysis, when the daily price of silver is >1.40 (relative) to the 200DMA, that is a sell signal. When the daily price <0.90(relative) to the 200DMA, that is a buy signal. Over the course of the silver bull market this has been a very good signal of when to buy and sell.)

I could be completely wrong on this, but my gut and chart analysis expects a retracement over the next week or so to around $34. Then I expect a continuation downward given the weakness in the economy projected by the drop in commodities prices via the CCI. If this analysis is even close, I’ll be looking for a bottom around the last couple weeks of November and the first two weeks of December. The bottom will be in when there is an announcement by the Fed and/or coordinated action by the CB’s because of the pain in the markets to do something. This analysis flies in the face of PM seasonality, but then again who could have foreseen this kind of price drop in silver? Will see over the next few months how this pans out.

I would some experience traders to comment on this and let me know if I am way off or if this is a successful potential swing trade.

Sun, Sep 25, 2011 - 5:49pm
DefiniteMaybe
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BTW: Thanks 41

It took some time, but I figured out a way (gawd am I slow) to upload the files without using photo bucket. Thanks for the tip though.

DM

Sun, Sep 25, 2011 - 6:27pm
atlee
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Yea thats freaking brilliant

Yea keep talking about shorting a market that has dropped 26% in a week. That is freaking brilliant.

This market is moving faster than you can obviously think. But go ahead and take the rest of the reactive souls with you please. That is the powder we need to prime the pop.

If you are going to be in THIS market, you need to be faster than asking for comments on a proposed short position.

Geez.

I am NOT saying you cant profit from the short side, but you better be nimble and understand your risk.

I suggest you stand aside until things have calmed down. Or maybe just go ahead and send a check to the Morgue.

Sun, Sep 25, 2011 - 6:35pm atlee
CYM
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The time to short was last

The time to short was last week Monday, Tuesday, and/or Wednesday. Shorting now is crazy. Wait for the bottom then go long. If you want to short something, short financials.

Sun, Sep 25, 2011 - 6:42pm DefiniteMaybe
Sockeye
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Opening in Asia

the night time market opened at 6 pm sunday night new york time. It almost immediately went down $2 to $29.

Not a good sign. It looks like more weakness.

I am almost always wrong. But the fun in life is those few times when I am right.
Sun, Sep 25, 2011 - 6:50pm
Dr G
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The best way to make money

The best way to make money now isn't to short silver--it's to BUY physical silver at crazy low prices. A tube of ASE for under $700?! Awesome!

Sun, Sep 25, 2011 - 6:50pm
Blorf
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There's nothing left to short

There's nothing left to short at this point except large cap tech (AAPL). Everyone has rushed into that cash horde as a safe haven. If hedge fund and mutual fund redemptions keep up, that will be what gets sold.

Sun, Sep 25, 2011 - 6:52pm CYM
Sockeye
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CYM wrote: The time to short

CYM wrote:

The time to short was last week Monday, Tuesday, and/or Wednesday. Shorting now is crazy. Wait for the bottom then go long. If you want to short something, short financials.

I respectfully disagree. It is never too late to short silver. The Point & Figure Target is $16. a point and figure person who wants that target would find this early to short. the market only went from a long to a short bias on thursday and friday. It has just begun.

All trading is dangerous. but I believe that in general shorts hold less risk then longs because the market always drops faster than it goes up. so you have the risk on for a shorter time. thus you hold less risk on a short. The markets are always offering opportunity. Right now the opportunity is to go with the trend and the trend is now DOWN.

The time to short was last week Monday, Tuesday, and/or Wednesday.

I disagree because back then the trend was still up. a trader should only made trades with the trend. Now the trend is Down. so it is now time to go short.

I am almost always wrong. But the fun in life is those few times when I am right.
Sun, Sep 25, 2011 - 6:56pm
sp001
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silver is acting like equity

silver is acting like equity market right now....at the open, dollar down right now -0.60%, spy up 1.08%, silver up 1.16%, gold struggling at 0.1%

Sun, Sep 25, 2011 - 6:59pm Sockeye
sp001
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if u believe we r in a

if u believe we r in a downtrend (daily MA all turnin now) then why would u short silver right here with RSI so low? wouldnt u wait for a bounce first to clear oversold conditions?

Sun, Sep 25, 2011 - 7:08pm DefiniteMaybe
RedRover
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Re: Potential Swing Trade: Any Thoughts?

Definite Maybe,

re: your proposed Dec/ Jan puts. Your price point could very well be accurate,
but I'd expect it to be in a short term time-frame (within the next week or 2). People
will buy at these rock bottom prices and I anticipate us heading right back up.

I mean, c'mon.. Hunt Brothers it reached $47.80. Inflation adjusted
that is $131.12 & you want to do a semi-long term put? You asked for
opinions and I wouldn't do it b/c QE to infinity is the gov's only solution.

For arguments sake.. why are you thinking this way?
What's your rationale? For what it's worth, I anticipate
gold and silver to reach major highs by 1/2012.

Cheers!

Sun, Sep 25, 2011 - 7:11pm Sockeye
CYM
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Sockeye wrote: CYM wrote: The

Sockeye wrote:
CYM wrote:

The time to short was last week Monday, Tuesday, and/or Wednesday. Shorting now is crazy. Wait for the bottom then go long. If you want to short something, short financials.

I respectfully disagree. It is never too late to short silver. The Point & Figure Target is $16. a point and figure person who wants that target would find this early to short. the market only went from a long to a short bias on thursday and friday. It has just begun.

All trading is dangerous. but I believe that in general shorts hold less risk then longs because the market always drops faster than it goes up. so you have the risk on for a shorter time. thus you hold less risk on a short. The markets are always offering opportunity. Right now the opportunity is to go with the trend and the trend is now DOWN.

The time to short was last week Monday, Tuesday, and/or Wednesday.

I disagree because back then the trend was still up. a trader should only made trades with the trend. Now the trend is Down. so it is now time to go short.

I'm not saying it won't go down further, I just don't think it has much more to fall. I freely admit I could be completely wrong, because these markets are completely broken right now. Intraday shorting might work, but I still wouldn't do it. I'm sticking with shorting financials. I've been playing FAZ/FAS for months now with good results. The financial problems have not been resolved and until they are I will continue to short them on every rally.

YMMV... Good Luck =)

Sun, Sep 25, 2011 - 7:14pm sp001
Dr G
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@sp001

Silver up 1.16%? I show it down almost 2%

Sun, Sep 25, 2011 - 7:23pm Dr G
CYM
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7:22pm est Netdania spot down

7:22pm est

Netdania spot down ~2%

Finviz futures up ~1%

Sun, Sep 25, 2011 - 7:41pm CYM
D E
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Go Green?

Seeing some green tonight in gold, silver, oil, copper, corn and rice. Might be Uncle Rubber, might be Granny's canasta club, but it doesn't look like panic selling due to margin calls. Kudos to short sellers last week, but this week just starting...

Just sayin'

GLTA

Sun, Sep 25, 2011 - 7:43pm
Eric Original
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Beemer

Welcome aboard!

To post youtubes just find the one you want, copy the link, and paste into the comment box.

We'll be looking to you for some good BBQ recipes...

This isn't a metals blog anymore. It's a right wing circle jerk, masquerading as a metals blog.
Sun, Sep 25, 2011 - 7:44pm Eric Original
beemer
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WILL DO

Thanks very much Eric

Brenda miller
Sun, Sep 25, 2011 - 7:44pm
DefiniteMaybe
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Comments Regarding Chart Analysis: Thanks!

Thanks for the comments guys. I really appreciate the critical look at this potential trade. This is the reason why I came here.

@41: Wow, if the prices drops to that level that quick, then I will certainly be going long after the dust settles. What's my rationale regarding this trade? That I would go short once there is a bounce around this level. That is, if there is a bounce similar to '08 as it went down below $9.

@atlee: There is a reason you have so many hat tips. And I am glad you chimed in. (I didn't realize Keith R was a trader as well .)

DrG: We're on the same wavelength.

@SP: Exactly, I would wait for a short term bounce before going short.

Some clarification: No, I wasn't going to jump into this shark tank tomorrow buying SLV Puts. Maybe the '08 scenario I have in mind is playing out a lot faster now since countries are going bankrupt and not just companies.

As an aside, I will hold my SPY Puts as I expect that ship to go DOWN.

Please feel free to comment. I would rather pay with a verbal "dressing down" of my wrongful ways then to pay with FRN.

Sun, Sep 25, 2011 - 7:47pm
RedRover
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no green that i see: where are you looking?

DE & SP001,

I am not seeing any green in PM's @ all

7:43 pm est

silver 30.53 (-.40 | -1.29%)

gold 1645 (-11.80 | - .71%)

Sun, Sep 25, 2011 - 8:10pm RedRover
D E
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globex

dec silver open 30.85 high 30.925 around 7:50 pm edt

now 30.575, but I just got out of the shower