Pailin's Trading Corner

42650 posts / 0 new
Last post
Sat, Jan 21, 2012 - 8:43am
tonym9
Offline
Joined: Sep 27, 2011
1490
2492

I forgot to add the FOMC to

I forgot to add the FOMC to my list. I don't think the FOMC will cause a spike up in metals. Not yet. Yes, the makeup of the committee has become more open and supportive of QE in some form. And yes, the statement may have more bias to QE in some form. But, there isn't 'The Call' for QE3 from the market or its mavens as of yet. Things market wise are ok. I don't think we get QE3 in this environment. We need a heart attack moment and this isn't it. Not yet.

Last FOMC hoopla resulted in a drop. I clearly remember since I was positioned the wrong way. Ouch.

A few months from now, probably we get it. Here's my thoughts on it...very conspiratorial but...

1. Republocrats are at least talking about reining in or changing the FOMC and it's leader.

2. Due to this, FOMC will side with Dems for it's very survival.

3. This means they must deliver Obummer and CONgressional Dems a nice little election gift, wrapped in QE "stimulus" timed to hit when it counts the most. I have said for some time that we don't get QE until the Republocrat nominee is selected and is scoring blows on Obummer, sometime late spring/early summer. If FOMC can help to create the story of economic healing, and get Dems the credit, they don't have Ron Paulism to deal with.

Simple conspiracy think based on survival. We will all do what is needed when threatened. FOMC has to feel threatened by the Republocrats.

"No! Try not. Do, or do not. There is no try." -Yoda Levitation will levitate until levitation doesn't levitate. Rates be the key matey.
Sat, Jan 21, 2012 - 8:55am tonym9
pailin
Offline
Joined: Jun 14, 2011
4313
15417

tonym9 wrote: FOMC has to

tonym9 wrote:

FOMC has to feel threatened by the Republocrats.

Sorry don't buy it. Everybody in the race is the same as Obama. And zero threat. Except Ron Paul. But he's unelectable, and even if he did get in anything he tried to do in line with the mission statement would be fully c0ckblocked by Congress/Senate. The only way we get a Ron Paul country is if he's dictator-for-life and rams things through. But fascism is hypocritical to RP mission statement and thus will never happen either! FOMC/Fed/$ponzi...all safe and sound (at the core) no matter what happens election-wise.

To the intelligent man or woman, life appears infinitely mysterious, but the stupid have an answer for everything. -Edward Abbey
Sat, Jan 21, 2012 - 8:58am
pailin
Offline
Joined: Jun 14, 2011
4313
15417

silver moves

I've seen and survived being on the wrong side of silver many times. Up, down, all around. When I began trading it, I understood that the volatility is what attracted me and that it could work against me as much as for. So I figured out the average depth of big moves over various timeframes and never put myself in a position where I can't handle a 20% move against me at any point in time. Pain yes, blow up my account..no. And I've survived every mess since and usually have the fortitude (and more importantly) the dry powder to buy the heavy dips and either average down or sell the bounce to ease the pain of earlier cut losses. All this while being locked into daylight only trade hours. Now I trade those positions much less (trend swings only), and focus my gaming around forex and 23/5 market access, but in smaller measured quantities.

Moral of this story - silver can and will move 20% or more against you at any time. Maybe even 30% now that everything is more volatile worldwide. And gold realistically is now 10% any given trading day. Be prepared for that or risk watching your capital disappear like a puff of smoke leaving you optionless. And in deep despair.

5% up in one day is nothing. Could be down 20% from 32 on spike Sunday night. Anybody remember May 1? It happens. Or the reverse :)

To the intelligent man or woman, life appears infinitely mysterious, but the stupid have an answer for everything. -Edward Abbey
Sat, Jan 21, 2012 - 9:02am
tonym9
Offline
Joined: Sep 27, 2011
1490
2492

I would also agree on a

I would also agree on a longterm bullish position. However, I am still short term bearish. I feel this move we just saw is a bull trap.

5-6% moves in silver are not the biggest I agree. But in this environment Friday's move was huge. On no volume it doesn't make sense to me.

This is the EXACT time to put on a short term bear play if you are bearish. A nice pop up on no volume should settle some, and could be the setup for a greater fall based on news events. I feel we see 29 before 34.

Then again, it could very well spike from here. WTFDIK, I'm just a degenerate gambler who wants tradable action either way.

For me ZSL is the perfect play and set up for a next week sale. Risk/Reward is in my favor, even with a 12.39 dca which is too damn high. But there is risk in the play no doubt.

I'll take a setup like this every Friday please. It's tradeable.

Also no doubt holding ZSL over a weekend is much more comfortable for me than holding AGQ overnight during the week. But that is my bear bias talking.

Continue the debate please...good stuff so far.

"No! Try not. Do, or do not. There is no try." -Yoda Levitation will levitate until levitation doesn't levitate. Rates be the key matey.
Sat, Jan 21, 2012 - 9:13am
tonym9
Offline
Joined: Sep 27, 2011
1490
2492

P: Didn't explain my RP

P:

Didn't explain my RP thought well enough. I agree he'll never be elected POTUS, even tho I'd like to see it. But where I was going is that FOMC would like to see RP lose some of his power to create continued havoc for them in CONgress. They need the Congressional Dems more than Obummer...but Obummer too tho. Starter's gun doesn't go off for a few more months.

Edit: Also agree the talk about the FOMC in this election cycle is probably just talk. But, even this talk creates hesitation by the FOMC I'm guessing. They can't feel as confident as they did just 18 months ago. It has to be viewed as a threat, so the best way to stop it is to squelch it.

Again, pure conspiracy talk here and I've never been good at forming conspiracies, but it seems logical to me.

"No! Try not. Do, or do not. There is no try." -Yoda Levitation will levitate until levitation doesn't levitate. Rates be the key matey.
Sat, Jan 21, 2012 - 10:27am
atlee
Offline
Joined: Jun 14, 2011
1427
12263

Disgusted with myself

Inverted head and shoulders breakout counts to 33.30.

We could just run straight to 35 area.

I mentioned the inverted head and shoulders Monday but committed the sin of ego. I lost the pulse of the silver market on Wednesday and my ego completely blocked my senses. I am so disgusted with myself I can hardly stand it. I allowed my ego to overshadow a move I had correctly anticipated. I climbed in late and exited entirely too early, forgetting everything I had marked on my charts.

Barring any European risk off event, I suspect that the move continues Sunday night leaving jerks like me having to pay up or stand on the platform and wave goodbye. I don't guess that we would see any banker intervention until some of the steam behind this move dissipates and there are a bunch of fresh nervous late longs in the market.

The ZH article on the surge behind silver is great but I also suspect that Edel's remarks only added fuel to a fire that was ready to ignite. I am guessing that people (myself included) really do not know how to interpret the premium fluctuations in Sprott's fund and that also adds intrigue to market movement. For all my negative rants about Sprott, he is no dummy.

So congrats to you longs who held! I think you are in for a great run and I envy your savvy.

Sat, Jan 21, 2012 - 10:45am atlee
pailin
Offline
Joined: Jun 14, 2011
4313
15417

atlee wrote: I am guessing

atlee wrote:

I am guessing that people (myself included) really do not know how to interpret the premium fluctuations in Sprott's fund and that also adds intrigue to market movement.

(HINT: sell premium 25%+, buy premium 15%-, price doesn't matter :)

To the intelligent man or woman, life appears infinitely mysterious, but the stupid have an answer for everything. -Edward Abbey
Sat, Jan 21, 2012 - 10:51am
Strawboss
Offline
-
Washington DC, VA
Joined: Nov 13, 2011
902
2805

I am short term bearish on silver

Short term defined as hours, perhaps a few days. Until proven otherwise, the trend has been that the few days before OE is decidedly bearish for silver, gold and the mining shares. I suspect that is why the mining shares have been lethargic and not validating the move - as a group.

I dont think the Fed does anything. It would be tough to do with oil at $100. I have a position in DUST that is about 10% of my entire core long miner positions.

I see this as a very, very short term play anticipating a modest decline in the miners over the next day/days. I am only doing this because I am sick and tired of my positions dropping in the days before OE.

Jesus Christ is the only true hope that any of us really has. Aaaargh .. the monkeys!!! Trading metals is like playing frogger...there's always a big truck coming.
Sat, Jan 21, 2012 - 10:56am
Strawboss
Offline
-
Washington DC, VA
Joined: Nov 13, 2011
902
2805

The trading stragedy being discussed

It makes perfect sense to me in terms of the buys/sells intraday (and overnights).

I have a problem with it philosophically though as anyone doing it essentially becomes a co-opted tool of TPTB - i.e. you are acting in unison with them - thus increasing the effectiveness of their efforts to suppress the true price of PMs.

No disrespect meant and from a traders perspective - I have no issue with it. If it works - great.

I am sure that sounds schizophrenic...

Jesus Christ is the only true hope that any of us really has. Aaaargh .. the monkeys!!! Trading metals is like playing frogger...there's always a big truck coming.
Sat, Jan 21, 2012 - 10:58am
SilverWealth
Offline
-
Rectal Springs, CA
Joined: Jun 14, 2011
3873
15406

General

I have done what you said many times and I missed this move in Silver as well even though I should have known better.

But These moves always come whenever something has had a serious beatdown for an extended period of time and no one is psychologically anticipating the bull. This is the first impulsive Bull move in Silver in 5 fucking monthes. 5. Of course most will miss it.

But maybe its a sign the bull is back for a while and so its trading will be easier. Having to play heavy defense for 5 straight months is not fun, its living with terrorism.

There will be a retrace and a time to get on board I think. Do not beat yourself up. Lee had Gettysburg remember? This is nothing.

And Pailin imo is spot on about how to handle metal volatility. More and more that will be key now imo.

Sat, Jan 21, 2012 - 11:08am
plunder
Offline
-
Detroit, MI
Joined: Jun 14, 2011
87
319

atlee you sound

atlee you sound frustrated!

there will always be another opportunity.

I forgot who told me that but he says it all of the time...

Sat, Jan 21, 2012 - 12:02pm
Rico
Offline
Joined: Jun 14, 2011
1901
6337

@Atlee, Your personal honesty

@Atlee,

Your personal honesty is always refreshing, around here--it is vital that we traders at least attempt an objective assessment of our trading behavior (so very difficult to do!), and you are giving us here a great example of this. I find that the more I learn about trading and the markets, the more humble I become.

Re SI, I was in Friday's move (ETFs, not futures), because I never got out in the first place. This is a bull market in PMs--​the price action is telling us that. Once I learned to quit trading so much (very slowly--mule, meet 2-by-4...), the noise level went way down, and the profit level went way up.

Sat, Jan 21, 2012 - 12:04pm
redwood
Offline
Joined: Aug 9, 2011
5309
10895

I sympathize with atlee.  The

I sympathize with atlee. The fallout from insisting on precision, is that the discipline required to achieve it, also derails you from seeing the target when it's camouflaged. That's what Generals do. But atlee, like a good general reorients his compass quickly.

Abe thanks for that on Sprott. Vamoose1 has a good post on main from last night on Sprott and miners for those who are interested.

Sat, Jan 21, 2012 - 12:24pm
redwood
Offline
Joined: Aug 9, 2011
5309
10895

The other irony about this so

The other irony about this so called run up is that it only matters if you're holding physical. I was in all week waiting for the market to declare its direction, but at the end of the week, I made diddly squat. Now that picture could change next week, but so far there really are no gains trading miners. That's what SSK was cursing about. So until the grip on miners is released all you've done is gained a seat at stadium to watch your favourite ballgame, certainly not to play.

Sat, Jan 21, 2012 - 1:02pm
plunder
Offline
-
Detroit, MI
Joined: Jun 14, 2011
87
319

option expiration: 1/26

there's something familiar about all of this. Late october saw us rallying into options expiration also. There were 2, 5, 7 year treasury auctions on OE week then also. And an FOMC meeting shortly thereafter. Just like what we have here.

Short answer is that it rallied all the way into OE on 10/27. Then a dead day, then a prompt $3 butcher job over the next 2 days, presumably because too many excited longs exercised (at least that was the popular theory at the time).

Here is where CME SI stands right now:

With the FOMC and state of the union dumbing things up in the middle of next week, think I'm going to sit out. Only way I might bet is if I see a big rally Monday followed by a 'flaccid tuesday' instead of happy tuesday. If it looks like it's rolling over that way then I'll put on a short.

Sat, Jan 21, 2012 - 1:23pm
redwood
Offline
Joined: Aug 9, 2011
5309
10895

Nice work plunder.

Nice work plunder.

Sat, Jan 21, 2012 - 3:20pm
Titus Andronicus
Offline
Joined: Jun 14, 2011
1165
4537

Silver Average Charts

Here are a couple studies of the daily silver price action based on averages. I think it is helpful information no matter how you trade silver. This time scale is not really readable but each chart starts and ends at midnight (EST), with 2 hours between the vertical dashed lines.

The first (top) graph is averaged over every trading day of 2011. This is similar, but definitely different than the one I did for gold. It seems that there is a nicer morning bump up that does not exist for gold, on average -- maybe that is why some day traders are more comfortable trading silver. This shows that an optimized time-of-day trade for silver is probably different than for gold.

The 2nd graph is averaged over November and December. Did any day traders have bad experiences during this time? Nothing but a falling trend during NY hours!

The 3rd graph is Jan 1st to Jan 13th. Very different shape. The London Fix short didn't work too well for silver so far this year. NY afternoon / Asia still worked fine. Seems like a NY day trader's wet dream -- buy in the morning; sell at 11:30am.

Sat, Jan 21, 2012 - 3:51pm Titus Andronicus
fast mover
Offline
-
ID
Joined: Jun 14, 2011
118
492

Titus Andronicus wrote: Also,

Titus Andronicus wrote:

Also, anyone interested in this trade should check out fast mover's blog on the subject:

https://goldenlightswitch.blogspot.com/

Titus,

You are providing some great discovery work on trading the LBMA fixes. I have invested much time and money into this strategy. The simple rules have worked for me, but as you point out there are landmines out there. I am concerned unless a trader trades and lives through some of these +- $5k days, they may blowup an account. I created this blog to further educate traders willing to trade this system in order to get through the drawdowns.

I use an options strategy to prevent the "get it in the teeth" Black Swan event. The cost is about 13% of annual profits.

I welcome your comments.

FM

Sat, Jan 21, 2012 - 5:08pm
Abraham Bernanke
Offline
Joined: Sep 19, 2011
326
1445

We WILL tank next week, I M H

We WILL tank next week, I M H O. Need 'PROOF'?:

As of Friday morning, 14 percent of the S&P 500 had reported earnings and about 60 percent have reported earnings per share above expectations, according to Thomson Reuters I/B/E/S. That is below the 70 percent plus rate of other quarters during the recovery, but it is still early in the earnings season.

Analysts had expected a growth rate for S&P earnings of about 8 percent at the start of the year. But so far, the actual earnings reports, combined with newly lowered expectations for companies yet to report, are running at about a 5.8 percent growth rate.

“This is still a pretty good earnings season,” said James Paulsen, chief investment strategist at Wells Capital Management. “You’re going to get a big enough slog (of reports) next week that you’re going to be able to make a decision on the earnings season.”

Paulsen said in addition to earnings, he’s watching the weekly jobless claims number, which surprised with a large decline to 352,000 this past week. If there is another good number, he would look to economists to raise their employment forecasts for January.

He does not expect the Fed to be the big story for stocks. “I don’t think it’s going to have a lot of impact. As long as the economy is doing okay, and Europe is calming down, the Fed is being removed from the spotlight,” he said.

SOOoo...., Europe and earnings WILL be blamed for tanking the market early next week. Guaranteed!!! At least that is the way the 'news' is leaning!!

SWAGER on. Silver - Wine - Art - Gold - Energy - Real estate
Sat, Jan 21, 2012 - 5:34pm
Rico
Offline
Joined: Jun 14, 2011
1901
6337

LOL! Paulsen's a good egg,

LOL! Paulsen's a good egg, but he's the permabull's permabull.