Whadya know?

Just as I was writing my last blog entry, I saw a response to Adam's Gold bullishness (from Steve of www.recordpricebreakout.com):

"I wouldn’t get so high on gold yet. We’ve been here twice before (since March 2008), and there’s a HUGE divergence on the MACD on the weekly chart."

So I decided to take a look...and by George...he's right! (Clicking on the chart gives you a clearer view):

Now what do I do?

Ok...so my $9,600 option investment a few days ago is now worth $34,000. (Of course, my short position in Gold has me down a little over $6,000.)

However, Adam Hewison, the Trade Triangle guru, and one of the reasons that my accounts are doing so well, said a few hours ago that if spot gold closes over $989.85 (which it did @ 994,) then we go a lot higher. The trend is obviously up, but I could make a case that a close at, say 999, would be a little more bullish for Gold, based on the chart I drew below (clicking on it gives you a clearer view):

Anyway, now I have to make my decision. The reason I bought the calls was to hedge my short. If I get out now, I'm naked, so to speak...and my loss is unlimited. I think there are definitely some better options then that (no pun intended.) The Greenback held the 78 level on a closing basis...so I think I will watch very closely.

Gotta be more careful

I lost a lot on a USD/JPY (short) trade that I never should have made. Basically, this was a Bob Iaccino recommendation that I did wrong. His firm never entered into the trade, but I did. The entry point was on a diagonal trendline and not a horizontal trendline...this is important because, depending on how long it takes for the trade to initiate, the entry point on a diagonal trendline will change.

Here's how he described what he wanted us to do (clicking on the text gives you a better read):

We were given the approximate price of 92.17 to enter the short if it closed through that price on the 4 Hour chart. BUT, since the trendline was heading South East, the entry point would have to decrease simultaneously. I got in because the bar had closed below the 92.17 price mentioned above...but I failed to realize it was still within the decreasing wedge.

Had we closed below 92.06 (out of the wedge and which never happened), that would have been the proper point to short...I went with the static price given from the morning webinar...92.17.

My short Gold position

I wrote this post on buying Gold calls the other day because I was afraid that Gold was going to explode (which it did,) and I bought calls to protect a short position that I initiated a couple of weeks ago.

After having them for a couple of days, I was very close to getting rid of them at breakeven, BUT then, all of a sudden, my short position started acting weird, so I decided to keep them a little longer. Anyway, as of now, I am down very big in my Gold short (about $4,000,) as the yellow metal has climbed above 975.

BUT my October 975 calls have also rocketed, and are up about $11,400. (Clicking on the chart gives you a clearer view):












The problem, of course, is that the options have to be watched, because they can expire...whereas my short position will not go away until I cover it.

Out of trade

Out of trade w/ a $1000 loss. That's trading. I'm looking for CUMULATIVE pips, right?

Trade Update

Presently down in my US/CAD position. My stop is set. Now this from Action Forex:

USD/CAD's rise from 1.0790 extends further in early US session and the break of 1.1019 resistance indicates that rise from 1.0718 has resumed. The development adds more favor to the case that price actions from 1.1074 to 1.0718 are merely consolidation to rally from 1.0631 only. That is, such rise is still in progress. Break of 1.1230 resistance will confirm this case and all affirm the case that USD/CAD has bottomed out too.

Funny how this came out way after Bob's recommendation.

Trade triggered

I'm now long the US/CAD... a 1/2 position. The pair has not fully rotated yet, but the short term oscillators seem oversold. This way I'm in, but not all the way if it continues to rotate. It is also important to note that the Melody ADX on the 4 Hour is not overbought. 60 is usually the exhaustion level. Stop is 1.0922 and T1 is 1.1112.

New Trade...that may not be triggered

We were given a trade to go long US/Canadian on Friday, by Bob Iaccino, if it closed on the 4 Hour above 1.1019. It did @ 9:00 e.s.t....WAY OVER! Unfortunately, since it has run away, chasing it would be dumb.

Looking to wait for a rotation (if it happens.) The Dollar is way oversold...so we'll see.

Why Are We Such Suckers For Prediction?

I'm always screaming at the shills that CNBC brings on to the show. Bob Iaccino knows his stuff and Bill Gross does too...and of course a few others do also...but the good majority of people we see on a daily basis...are complete idiots. So imagine my surprise when I saw the following article in Market Club:

I keep CNBC on all day while I work. Perhaps I think I will miss something, or maybe it’s the background noise that’s appealing. In any event, what I always find amazing is the parade of experts making one prediction after another. I think I would fall out of my chair if I heard one of them say “Well, to tell you the truth Mark, I have no idea”.

What’s most surprising is the arrogance in which these forecasts are made. The forecaster always seems convinced he is right. I think the world is far more complicated than we think, yet we always seem to place way more value in what we know over what we don’t know...

This is an unbelievable article, and you're going to think that it's talking about you!

Now every day this blog's readership goes up and it's probably due to the success of my trading...but I learn from others. So...

...pick an area of investing that you want to learn about by going to the Market Club Trader's Blog. Then you can see everybody's blogs on one page...Bonds to Forex...people that I learn from every day...also don't forget to read the rest of this psychological article too.

Scarier and scarier...

Art Cashin of CNBC was quoted on its website:

(...But now Cashin sees a different market direction.) "I'm taking a little risk off of the table. I sold some stock yesterday," he declared. As a sign of investor anxiety, he noted that "a lot of Elliot Wave followers are worried about finishing this leg" of the rally.

Now, I wrote this post at the beginning of August. In it, there is a link to Jamie Saettele's eerie article that he wrote on Elliot Waves...the very subject that Art Cashin just mentioned for selling stock above!

So far Saettele has pegged it perfectly (he wrote it on Apr 30,) like he has a crystal ball...