Sunday, April 7, 2013

Movement in the tall grass?

Gambling with stocks is a little like sitting by a waterhole waiting for something to come out of the tall grass that you can eat. You spend a lot of time waiting and not everything that emerges can be made into a meal. Some of the things that emerge would like to make a meal of you. In any event a couple of things happened this week that qualifies as movement in the tall grass. As you know from my last post UCO issued a buy signal so I jumped in and placed a bet. Immediately thereafter UCO made a stunning reversal and I got stopped out with a small loss. Chart below. 

UCO 10 week moving average chart
 As you can see this was a complete reversal in the price of oil. However bonds took off like a house afire and the chart of UBT issued a buy signal. I got in early and by the end of the week had a nice gain of about 4.5%. Chart below

Chart of UBT 10 week moving average. 
 Here is the update of the model portfolio. Pay no attention to GDX. I think it has a curse on it

UBT 100 68.65 71.729 2.71 up $270.90 up $307.90 up 4.49% $7,172.90
GDX 300 40.926667 35.06 -0.16 down $48.00 down $1,760.00 down 14.33% $10,518.00
Total



up $222.90 down $1,452.10 down 7.59% $17,690.90
If my guess is correct the drop in the price of oil combined combined with a piling into bonds for safety is an indication that someone is getting nervous about the state of the economy. This may just turn out to be a short term hiccup or it might well be the beginning of something more serious. Whatever it is we'll have to wait till it sticks it's head out of the tall grass before we can form an opinion of what sort of beast we are dealing with. 

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