Thursday, April 18, 2013

The movement in the tall grass turned out to be a stampede


I have no idea where to even begin this one. I'll start with the collapse of Gold. I'm pretty sure it was a created event caused by some big money unloading huge amounts of gold which drove the price down to the point where it started triggering stop losses. Once that starts it takes on a life of it's own as each sell order that comes through triggers another layer of stop losses and the first thing you know Gold dropped several hundred dollars in a couple of trading sessions. I got lucky and managed to catch a wave fairly early and in 2 days I made a tidy little profit by selling Gold short with the ETF fund GLL. Chart below. I bought about 1/3 of the way up the spike and unloaded more or less at the top. Chart below. I picked up around 10 bucks a share on a 48 hour trade. 

GLL a short gold ETF

 I made a few additions to the model portfolio to try and offset the bloodbath I'm taking with the miners. I shorted crude oil, the oil and gas industry and went long bonds figuring there would be flight to quality based of fear. So far so good with each of those. Below is the chart of SCO which is a bet the price of crude will go down. 

SCO a short of crude oil  
 Below is a chart of DUG which is a short of the oil and gas industry. 

Dug a short of oil and gas 
 My last addition to the portfolio is UBT which is a bet the price of bonds will go up and the yield down. Chart below. 

 
UBT the ETF of the 20 year treasury
Here are the results so far this week. Pay no attention to GDX. GDX is a long term investment which I will leave to my children. I'm up over 5% on everything except GDX. This week end I'll try to make a guess as to where things are heading.



DUG 100 17.76 18.64 -0.30 down $30.00 up $88.00 up 4.95% $1,864.00
SCO 100 41.22 43.62 -1.79 down $179.00 up $240.00 up 5.82% $4,362.00
UBT 100 68.65 72.1499 0.59 up $58.99 up $349.99 up 5.10% $7,214.99
GDX 300 40.926667 28.21 0.83 up $249.00 down $3,815.00 down 31.07% $8,463.00
Total



up $98.99 down $3,137.01 down 12.53% $21,903.99





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