Pullback Ends with the Quarter

Thursday Sept 27 2012

For the record we sold positions on the open of  9/18.  Between option expiration last Friday, the end of the quarter tomorrow, and amid a generally overbought market, stocks metals and oil retreated.

I suspected I was getting out early and said so. But that saved on the strain of watching the portfolio drop by 5-8% in a week.  It is mentally  hard to buy back that entire position now. I bought some calls on GDXJ and puts on TLT, and I bought way too early. Now would be the time to buy them. I have promised to be honest with readers and that is what I am doing here. Most writers gloss over their errors. 

 

I have consistently mentioned that we must look at shorter time frames as the indicators on the daily chart have maxed out. Here the two hour interval shows a remarkable similarity to what happened form mid to late August.GDXJ touched the 87 bar MA and bounced both times. The MACD indicator is now in buy territory, the opposite of where it was Sept 18, ahem. That is why this is an art not a science....

Central Fund

Readers will recall my original preference was for Central Fund. I moved out of some shares of CEF and added GDXJ as it outperformed on the upside. That of course works both ways!  CEF as an unleveraged holding of pure silver and gold did not experience near the pullback that GDXJ did. And it too is now in buy territory. 

So, additional gains in all our original recommendations now lay ahead. TLT has rgained its ovebought status. 

TLT

Note that once again TLT is the exact inverser of GDXJ. This is the same sort of position where we bought puts in early Sept and they exploded in value. The trick was exiting at the right time. We will focus on doing that over the next few weeks. 

Or as Holmes might say to Watson

The Game's A Foot!

Thanks for reading The Market Perspective.

 

Comments

[Robert Torres]

Saw this interesting article on Forbes today thought you might like it.
http://www.forbes.com/sites/abrambrown/2012/09/27/u-s-economy-appears-weaker-than-feared-q2-gdp-durable-goods-much-lower-than-forecast/

[zenizen]

Parted with in-the-money FAS puts today. It was hard, but with SPX topping 1435, then 1447, I couldn't help feeling that this devious market intends to set a bull trap all the way up to 1500.