Good times

Things have been going great lately. In my effort to learn to trade the stock market I've made the following conclusions.

1. Find a system that is your own. Do not take advice from others because even if they are on to something you have to have the full picture to be effective, you can't get that from taking advice from others. I write this blog for myself. I have almost zero readers and that's ok.

 2. Manage bet size. Do not overextend yourself. This way you can stand if the trade goes against you and you have ammo left when the really good setups come.

3. Patience. Wait for the good trades to show up. If there's not a trade in a given month it's boring but it is totally ok.

4. Be prepared for the really good setups, you know them when you see them. I knew it in DUST and in UGAZ the other day. Bet hard but leave a little in reserve just in case. It's better to loose some profits than to blow up the account.

5. Keep a diary. This blog is my diary. Putting thoughts into text makes the thoughts clearer. Is a trading idea not good enough it will show when you try to describe it.

Big day for Natural gas

Today was a crazy day for the natural gaz ETF UGAZ. I'm bringing this chart from a longer time frame so you can see the magnitude of the last days move.

What I've learned from this trade is a lot. I've done several mistakes so far. I'm going to some them up.

1. First of all I played it too hard leaving me too little margin for errors and no buying power if the move should go further against me.
2. I didn't pay attention to the fact that the inverse ETF DGAZ and the straight ETF UGAZ was trading at 10% percentage points difference. I went heavily into long DGAZ and even covered some of my short UGAZ. After that UGAZ kept the same price while DGAZ fell sharply. It was a case of DGAZ being wrongly priced compared to the underlaying commodity.
3. Considering point two I should have been more invested in short UGAZ than I am now.

Here's how I would have played it differently. Make a limeted sized short bet at the first position. Wait until a substantially better price develops, bet another 5% short. (I did almost this, went into the second short position a little too fast.) Wait further,when an opportunity like this develops, bet but not too hard. Keep attention to difference between long and short ETF price. Make one more short or at least keep the previous shorts and then bet on longs.

I now live dangerously and lost almost 10% of the total portfolio value in one day. Tomorrow will tell what happens to my account.

UGAZ - I was looking at the wrong trendline

I was looking at the larger trenline and missed the steep one in front of it. Well now we are at the steeper trendlines upper limit. I will continue to add short position on this trade. The markets are now highly volatile and there are several BOT patterns developing in many different places like UGAZ, BRZ, TUR. It is in times like this that it is so important to have cash on the sideline to be able to take advantage of what is happening. Hopefully UGAZ will top soon and that will give me more resources to play other markets.

Prediction on Turkey from Jan 14

Jan 14

Today

Almost identical pattern in UGAZ as in BOIL

BOIL - Touch of resistance approaching?

Brazil BZQ

Not sure what to make of this chart but after looking at it for a while it looks more and more like a touch of resistance chart. And it hasn't touched once but three times. Might be time to move in.

JDST

The most interesting leveraged ETF at the moment is the 3 X Junior Miners ETF: JDST. The reason? Volatility. Here it is compared to two other higly volatile ETFs (I also put the S&P in yellow in there for fun):

Also consider that this is a sector that has dropped 80% in the last years. The risk is reasonable.

I already invested in the bull ETF JNUG but after the latest runup it might be time for a breater. I sold a portion yesterday. I will add to the JNUG/JDST position on any counter rally. 

Sugar looks interesting

SGG 3X inverted

Climbing the wall of resistance. Will put this one on the hot list of buy candidates.

Exit DSLV

I'm looking for an exit of DSLV. I consider this a bad trade, but not a loosing trade. I got in at 44.2, somewhat below the no 1 point in the chart. It was a bounce against resistance trade. But it hit the roof two more times at point 2 and 3 before weakening. It's been a two month wait and I'm still in the red. I expect it to hit the resistance floor soon and the I'll have a chance to get out of the trade with a small surplus. That would be good because I need to free some cash for other trades.

Turkey

As I always like to bottom fish Turkey ETF TUR is looking interesting. But I haven't bought it yet. I had the feeling it might be more to come. It is now going through a coning face with a high likelyhood of going lower after that. Hopefully there will be another chance to enter below the last low.

(It seems I cannot upload a chart to blogger right now but will do that as soon as it is working again)

Ok here we go. And let's see what happened after I made this chart...

Looks like it's on its way, but it could of cource turn eatly. Any way I'm pretty close to fully invested so I would have to exit some other trades to play this.

Great opportunity in Junior miners

This is not a 3X leveraged chart. This is the inverse of the fall in junior miners. We see an incredible parabola that has got to be reversed soon. This can now be played with JNUG, the 3X daily junior gold miner ETF. Today precies metals are falling again getting us closer to a good entry position.

Close to a top in P/E valuations

I borrowed this chart from Smartmoneytracker.com and added my sloped test of resistance lines. Clearly we are getting close to a top in p/e ratios and most likely a market top.

Quick thougts for next week

TYL is in the zone for increased shorting. This bubble will pop!

A terrific hedge play would be to short basic materials and go long precious metals

Basic materials look like a good short from here and above

Turkey should be monitored from here, starting to look cheap.

Silver, silver, silver

Since last time I posted DSLVdid exactly what I did not expect it to do. It climbed higher along the trendline. The arrow marks where it was last time I posted and where I recommended a short of DSLV. Anyway it's not a disaster but it has now arguably touched the trendline three times and that should be enough. Am I convinced, no, but I have a large portion of my money on this trade. Another thought is that Bitcoin mania is in full force and when it comes crashing down it might well give a push for monetary metals since the metals are a competing money alternative.