shooting the moon

ssi_xauusd_body_Picture_10.png


http://www.dailyfx.com/technical_analysis/sentiment?technicalSentiment=XAUUSD

Precious metals haven't really participated in this rally, even as they've tracked the stock market for the last few years. Right now the wrong-way retail traders are heavily buying gold, even as it's declining. You can see that from the chart above, the DailyFx traders are buying into the gold decline.

Retail buyers tend to be buy-on-the-dip buyers. When the Ameritrade Index was still being posted, it was clear that retail buyers had buy stop orders *below* the current price, so they would be heavy buyers on down days. In other words, they were looking for a bargain. In fact, some stocks would be heavily sold on days that it was breaking out of a range. And big decliners, like Merck (when Vioxx was pulled) were very heavily bought.

Anyway, returning to gold. I tend to think it will run to $2500, but not right now. Right now it looks like a money pit that the retail buyers are too ready to jump in.
 
Quote from billyjoerob:

ssi_xauusd_body_Picture_10.png


http://www.dailyfx.com/technical_analysis/sentiment?technicalSentiment=XAUUSD

Precious metals haven't really participated in this rally, even as they've tracked the stock market for the last few years. Right now the wrong-way retail traders are heavily buying gold, even as it's declining. You can see that from the chart above, the DailyFx traders are buying into the gold decline.

Retail buyers tend to be buy-on-the-dip buyers. When the Ameritrade Index was still being posted, it was clear that retail buyers had buy stop orders *below* the current price, so they would be heavy buyers on down days. In other words, they were looking for a bargain. In fact, some stocks would be heavily sold on days that it was breaking out of a range. And big decliners, like Merck (when Vioxx was pulled) were very heavily bought.

Anyway, returning to gold. I tend to think it will run to $2500, but not right now. Right now it looks like a money pit that the retail buyers are too ready to jump in.
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I think you should look at the COT data for gold not to mention almost all of the sentiment indicators and I think you would probably change your mind.
 
Quote from actionzip54:

I think you should look at the COT data for gold not to mention almost all of the sentiment indicators and I think you would probably change your mind.
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Historical COT data here, basically the commercials are still pretty short compared with historical levels [via breakpointtrades]

http://stockcharts.com/h-sc/ui?s=$GOLD&p=W&yr=10&mn=0&dy=0&id=p81350222632&a=192012712&listNum=12

I don't want to get long before it breaks out, just pointing out that gold is going nowhere/declining but with retail enthusiasm. Recipe for frustration.
 
One thing that can be useful to watch to gauge longer term trend is Monday opens. If Monday opens lower than the previous close, then retail buying is subdued or even negative. You can see from the November lows that 9 of the 13 weeks had lower Monday opens, even though the SPY travelled about $15. The last two toppy weeks have had higher Monday opens. So atticus for instance said that he was astonished that this Monday opened higher, but that's what you would expect at a top. A lower open would have been bullish.

http://stockcharts.com/h-sc/ui?s=SPY&p=W&yr=0&mn=6&dy=0&id=p95226172424

I don't think closes have much info in them, tho.
 
I'd say I'm about 7% over the old highwater mark at this point, after the disastrous end to last year. So that's nice, but even a monkey could make money in this market (not to rub it in anybody's face or anything, just to acknowledge that pressing buy is really the only strategy that's worked for the last few months).

Anyway, now that the psychological pain has passed, I'll try to put my mini-blowup in perspective. The total percentage loss from the BTH trade (as described in the earlier posts) was 18%, roughly. But it gets worse, because that 18% loss was the result of a double down, adding to what was a dumb trade in the first place. Not doubling down is pretty much cardinal trading/investing rule #1 (I know some disagree, different strategies might work with doubling down) and the position was large to start with. If my first buy was at around $25, and I sold at around $15, that gives you an idea of the complete stupidity of the final position I found myself in, down 18% altogether.

I don't know if I'll continue writing this, but if I do, I'll put up some sort of public portfolio at either covestor or i2 or c2 or whatever it's called.
 
Quote from billyjoerob:

ssi_xauusd_body_Picture_10.png


http://www.dailyfx.com/technical_analysis/sentiment?technicalSentiment=XAUUSD

Precious metals haven't really participated in this rally, even as they've tracked the stock market for the last few years. Right now the wrong-way retail traders are heavily buying gold, even as it's declining. You can see that from the chart above, the DailyFx traders are buying into the gold decline.

Retail buyers tend to be buy-on-the-dip buyers. When the Ameritrade Index was still being posted, it was clear that retail buyers had buy stop orders *below* the current price, so they would be heavy buyers on down days. In other words, they were looking for a bargain. In fact, some stocks would be heavily sold on days that it was breaking out of a range. And big decliners, like Merck (when Vioxx was pulled) were very heavily bought.

Anyway, returning to gold. I tend to think it will run to $2500, but not right now. Right now it looks like a money pit that the retail buyers are too ready to jump in.
More...

Gold getting crushed, retail investors can't get enough. Zerohedgers doubling down.

http://www.dailyfx.com/technical_analysis/sentiment?technicalSentiment=XAUUSD

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This is another good indication of where individual investor is putting money.

http://www.tickerspy.com/ideas_research.php?v=indexes&s=tracked_by

The dry bulk shippers, Chinese solar, the miners (has anybody ever made money in miners?), battery, uranium, etc etc. I don't see any tech here. Mobile software comes in at 109. Data centers at 113. Social networking at 118. Dotcom retailers at 123. Asset managers, which is a great business, are at 244. Not saying that this is hugely valuable, just gives you a good indication of where the public is. They're buying gold (see above), dividend stocks, China, and staying far away from tech and mutual fund companies.

I wonder, if we have another bull market, whether the mutual funds won't come back. ETFs have taken huge amounts of business from mutual funds, but it's hard to resist a good story, and I wonder if we won't have star fund managers in a few years like in the 90s. There are lots of star hedge fund managers these days, but in a bull market, it's very hard to beat a long-only, momentum mutual fund.
 
The top three sectors (chinese solar, dry bulk shipping, and miners are all doing terribly. That's not surprising, seeing as most individual investors are value/buy on the dip/falling knife investors. They are throwing away their most valuable advantage, the ability to buy small positions in momentum stocks. Of course, it's not easy to stay in momentum stocks. I have a long list of momentum stocks I've sold early and dead money I've sat in for too long. But my own buy-the-dip tendencies were severely curtailed when I followed the Ameritrade index on a daily basis. It's no longer posted, but it was perfectly clear that individual/retail investors ALWAYS bought the dip. It was compulsive. And when I thought it was a good idea to buy the dip, I would take a look at the index the next day and realize that I was following the herd. The instinct to buy something because it's going down (or to stay in a losing position) is so powerful that it's the most important thing to avoid, in my opinion, in order to improve results. And unlike managers investing large amounts of money, small traders have no need to accumulate large positions over long periods of time. So small investors and traders don't have that excuse.
 
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