Daily Archives: July 27, 2010

A Target for GLD

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Precious metals have been squishy for months now, and today was particularly weak. I covered GLD yesterday and SLV today. I do think, however, GLD has a decent chance of making its way as long as the area I've tinted. I will happily reload on any strength.

0727-gld

Sure is quiet in comments-land! I think I'm going to call it a night; see you folks Wednesday morning.

As Simple as ABC

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Today I covered a position in the world's simplest ticker symbol, ABC. I had shorted this stock when it broke its ascending trendline (circled). It had fallen about 14%, and as it approached its former breakout level (the horizontal line), I covered in the tinted green zone. Because this chart only covers a portion of the entire price history, it isn't clear to you that the horizontal line is a big breakout, but trust me on this one.

0727-abc

I offer this as an example of a rational time to "take profits". Yes, this stock could go lower, but this seemed like a logical time to reduce risk and take the 14% given to me.

Trading Rules from the Marines

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I look at charts so often, I usually have to have something on in the background to keep the rest of my brain from rioting. Typically, that "something" is usually a movie or some music, and today I put in Full Metal Jacket (which, like most of my DVDs, I've seen many times).

Semi-watching the movie made me curious about the Marines, and I found this really interesting code of principals, which I've put below. It's an impressive list, and I think every element shown here is relevant to trading. Please read it:

INTEGRITY
Uprightness of character and soundness of moral principle. Absolute truthfulness and honesty.

KNOWLEDGE
Acquired information, including professional knowledge and understanding of your Marines.

COURAGE
A mental quality that recognizes fear of danger or criticism, but enables a Marine to proceed in the face of it with calmness and firmness.

DECISIVENESS
Ability to reach decisions promptly and to announce them in a clear, forceful manner.

DEPENDABILITY
The certainty of the proper performance of duty.

INITIATIVE
Seeing what has to be done and commencing a course of action, even in the absence of orders.

TACT
The ability to deal with others without creating offense.

JUSTICE
The quality of being impartial and consistent in exercising command.

ENTHUSIASM
The display of sincere interest and exuberance in the performance of duty.

BEARING
Creating a favorable impression in carriage, appearance, and personal conduct at all times.

ENDURANCE
The mental and physical stamina measured by the ability to stand pain, fatigue, distress, and hardship.

UNSELFISHNESS
Avoidance of providing for ones comfort and personal advancement at the expense of others.

LOYALTY
The faithfulness to country, Corps, unit, and to your seniors and subordinates.

JUDGEMENT
The quality of weighing facts and possible solutions on which to base a sound decision.

Trap-Like Pattern in VIX (Mike Paulenoff)

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We have to be impressed with the market's resiliency yesterday after hitting new recovery highs, because weakness thereafter has been very much contained, at least so far. That said, however, I am "concerned" about the "trap-like" pattern that has developed in the hourly Volatility Index (VIX). Let's notice that the VIX made multi-month lows this morning at 22.70, but has since climbed back above 23.20, which so far has "trapped" VIX bears (SPX bulls).

In the event the SPX rolls over into a deeper correction later this afternoon or in overnight trading, and the VIX climbs above 24.70/80, the VIX will have put in a powerful upside reversal immediately after violating a major Double Bottom June-July low. Such a scenario is all the more likely given the glaring downside failure of RSI momentum to confirm the multi-month low in the VIX. Let's watch this relationship closely in the upcoming hours.

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Originally published on MPTrader.com