January 19th, 2012
A technical analyst will ever rely on one indicator to make a technical call. The key is to use other unrelated studies – so if you use simple moving averages do not use the MACD and if you use a simple rate-of-change to not use another momentum study and so on
The technical evidence to support the call for a new 2012 – 2013 bull market is compelling. Long term cycle work and the simple 50 and 200 day MAs are positive. The short 2011 bear has completed a perfect Fibonacci retracement of the 2008 – 2011 bull and now we have the NYSE advance decline line breaking out. So don’t listed to those doom and gloom idiots – get long and enjoy and most of all avoid those gold bugs
Tags: The NYSE AD Line
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January 17th, 2012
Here is what Horizon ETFs say about covered call writing, “The Investment Manager of HEX will generally write short-term, slightly out-of-the-money call options on the entire portfolio. Covered call options provide a partial hedge against declines in the price of the securities on which they are written to the extent of the premiums recieved. (misspelled). Historically, during strong bull markets, where the underlying stocks are able to drive through the strike price on a frequent basis, buy-write strategies have lagged. And even then, investors would still have generally earned moderate capital appreciation, plus dividends and a call premium. During historical moderate bull markets, range-bound markets and bear markets, a covered call strategy tends to generally outperform its underlying stocks.”
Let us now name a strategy that compels us to hold declining stocks and if they go up we have to give them away. I guess we would call that a covered writing strategy. We can see from our HEX vs. XIU (TSX60 index) there is no partial hedge with both losing about 11.5% from February 2011 to date – this is with income on both products included. The extra income on the HEX is offset by a greater capital loss. The real test for this failed strategy will come if the markets advance over the next several months. To be continued for sure.
Tags: covered calls
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January 7th, 2012
I am sure we all recall the Gartman Letter published late last month when Mr. Gartman said he was out of gold, based on a belief that the rally in the yellow metal over the past decade is ended.. He said China has been buying gold aggressively over the past several weeks, which should have sent the price surging. Instead gold has fallen almost 10% since the beginning of December. “One of the oldest rules of trading is simply this: A market that cannot or does not respond to bullish news is a bearish market not a bullish one,” In response Peter Grandich called Gartman one of the ‘three stooges of gold forecasting’’
OK let them go at it but in the meantime why not look for a trading opportunity and I think I see a Barrick Gold trade here. Note our Barrick vs. Gold chart. The support line at (B) was broken in the recent GLD correction, but Barrick posted a higher low – bullish divergence. Note now the pivot level at (A) with the GLD still below and yet Barrick is trading above the relative pivot at (A) this is a display or strong relative performance. I look for Barrick to run up to the old highs of last September
Tags: Gold and Gartman
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December 22nd, 2011
This strategy is particularly intense during the during bear market years as investors and portfolio managers lock in capital losses for the current trading year. A portfolio manager will engage in tax loss selling to ensure the overall portfolio does not attract a taxable gain in the event of a small per cent of profitable positions.
Important Dates for 2011
Canadian exchanges are closed Dec 26 & 27, 2011. In order to have a sale transaction settle within the 2011 calendar year in Canada, sell orders must be filled on Dec 23rd 2011 for Canadian exchanges. The NYSE is open on the 27th which would be last day for selling in order to settle on Dec 30th.
Any issuer sold cannot be bought back within 30 days, or it will not count as a capital loss. Consider buying a similar investment if you wish to retain exposure to the related sector such as metals, energy or the financials. As an example, if you sold Kinross Gold Corp at a loss you could buy IAMGOLD Corp on the same day. You would be trading a distressed gold stock for another distressed gold stock. If you had a basket of gold stocks to sell you could buy a gold stock related ETF such as the iShares S&P/TSX Global Gold Index Fund (XGD)
IMPORANT: This group has historically printed a significant rally in the first week of the following January. The basket below could produce a one-week return of 15%
Tax Loss Selling Rebound Candidates 14-Dec11
Stocks under $1 and a volume of less than 30,000 are removed
Company Symbol Price Volume
Tags: Tax Loss Selling 2011
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December 16th, 2011
On my last post I told the gold bulls to cheer up because the worst may be over because the generally bullish Dennis Gartman said he expects the yellow metal to fall to $1,450 an ounce before it breaches $1,800 and Gartman has fully closed his gold position. Since Dec 12 gold has dropped from 1666 to 1575 and so we need to take a look at the technical picture.
Our chart today is the daily closes of the NYMEX gold plotted above the AMEX Gold Bugs Index. So far this looks like a simple A-B-C type correction in both plots. Currently there is a small degree of bullish positive divergence with the AMEX Gold Bugs printing a higher corrective wave low (C) relative to corrective wave low (A). We need these lows to hold in order to avoid a (C) wave extension. When you look at a very long term weekly or monthly gold chart the primary up trend line has not been violated.
Tags: Gold - do we hold or fold?
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