Commodity pullback?

Below is a weekly chart of SLV.


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My friend KM makes a good point: Silver should be pulling back some. As we can see, last week's action totally blew through the Bollinger Band. This typically indicates a turning point. The decline should be swift, and result in one ore more red candles.

There is some support nearby, however, $14.00 looks like the first really strong line in the sand.
With my stop in place, I am guaranteed profit and if it does pull back, I'll re-buy with twice the position size.

Happy hunting.

Three long weeks

For a long darn time now, the market has been moving up and down, making and loosing the same dollar over and over. Blah!

Of course, there are hot-spots: Gasoline (UGA), some commodities (SLV, GDX), agribiz (DBC), and more.

"The metal (silver) has gained 33% this year. In comparison, gold has risen less than 10%... The $15 level is a break-out area for silver," said George Gero, a precious-metals trader for RBC Capital Markets. "Silver is not a pure precious metal. It's also an industrial. So what helps silver is the fact that there could be a recovery." (From IBD)

Essentially, the market has been marking time with millions/trillions of dollars moving about with nothing to show for it. (Hmm... that sounds familiar.)

There is a chance of movement though:


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The last two highs in this daily SPY chart are lower than their predecessors. The lows are higher also. There are many more down days than uppers; I think I'm seeing a trend develop.

Probably best to wait it out until the market picks a direction. But, as mentioned earlier, there is a direction in several key sectors.

Rats! The FreeStockCharts.com hover widget doesn't work here. Oh well.

Testing...

This is a real-time daily chart of the SPY. I am trying out the widgets at FreeStockCharts.com

Had to chart the SPY because the pull-back seems to have failed... I am somewhat invested in bullish stocks and ETF's now.

My trading friend, KM703, offers us this daily chart of SLV, the Ishares silver ETF. In fact, he offers it just in time!


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Since Price is above the 20ma, and above the rising 50ma, this is pretty safe. Further, KM shows that key resistance points have been broken and there is plenty of room overhead for growth. The upper Bollinger Band has opened up, Volume is on the rise, and resistance at $15 seems to be pretty weak compared to the current level of momentum.

I am equally encouraged by the 30 minute chart which shows no intention of pulback.

Here is an interesting article about (among other things) commodities buying in China.

Here is a goldmine of commodity vehicles, some will be great investments rite now.

Update: Here is a great article on copper.

Thanks KM! You can contribute here anytime.

Update: There was a huge pullback this morning. I took advantage and bought in. I have placed a % trailing stop to sell just so I am protected... I don't plan to 'work' this one, I hope to hold it for at least a few weeks.

The Foole has been Fooled... leveraged ETF's have issues.

Here is a chart of SDD the 2x leveraged Ultrashort Smallcap 600 fund...



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Here is a chart of SAA the 2x leveraged Smallcap 600 fund...



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Notice that these charts do not reference Price, they are referencing position to the SPY, broad market index. Next, notice that they are both below the SPY. I am here to cry FOUL! Since they are opposites, one or the other of them should be in the money.

Sadly, this is not peculiar to this pair. From what I can tell, most if not all of the 2x and 3x pairs are not appropriately balanced. In fact, the Proshares website indicates: "This ETF is designed to meet daily objectives; results over longer periods may differ."

Conclusion:
- These are wonderful vehicles for intra-day trades. They provide access to markets previously unreachable and they leverage your gains/losses.

- It was suggested to use these as long term investments by our friends at the Motley Foole, but they didn't do the math (my friend IIC at SharpTraders.com did).

- It should be good (wonderful) for a longer term trade to short the opposite of the pair.

- Ultimately, to make reliable gains, we should invest in fundamentally sound stocks during a bull market. (I like the book Rule One Investing for this.)

Around the Horn

- SPY, Broad Market Index:
(Daily Chart) Uptrend broken. Overnight action has resulted in Price laying directly on the 20ma
- BGU/BGZ, Large Cap Sector:
(Daily Chart) Uptrend broken
- MWJ/MWN, Mid Cap Sector:
(Daily Chart) Up-trend thoroughly broken. Lower high, lower low.
- TNA/TZA, Small Cap Sector:
(Daily Chart) Up-trend thoroughly broken. Lower high, lower low.
- TYH/TYP, Technology Sector:
(Daily Chart) Up-trend thoroughly broken. Lower high, lower low.
- FAS/FAZ, Financial Sector:
(Daily Chart) Up-trend intact. Lower high, lower low.
- ERX/ERY, Energy Sector:
(Daily Chart) Up-trend intact. Lower high, lower low.

Monday may be a good day to place long positions in short ETF's.

News headlines

http://www.google.com/hostednews/ap/article/ALeqM5jXPJmkJdyKGBu_J5HvhnfYCkYAzgD98B6O7G0

TOKYO (AP) — Japanese stocks fell Friday...

WASHINGTON (AP) — New rules for the credit card industry...

SINGAPORE (AP) — Oil prices stayed above $61 a barrel Friday in Asia as investors sought a hedge against inflation amid weakening U.S. dollar...

BANGKOK (AP) — Asian stocks wilted Friday as the possibility of credit rating downgrades for major economies and bleak unemployment figures in the U.S. added to fears the recent massive rally was built on shifting sands....

LONDON (AP) — British Airways on Friday reported its biggest full-year loss since...

WASHINGTON (AP) — Auto lender GMAC Financial Services will receive $7.5 billion in additional government aid...

WASHINGTON (AP) — The federal seizure of struggling Florida thrift BankUnited FSB is expected to cost the Federal Deposit Insurance Corp. $4.9 billion...

Further: (From here)

"Currently, 46¢ of every dollar that the federal government spends is borrowed, which makes each dollar worth less in terms of other paper money alternatives, or in terms of a basket of commodities."

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Hmmm... Methinks thes headlines may seal the deal for bears, at least for today.

Have fun!