Bought 1000 PMV.VN @ 0.62

Update January 26: The share price of PMV.V crossed my mental stop yesterday so I had to reassess the position. I sold my shares at $0.56 for a loss of ($0.56 – $0.62) * 1000 = $70 + $19.90 commission = $89.90 = 0.9% of account. Gold is falling while USD tanked this week. The lack of volume on today’s goldminers rally is also uncharacteristic of the recent uptrend.

The long term uptrend of gold and gold miners is unmistakable on both fundamental and technical basis. I am taking a dabble in this junior gold miner as its share price is making a gap fill on a recent breakout (Fig. 1), amongst other things. Intraday chart (Fig. 2) is also showing signs of life at this support level.

What’s going to happen to gold as it breaks below 1350 (first time since November) from worries about Chinese inflation, which led to strength in USD (on fear of further Chinese tightening) as EURUSD dropped 60 pips in 2 hours. See FT: Fears grow that China is overheating.

Couple that with political and economic uncertainty, we have a short term uncertainty in gold’s direction. However, all these is in line with the underlying gold-bug case that money is becoming more worthless as governments pump in money to their respective economies. Another point to note is that as the Shanghai Composite and Bombay Stock Exchange (i.e. growth markets) are making 3-month lows in recent weeks, people will start to look for other assets to diversify their wealth.

This is all conjectures anyway. I can’t predict the future.I am merely placing my bet as the stars seem to have aligned for me to increase the probability of this good reward/risk trade.

Mental stop is $0.55. Hard stop is $0.48, however, I’ll give it some margin and say 0.40 is my stop as liquidity is thin in this junior. Thus, risk is ($0.62 – $0.40) * 1000 = $220 + $9.95 commission = $229.95 = 2.4% of account.

Note: You might have noticed that my trade log style has changed for 2011. I am trying to jot down my thought process rather than the data analysis and numerical logic to better capture my thinking for the record.

PMI Gold Corp. (PMV.V)

PMI Gold Corp. (PMV.V) intraday

I didn’t miss a boat. I missed a freakin rocket!

The purpose of this post is not to bang my head over this wonder. There are always other opportunities in the market. The purpose of this post is to remind myself that:

1. my analysis can be so right, sometimes; but more importantly
2. my entries and exits timing are still terrible

I can’t use the same techniques I use to trade forex and large caps in these junior miners. I’m used to riding waves on a boat. I need to adapt and figure out ways to ride rockets (a friendly reminder that most rockets will fail to launch), as Uberlu suggested in a comment.

Here’s what happened.

I lamented about my missed opportunity in establishing a position in Ventana Gold (VEN.TO) last week. VEN.TO is a company in which I’ve been very bullish and took numerous dabs at for months. This is the picture of VEN.TO last Monday. It already propelled to $11.

Ventana Gold (VEN.TO) on November 8

Now this is VEN.TO today.

Ventana Gold (VEN.TO)

VEN.TO closed at $10.03 on Tuesday. It opened at 13.61 on Wednesday on news of a takeover bid.

Bought 300 VEN.TO @ 8.95, Stop 8.80

Update Oct 20: I raised my stop to 9.10 this moring. It got stopped out 2 minutes before the close for a small profit.

Following the covering of my short side play this morning, I sneaked back in to the gold bug camp. In particular, I bought some of my recent favourite gold miner, Ventana Gold Corp. (VEN.TO), a few minutes before the close.

Gold held on to the 1330 support as I’ve discussed this morning (see gold chart in this morning’s post). I also watched the closing 30 minutes of the market and VEN.TO respected its 8.90 support level too. See Figure 1. There was a brief touch below 8.90 but it pushed back up quickly (not shown).

This is a play inline with the direction of the recent rally. Just riding the trend. Nothing fancy.

Hard stop is $8.80. Mental stop is $8.88. Maximum risk is ($8.95 – $8.80) * 300 = $45 + $9.90 commission = $54.90 = 0.5% of account. There’s a risk of another gap down open tomorrow. So my position is small in case the market runs away overnight.

Ventana Gold Corp. (VEN.TO)

Sold 400 VEN.TO @ 10.70, Breakeven

I’m out all my Ventana Gold (VEN.TO) position. This thing is losing steam despite gold prices hitting record high seemingly on a daily basis. VEN.TO made another attempt to break $11.00 resistance level at the open but it quickly reversed (Figure 1). I upped my stop order at the open on this third attempt because I don’t want to be holding it if it fails for the third time.

I’ll just sit and wait for a while to see how this one goes. Recent low at $10.40 is the support to watch. Coincidentally, the 50 daily MA just crossed over the 200 MA today for a classic bullish signal (Fig. 2). A contrarian correction (downward) to bleed off overbought condition is in play, perhaps?

Ventana Gold (VEN.TO) intraday

Ventana Gold (VEN.TO) daily

Loss is ($10.70 – $10.70) * 400 = $0 – $14.85 commission = -$14.85 = 0.15% of account. I am just handing money over to my discount broker Questrade these days.

Sold 350 VEN.TO @ 10.50 (Profit +0.8%), Re-Bought 250 VEN.TO @ 10.67

My Ventana Gold Corp (VEN.TO) stop got filled yesterday afternoon as gold price took a dive (Figure 1) before the Bank of England minute today. However, the support at 10.50 look very promising as VEN.TO made a couple of successful long tail test of that level in the last 24 hours (Fig. 2). Seeing that the BoE has blatantly admitted to support the bandwagon on more quantitative easing (along with the FED), the bullishness in gold is written on the wall. As such, I am re-entering my VEN.TO position this morning with a smaller amount of shares.

New stop is a close of VEN.TO below 10.50. Volatility is expected to be high. So I am giving it some intraday leeway to move. A hard stop is set at 10.20. Risk is thus ($10.67 – $10.20) * 250 = $117.50 + $9.90 commission = $127.40 = 1.3% of account.

For the record, previous entries were at 9.74 and 10.85. My stop at 10.50 was too tight.

I am admittedly being quite aggressive here. Let’s wait and see if it pays off.

Gold

Ventana Gold Corp (VEN.TO)