Bought 300 HOD.TO @ 9.19, Stop 9.05

I shorted some crude oil to hedge my gold miner long right at 2 pm today. EURUSD looks to be trading in a range. And since FOMC and G20 are right around the corner, I am not expecting the market to do anything drastic (i.e. breakout). So I am shorting commodity (to long US dollar) as EUR/USD is at the top of its channel (Fig. 1). I picked Horizons BetaPro Oil Bear Plus ETF (HOD.TO) because it’s one of the most active reverse ETF on the TSX. I considered buying HFD.TO (for shorting financials) but that one has a fraction of the volume of HOD.TO.

The falling star candle right below the 82.50 resistance on the hourly chart of crude oil (Fig. 2) is also a factor in my timing.

Risk is ($9.19 – $9.05) * 300 = $42 + $9.90 commission = $51.90 = 0.5% of account.

Figures 1 and 2 were captured at the time of entry. The markets are still hanging on the ceiling approaching the close.

EUR/USD

Crude Oil

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 350 HGD.TO @ 10.84, Profit +2%

China not-so-surprised the market (their delayed Treasury report was a hint) with a 0.25% rate hike overnight (WSJ: China Raises Interest Rates). The US Dollar shot up, precious metals took a big hit. I close my gold short soon after the TSX market open to collect some quick profit. Rinse and repeat.

I did mention that this trade is a short term swing. I bought this Horizons BetaPro Gold Bear Plus (HGD.TO), a leveraged gold short, on Friday and unloaded it this Tuesday. I fought against my greed to hold just a little longer. But the ascending support line on gold is too obvious to ignore (Fig. 1). Thus I closed this short term position with this 5%+ gap up while the market is still deciding what to do.

Furthermore, I noticed the equities market are holding rather well at the open. S&P500 held onto 1170 price level. Asian markets were marginally green overnight. And even the CAC in Europe is fighting an intraday low as the North American markets open. Thus, the sky is not falling just yet.

I figured it would take more omph to push this market further down as we are indeed in a strong bullish move. At the very least I am expecting some retaliation from the bulls. This can’t be this easy for the bears, can it?

Gold

Net profit for this trade is ($10.84 – $10.27) * 350 = $199.50 – $9.90 commission = $189.60 = 2% of account.

I am sorry, My Precious: Bought 350 HGD.TO @ 10.26

I cannot believe that I am doing this. I am shorting my favourite asset, gold. Spot gold was trading at 1372 at the time of my short during lunch hour (see Fig. 1). I bought 350 shares of Horizons BetaPro Gold Bear Plus ETF (HGD.TO) to short gold. It is just more convenient to do that in my RRSP trading account at Questrade. I am well aware of the deteriorating value of a leveraged ETF (especially bearish ones). So I don’t intend to hold this for more than a few days.

The reason for this trade is simple.

Today Bernanke made it clear that QE2 is on (WSJ: Bernanke Makes Case for Further Fed Moves to Boost Economy). Coincidentally, note the orchestrated weakening upward momentum across precious metal (Fig. 1), currency (Fig. 2), and equities (Fig. 3). Perhaps this is a matter of buy the rumour and sell the news?

I am betting that this rocket is running out of fuel. If I am wrong, I have my stop set with a limited risk. If I am right, there’s a long way down from up here.

So this trade is merely a matter of exploiting good risk/reward.

Stop is set at HGD.TO $9.90. Anything below $10.20 will be a sign of caution. Maximum risk is ($10.26 – $9.90) * 350 = $126 + $9.90 commission = $135.90 = 1.4% of account.

Gold

EUR/USD

S&P 500

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.