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?

[caption id="" align="aligncenter" width="570" caption="Gold"][][][/caption]

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

Posted 19 October 2010 in stocks.

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. [caption id="" align="aligncenter" width="570" caption="Gold"][][][/caption]

[caption id="" align="aligncenter" width="570" caption="EUR/USD"][]1[/caption]

[caption id="" align="aligncenter" width="570" caption="S&P 500"][]2[/caption]

Posted 15 October 2010 in stocks.