Gold and Bonds

Gold and TLT have been running inversely to each other lately. I am long bonds through the x3 TMF and out of my gold trade. I don’t short gold I am long or in cash. This chart shows my read on gold this year…the blue circles are the turning points and the blue arrows are the take profit zones. I scale out of the trade as it moves in my favor.


Bonds Breaking Outside the Bands

I am long the TLT through 3x leveraged ETF TMF. I am up 11% today and price is breaking outside the overbought bands. Normally I would sell some here to lock in some profit but I am going to give it a day. With the indicators going on fresh buy signal (albeit its in extended overbought levels) I really think another day or two can be had out of this trade before I need to take home some profit. This is experience of following the indicators daily.


The 20 Day Moving Average 

This will mark the 3rd time this year CEFL closed below the 20 Day Moving Average only to turn right around close above it. 

This risk u run for active management. U give up little upside. But one down trend that last more than few weeks and that active management will seem cheap expense. I stay the course.

Be at half risk when prices are moving down be all in when prices moving higher. Sometimes this process can take several days to play out. I just sold 500 shares yesterday now price moved higher and is printing above the 20’day Moving average so I might be putting that 500 shares back on into today’s close.

When trend breaks down

Want see what a trend looks like when it starts to break down take a look at the AAPL chart posted below. Notice price broke out quickly below the bands. That tells me it’s a powerful move.

 I expect price pause here to digest such fast and furious move.

Price is now below my three moving average 5 ema 20 sma and 50 and the averages are starting to change alignment. 

When price was moving higher price remained above the 5, 20 and 50 Day Moving averages. Numerical order is important as well.

On the Apple chart we see 5 ema crossing and closing below the 20 sma. While these are in bearish alignment they have yet to seal the deal and close below the 50. 

Trend has changed for Aapl as of now. How will it last? No clue but trade with the trend to win!

I seriously hate oil charts

I’m the ultimate alpha male trader. I like trucks, oil, gold, and machines that dig holes. I have to push myself to trade technology. Left to my own devices my portfolio be filled gold stocks, oil stocks and industrials. That isn’t a good Money management. 

Because of this weakness I always want to buy oil stocks and I own way to much now. But technically oil charts look terrible. Let’s look the ETF at $XLE.

It is perfectly defined downtrend. All moving averages are sloping down. All in numerical order 5 ema, 20 sma, 50 sma and price is below them. 

All 5 my indicators are on sell signal. No rush to buy here unless you have really long term view. Hard imagine oil stays below $50 forever. Let’s now look at the commodity itself.
Oil is in a wide downtrending channel and currently on sell signal. No rush to run in until price breaks above the 20 day simple day moving average.

Gold is in solid uptrend though you couldn’t tell it from the mining stocks. Gold usually leads so I expect GDX to break out soon. 

I am long gold using 3x leveraged ETN ugld.  I’m up 6%. My target is $123 on gld. That be 10% profit I will look to sell 1/4 my position.

CEFL continues to print money. 35% return last yr and close to 20% already this yr. I plan to increase my position size on the next buy signal.

When to take profits?

What do I do if a trade goes your way and u are in profit? How do You know when to sell and book the gains? Heres what I do.

Let’s start with what’s your time horiZion? If you plan to remain a share holder and compound the dividends and grow your wealth u need to learn to trim your positions. The idea is if price really rockets up and your position increased by large amount u can take some gains by selling a portion of you position. It could be as little as 1/10. 

If say u bought delta in $40s each time it got into $50s the indicators signaled overbought u booked gains. I did this exact transaction today. I bought 100 shares delta at $45.50 Today it hit $50.80. 11% return or $520. I sold 10 shares rasing $506. Taking the value my position in Delta back what I paid originally and I’m still long 90’shares into a surging up trend. 

Those 10 shares do decrease profits as price increases but price is more likely to stall in this area due to all indicators being over bought and for 2 yrs this area been overhead resistance for price movement. Why? I have no clue. In $50 range last years people sell this stock. Why not take your gains on the trade and have a bet it breaks through resistance and continues on. 

If it does your sitting in a nice trade. Be happy.  If price turns like it has in past, you locked in gains now you wait for price sell off maybe add those 10 shares at lower price point. 

You could also put that $500 to work in a new investment. If you have portfolio of stocks and you trade around these positions pulling off profits and adding to positions at lower prices you snow ball the gains. 

A portfolio of 10-12 blue chip dividend income stocks can quickly turn into 15-20. Or u could stick with the 10-12 and use profits from companies doing best to build positions in ones representing most value.

Obviously u need a timing model. I call mine the Money Flow.  Look next 2 charts 

Now look at this weekly chart. This is text book overhead resistance. I sold a portion of my position to take advantage of this overhead resistance.

I hope price continues higher but wise active management says otherwise.