More shorts

Bought 400 more SDS @ 36.10 yesterday. No revisionist history here, just didn't update the blog.

Market Probing

The market is probing for any support from the PPT. So far, not so good. Bombs away. Next stop 980 on the S&P.

Wal-Mart

RVASpeculator and I agree -- Wal-Mart is cheap by historical and forward looking valuations.
He believes that Wal-Mart may be beaten up because of two main reasons:
1) Yuan revaluation makes chinese goods more expensive
2) Large component of retail ETFs and mutual funds, which are being sold or sold short.

Wal-Mart is currently sporting a trailing 13 PE and forward 11 PE. It is carrying a 2.7% dividend yield. It's historical low point is in the low 40s for price in the past 5 years. Wal-Mart is a buy anywhere in the 40s.

I will be writing puts, In the money, on WMT if it gets down into the lower 40s.

Another Ponzi?

The paper gold (futures) market recently made a few changes. One of the ones cited by GATA and others is that COMEX can actually make delivery in shares of GLD instead of providing physical gold. I agree this is rather odd, but even worse is something I believe has been completely overlooked:

The GLD fund itself can not take delivery of gold immediately. It would be impossible to arrange delivery to vaults on demand. I suspect that GLD has predetermined delivery dates. Until then, it probably holds Gold Futures and takes delivery of those futures. This is why GLD doesn't experience any contango or other issues with its valuation because it takes physical delivery.

However, this presents an interesting conundrum...

You buy Gold futures, COMEX gives you GLD shares instead, in which GLD holds gold futures to take physical delivery.


Let me say it again. $GOLD is backed by GLD which is backed by $GOLD.

Does anyone else see a problem with this?

Now granted, I realize that "supposedly" GLD holds a fair amount of actual physical gold. And I believe it does, contrary to popular belief. But I believe it holds a substantial portion of gold futures contracts (with the intent to take delivery, granted) that constitutes a circular ownership trail of nothing but paper.

Finally, a few disclosures:

1) I am a conspiracy theorist.
2) I believe that physical / spot gold is not a ponzi.
3) I own lots of Gold and gold stocks.

First published on my blog, permabullybear.blogspot.com

Short again & some new longs

Bought 300 UltraShort S&P 500 (SDS) @ $33.50 with no stop
Bought 100 Chicago Options Exchange (CBOE) @ $31.50 with no stop (this is an IPO)
Wrote July 34 strike Puts on SDS @ $1.80
Buying more Yamana Gold (AUY) at the open, bringing total share count to 3000

Tremendously long consolidation almost complete

Yamana gold has been consolidating around the 10 level since May of 2009. Meanwhile, gold prices are up almost 30% from that point. Yamana is 50% below where it was in March of 2008, when Gold was just barely at $1000 (the first time).

This consolidation will end as soon as Gold decisively breaks out from the $1250/65 area. I believe this will occur in the next week. Gold did a classic break out and re-test move to shake the weak hands out. The next week should be solidly positive for $GOLD futures and should close Yamana above $11, on its way to $30 in the next 12 months.

Gap and Crap (Out)

Futures this morning gapped up handily -- almost 17 handles when I awoke from my slumber. Everything was higher.

And then, crap. Actually, there have been 3 other bad closes in the last week. One gravestone dogi, two other "ugly" candles. And then this nonsense today.

We need a full candle closed below the 200 DMA to feel "excited" about being bearish again. Until then, I'm not sure what to make of this.

I do know that Gold rolled over like a dead dog, and that doesn't really excite me considering the amount of gold positions I have.

Time to load up on SDS again?? Perhaps.

Likely $GOLD triple top breakout

Gold's continuous futures have already broken previous resistance. I expect a substantial bullish impulse tomorrow!


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Wow

Ok I didn't reopen shorts today like I said I would. Thank god too! I'm not doing anything again until a downtrend in the euro resumes.
Today is a prime example of why remaining short a market over even the intermediate term is often suicidal for ones net worth.


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RIG Bonds

RIG Bonds, due 2013, now yielding 7.3%. Bought 5.

The dangers of High Frequency trading in your own account

Let my example be an example to you all. Overtrading is silly and makes you no money. I have a conviction that the market is headed much lower and I want to hedge my longs. So I buy lots of ultrashort S&P (SDS) in anticipation, and make real $$. Then, I try to get cute and try to avoid the short covering spikes.

This is silly. It's overtrading and it makes you enter positions at the times OPPOSITE what you should -- after the move has already begun.

I am opening new shorts tomorrow using SDS and QID, and I'm not letting go.

More position updates

Wow, I've been slack.

Bought DD @ $41 and $37, cost basis then $39.
Bought XOM for $67.
Bought KO for $54.

Position Updates

This has been a long time coming:

Sold half of my BP for a 40% loss.
Wrote a BP $20 July Put for $98.
Got assigned on my RIG at $65. You know where that is now.
Sold 200 AUY at $11 yesterday.

Covered all shorts again

Sold all SDS @ $35.3 for just marginal hedging gains; less than 1%.

Missed the boat by not selling yesterday morning for a 5% gain.

Pile it on

I'm putting my money where my mouth is. I'm piling on another 100 sds. This grizzly smells blood in the stream from an injured bull. Bought at 35.8 with a stop at 34.8.

Oh and Gold to new closing highs today!


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More destruction ahead

We closed today below major support in all major FX crosses --euroyen, eurodollar, Aussiedollar -- and this portends further weakness in the equity markets as the new deleveraging cycle accelerates. Capital flight is occurring in the European market which is driving FX markets which is in turn driving the dollar which in turn is driving US stocks (along with energy uncertainty from the BP spill) lower... In turn driving gold higher? Got that?

I expect more of the same the rest of this month and quite frankly the rest of this year. Short term setup on the s&p puts us at 1014. We will likely get there next week.

Be safe and get hedged If you are long -- it's about to get ugly.


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Beep Beep Beep

Backing up the truck.... bought 300 more UltraShort S&P 500 SDS @ 34.7 with a stop @ $34.

Total position: 500 SDS, or roughly $17,500 short with 2X leverage $35K short.

Reshort at resistance

Bought 200 SDS @ $34.30