UPDATE 8/22 – #GOLD stocks prove there is always a bear market somewhere

This what a bear market and an outright crash looks like.

Gold and its sector stocks, after a long steady decline, went into free fall about four trading days ago and continued down virtually across the board today.

See the chart panel below for a random selection of the stocks.

Like all stocks, when the bear growls, these gold stocks can go down forever, but there were a couple of signs that the fall might be slowing in that two of the biggies – NEM and ABX — at least fell slower today (see the NEM chart below for an example).

A bounce may be due right about now for a quick scalp on the long side before any more decline. After drops like these this week, it will not surprise me if short-sellers want to log some profits for the weekend. Watch the open tomorrow for a trigger and keep a tight stop.

It must be said more downside will come with this much momentum in place. Shorting the bounce, if and whenever it comes, may be the better strategy for swing traders. The sector will be in its own bear market until it isn’t anymore and it’s going to have to base for sometime before it ever sees a bull again.

However, for the longer term, gold has had value for centuries and will again. Those who like to bottom fish and hold forever, or at least until the metals shine bright again, might start to carefully and patiently bait their lines.

UPDATE FRIDAY:

Buy NUGT on the open Friday for a 5.8% gain for the day, 9.6% from the previous close, JNUG for 8.3% on the day. Called this a scalp so took profits on the day trade and will watch the bounce to short. Alternative play would be to take half the profit on the close, let the rest ride with a break-even stop.

UPDATE 8/22:
Taking off alternative play, bear market bounce: NUGT up 9.9%, JNUG 10.7&, four days up into a black candle (see second chart below).

(click on the chart panel for a larger view)

(click on the chart for a larger view)

#Bitcoin – Don’t follow this crypto mania much but…

But I took a look today to see what’s going on lately.

Are you kidding me? There are people out there claiming this will replace the dollar? Replace gold?

Can’t anyone spell T-U-L-I-P-S?

I thought this would end when lap dancers in New Orleans started putting bar-code tattoos on their boobs to collect bitcoin tips.

Now that the drug dealers and money launderers have made a market a few notable institutions (like Microsoft for heavens sake!) had gotten sucked into, and computer nerds in bedrooms with potato chips are “mining” in their spare time, and even more than a few suburban crazies have gone crazy over, what is the real future for this crap? It is in market history (duh, the tulips), and it is not good.

Does anyone actually want to put their savings in this for a buy-and-hold overnight?

That this stuff is priced in U.S. Dollars should tell everyone everything that needs to be told.

(click to enlarge)

$BID And $TIF – What do the rich folk do?

They buy stocks, and spend money on all sorts of luxuries – second, third, fourth houses, paintings, baubles, antiquities… Just about anything that can be had at auction or in blue boxes.

And when they quit… Let’s just say they pull the BID (see charts below).

As bellwethers of the future market action BID (Sotheby’s) and TIF (Tiffany’s) are always worth watching. The timing is not precise but when they are long and strong the bull market is strong also but when they fall they tend to fall ahead of time. BID particularly.

Just bringing this up since I happened to notice BID seems to have had quite a sell-off lately, and it appears TIF could follow with a lot of downside space to drop into.

Just a cautionary note to remind anyone used to bull-market stock moves that whatever goes up can also go down.

(click on the charts for a larger view)

$KC_F – #Coffee short netting 118%, looking for major reversal

The current short in the coffee futures is gaining about 118% on its initial margin requirement. That’s in six trading days.

Can be done, but it’s going to take some serious trending effort on the part of coffee bears to push this swing down more.

So a reversal to the long side?

Coffee is still in an overall downtrend (see chart below) but if it turns now, it will put in a second higher price low since its bottom in December at 118, which makes it not only a long trade to take, but also gives it a chance to have a major bullish reversal. Looking ahead if it can take out 128 with some conviction, there could be the birth of a new bull market in the commodity.

But all that is just speculating. For now the short is on and the profit on this swing is, once again, just fine…

(click on chart for a larger view)

$KC_F #Coffee futures – Can A Dragonfly Fly?

The current short in the March coffee futures is up 71% on its margin requirement on today’s close.

I have to say, letting these swings run their course has not hurt for years now, and this past year too. At today’s close the daily swings, long and short (mostly short), are up nearly $15,000 per contract (see the white flag on the lower left of the chart below) for the past year. The current margin requirement at TradeStation is $2310 per contract. For much of the year it was higher so it’s too big a pain to precisely figure out what percentage that $15K gain actually is but it is a bit better than 500% for the past 12 months.

But, for fun (and maybe prudent trading), let’s take a look at today’s chart.

That is a “dragonfly doji” on today’s action (or at least very close to it). Didn’t know what it was but I thought that looked ominous for a short position, like a possible reversal, so I went and looked it up. According to Thomas Bulkowski’s The Pattern Site, the odds of a reversal are basically 50/50.

ONE CAN READ ALL ABOUT IN THIS LINK

No big deal but I still think it looks ominous so, since no signal is foolproof, I’m tightening a stop to preserve some of this 70% profit overnight.

(click on chart for a larger view)

$KC_F #Coffee futures – racks up 134% on the short side.

I closed this trade earlier (covered too soon) but coffee futures officially closed its current down swing with a profit of about 134%.

Needless to say again, Coffee has been a stellar performer on swing trades this year. Calculated on the continuous contract, it is up $16,500 on swing trades long and short (short being best in retrospect). Sneak a peak at the last line of text below for the current initial margin requirement to see what “stellar” means.

As for the current March contract, it is, according to TradeStation, up $12,600 per contract (see the white rectangle on lower right side of the chart below for closed trades). It is hard to calculate percentage gains since the margin has fluctuated.

Coffee has now reversed to a long. The initial margin requirement is now $2,310 per contract.

(click on the chart for a larger view)

$KC_F #Coffee #futures short nets 100%

Took off half of the position earlier on this futures swing trade. Second half up more than 100%, about $3150 on a $2970 margin requirement.

START OF THE TRADE

This move to the downside has probably gone about as far as one can expect and is threatening a turn to upside (see indicator on the chart below) and is down three days in a row so covered the second half of the trade on the close today.

Not going long until I get a swing signal to buy.

(click on chart for a larger view)

$KC_F Coffee futures, five days short, up 70%

The char below says it all, short from 128.50 in the March18 contract and up now $2100 per contract on this down swing, a 70% gain on the margin requirement.

Oversold now. Down four days in a row, a marker oftentimes for a bounce.

Taking half off but letting the rest ride in case of a crash.

(click on chart for a larger view)

UPDATED: $KC_F #Coffee futures up 73% in five trading days

A QUICK UPDATE: Coffee futures sold off today (probably hexed it with this post) and finished its upswing with a 31% profit. In this swing system it is now a short.

Coffee futures, which gave a buy signal at 123.85, closed today at 129.65, up 73% on the margin requirement.

START OF THE TRADE

That is a net so far of $2,175 on a margin of $2,970. Five trading days from the close six days ago.

In addition it broke out of the box around its most recent consolidation so it is likely to have more room to run (see the chart below). A possible target would be the high at 132.70 back on October 10th (marked by a white dot on the chart).

A great trading vehicle, coffee futures are up 430% year to date on swing trades year to date, long a short, not counting the current gain.

(click on chart for a larger view)