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Silver Wheaton Corp. Message Board

  • ballhead59 ballhead59 Jul 7, 2009 7:53 PM Flag

    OT- Natgas

    Ouch!!! I'm an investor now, the ole buy and hold strategy for me.

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    • Ouch is right! I was thinking about posting a topic like this today but you beat me lol.

      As I mentioned before I borrowed a strategy from the options guys, called a straddle.

      Basically, I was long at say $6/ unit and I did not want to loose the position by liquidating in the face of POTENTIAL turning point. Why? if it didn;t turn and it went up, I'm riding incremental increases up from $6 vs a chased buy in higher than $6, say $6.5. Never chase.

      By taking both the short and long position at the potential turn, I neutralized my losses or gains, until the direction was clearly determined. Also, using this I also locked in the best buy-in price for incremental gains whether it went positive or negative.

      I'm up a good number of points on the short ETF due to this. I averaged in on the short position the next day ( bought more short five days ago, breakdown was six days ago) with my liquidated long from the previous day.

      I don't think I can call myself a swing trader anymore, I'm more of day trader

      I'm troubled by the divergence of the silver chart from the gold chart. The silver chart shows a breakdown but gold remains within its positive channel.

      The next few days will be interesting.

      • 1 Reply to chemaes44
      • Chemaes,

        Thanks for sharing your logic, that’s helpful. That is a good strategy for turning points. I got suckered into thinking there was some “value” associated with a commodity putting a floor on price. Ultimately, I still believe that is the case, I just hope the time decay in UNG doesn’t kill that idea. Was also buying the idea that this breakdown was a last washout as part of the bottoming process. If I am counting back the days correctly you identified the breakdown on 6/29, which looking at the chart is quite impressive. It is always easier for me to see things when looking back in time on a chart. Yet, looking at natgas or UNG now, I would have been hard pressed to say it broke down until 6/30. Obviously, it would be nice to identify the breakdown that early, so I am wondering what you saw to convince you to pull the trigger. Lately, as I look back on charts such as UNG, in hindsight I am wondering why it wasn’t obvious to me that UNG was breaking down and the right thing to do was get out. It is definitely difficult to transition into a trader mentality, been working at it awhile but still don’t have it. Probably that mentality, I am right and don’t want to take a loss, it will come back. Oh well, Rome wasn’t built in a day.

        I have also been noticing the weakness in silver. I have mentioned before I respect the opinion of Bob Hoye, who has been saying that a rising gold/silver ratio signals distress in the financial system and portends the onset of the next wave of credit contraction. That ratio looks to be breaking out to the upside. In fact, this is why I have been searching for hedging strategies. I will have to contemplate for awhile what you have done with natty and how I might apply similar strategies to my portfolio. I think you are right, Gold is one tight spring bouncing around between 920 - 940 and something is going to happen soon. Hmmm, maybe I should brew a pot of coffee. Thanks again for sharing your thoughts.

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