Laid low

ht

Laid low by a cold for the past couple of days.  Since Monday was a holiday in the US the interesting action happened yesterday.

The DJI remained above the resistance level that was established by a price peak back in May last year.  But the movement in the market remains steady and subdued on a day to day basis. It is amazing how hard I find it to pick up on a change in the mood of the market and respond appropriately. I have completely failed to respond to the smooth upward trend which emerged in December, hugely to my cost in missed opportunity. I now am fearful that my response is too late. This feeling is not helped by the fact that my share picks have been poor. So, even now that the market is still bowling along my returns are dismal.

No point in bleating about this. I am making some money and these periods when nothing you do goes right happen from time to time. It's just a case of being strong and holding on for the moment when luck returns. In the mean time you just keep going and checking to see whether perhaps there is something you have missed and could be doing better.

In the mean time I have taken profits on PG and VZ in the US, both meagre. In the UK on WEIR, decent.
I have filled my boots with HK shares 3360 410 1128 1068 and 2342 - so far so good. These were purchased on the basis of decent quality shares that had been beaten down.

I am also in the process of buying battered shares in the US that I plan to hold for a week. More news about these in my next post.

I have had two comments and have been delighted to reply to each one. Ian recommended MA crossovers as a method for getting in and out of shares. I tested Unilever and found that they were too slow as signals for getting in and out.

Dave wants an understanding of this trading business and I have recommended two books:
Jim Slater's The Zulu Principle and Richard Koch's Selecting shares that perform.

It seems to be working

I put a lot of money into this one so the 2.2% in 10 days was well worth it

I've had a couple of good days despite the market being weak. I am continuing to take profits. For the first time in my life I am using automatic limit sales. Yesterday I came home to find the stockbroker (Selftrade) had netted me profits of £700 and the shares sold (TATE and TALK) had pulled back from the peak . I have now put limit sales on all my wave trades. And I have opened new trades in SDL and SGC. SDL has risen by 1.2% since I bought it at lunch time.

Let's hope this one works

My initial reaction to this strategy the profits were poor. A friend pointed out that I had been holding the shares for days and the percent gains made in those days were exceptional. Looked at that way the strategy does seem to be working. (2% in 10 trading days works out at about 50% per year, if you can keep it up).

You may remember how it works. I look for shares that are trending and are sitting at the bottom of the 1,5 standard deviation confidence line. I am now tweaking the strategy. I only working with the shares where the distance back to the middle of the channel is at least 4%. I am also favouring shares where the trend is upward. Rather than going for a large number of shares with small investments in each I am putting more money in fewer shares.

US shares bought using this strategy have been sluggish so far.

I am working hard to find good VectorVest strategies for the UK. It is proving a long and tedious search because it cannot be automated. I found one search which perform well consistently through last year's troubles. It picks out shares in rising sectors that have a good fundamentals. The selections made were mostly in the mining sector ANTO KAZ LMI MIDD and XTA. My plan is to hold them for a month and then to refresh the portfolio. The shares are already making some headway.

My life has been blighted in the last couple of days. Someone hacked into my Skype account and made a whole bunch of phone calls, mostly to Africa. The sum of money I lost was not great and Skype seems to have put most of it back. But I needed to find out if my computer had been compromised. A scan revealed that some infections had slipped past the firewall. I called the security company (ESET) and they assured me that nothing really bad was sitting there and the hack must have occurred at Skype's end. ESET spent half an hour doing a thorough clean of my computer through a remote link. Nevertheless I thought it sensible to change all my passwords. Another tedious task.

Cash up

Dow blue, FTSE brown, DAX green

Today is one of those big days. Not for the market but for me. Seeing the weakness of Tuesday's break out and looking as the long term chart of the Dow which I posted yesterday I lost heart and sold almost everything I had.

I've lived through these moments of truth several times during my trading life. Mostly, I am happy to say, just before a major market crash. I have no way of telling whether a crash is coming but it is possible. A great weight has been lifted from my shoulders. The market with its massive daily movements is so hard to read at present. The fact that gold moves in the same direction as stocks as I described on December 8th. removes gold's value as a safe haven. So what I have done is given myself a breathing space.

• I can explore alternative strategies that may be helpful in these hard times. 
• I am ready for a crash if one comes
• I can watch gold and silver perform their peculiar antics without worry
• I have cash ready to jump on board any train that I see leaving the station

I made a small overall loss on my purchases of Tuesday. I made money on the US stocks, but I was too slow selling the UK ones. I would have made a lot had I sold them on Wednesday but the gains were quickly reversed. The Hong Kong shares never really went anywhere.

So now I wait to see whether any winning strategies come to mind. Whether I was right to worry. And whether gold and silver will be worth buying again.

Today's chart simply shows the relative movements of the DOW, the FTSE and DAX over the past year. It is surprising that the DAX has been hardest hit given that the German economy is doing so well. I guess it must be that investors are wary of Euro denominated assets. The Dow strength is probably due to a preference for dollar assets.

Bad connections

I decided to go for it and bought shares in US UK and HK. I made money that first day but it started to drain away yesterday. It's too early to say whether this was a smart move. I was encouraged by Tuesday's clear breakout on the DOW following a few holiday days sitting on top of the resistance/ support line. So far there has been no clear follow through so I am getting a bit nervous. I'm ready to jump either way: buy more, or yelp and run off with my tail between my legs. It's that sort of market.

Gold and silver present similar dilemmas. An excellent rally on Tuesday (and a nice profit for me) but little follow through. Both are coming up to resistance levels. Silver is approaching a line I drew some time ago, gold one which I have only just added. Vigilance is required here too. 

I have been suffering from ongoing broadband connection problems for about two months now and they are getting worse rather than better despite attentive and heroic efforts from BT ably managed, I have to say, by TalkTalk (not everyone's favourite but I've been with them or my phone for many years and several name changes. I think they were called Mercury when I started). BT's latest effort is to rewire from the house to two telegraph poles away. It cleared the crackle on my phone line but the crackle comes back when broadband is attached. For my part I have changed my phones and my router. And still the crackle goes on and broadband drops out several times a day. Sometimes it comes back of its own accord at others I have to reboot the router and the computer. Not much fun. I had to kick Plus Net (my broad band supplier) quite hard to push them into action after the holiday break but they are sending a BT engineer this afternoon. It's dispiriting and I worry that I might end up with no service at all. A bad way to start the new year.

And here's another little worry. Here is a five year look at the DOW. To my eyes it has a distinctly toppy look to it. Stay lucky.

Watch and wait.

Not a pretty picture

Happy New Year to you all and may it be a prosperous one.

I have completely ignored the market over Christmas. barring a couple of sneak peeks and a bit of a groan as precious metals dig a hole in my portfolio. This is where I need to focus my attention so that I have a better idea of what to do next.

Which way will it go?

Dow is back up to the resistance level and sitting there. It is sitting high so the big question is 'will it break out?' I've no answer to that so I sit and wait with my ducks lined up.

Gold is ugly. It has broken all nearby support levels so its current rebound is unconvincing. The next support level now is around 1480 almost 7% below where we are now. Resistance at 1600 is frighteningly close. Logic dictates: clear the decks and that is what I might do sometime today.

Silver not looking too bad

Silver is a bit more hopeful. It has bounced of a strong support area around 26.00 and has almost 5% to go before resistance. So good reason to hold or even add. Again I'll leave the decision till later.

A bit of euphoria hit the UK market at the open pushing it up over 100 points. Even after the pull-back it is still strong.

So I am watching and waiting for a sign to show what the Christmas break has done to the market's mood.

Hold onto your hats

Hold onto your hats.

Amazingly the Lloyd's purchase is paying off - so far. I am sitting on a net profit of 1.7% after four days despite yesterday's pull back.  I guess it will all vanish tomorrow. I need to monitor carefully because it is a share with no fundamental virtue. Its price is subject to political interference - this does not make for a happy holding. It will be a case of take the money and run. I might have done that yesterday but was out all day with our Australian guests. For the time being the price is being pushed and pulled by the market and that is why I think the paper profits will disappear today. We are still in that ghastly channel

Hong Kong is much the same. Price fell to the level where I had made the judgement that it would bounce back and in a valiant effort to put my money where my mouth is I put in an order to buy a batch of shares on Thursday night. Since I expected a strong rebound I put the buy limit at 1% above the closing price of the previous day. All my orders, with one exception were filled. The exception was a share that sprinted upwards and made a 4% rise on the day. That share (330) has continued to rise The shares I did buy made no money the first night but with the big rise on the Dow the next day they made money on Monday. The money was lost on Tuesday overnight after the Dow had lost ground.

It is beginning to look as though the new resistance line that I had failed to spot previously (I have marked it on the chart above) is the important one. With that new line in place I'm beginning to wonder if we are going to have a repetition of the last pattern of consolidation. If this happens the next move is a sharp fall to the bottom of the channel and support at around 11500 with the risk of a breakdown. This is guesswork but I still think it's time to hold on to your hats.

I was not at my desk yesterday because I took my guests to Swindon. Swindon? you may well ask. But Swindon has used part of its old railway workshops to create a massive cut price retail outlet - boring but big and lots of ladies like it - and another part to create an amazing museum dedicated to display the story of the building of steam locomotives from the nineteenth century up to the 1960s. Over 20,000 people lived and worked there for several generations. The museum is called Steam and whoever designed it did a fantastic job. There are short film clips that show interviews with men and women who worked there as well as pictures of the frightening machines they operated. Those machines are there and there are massive examples of the locomotives they built. I have taken two lots of visitors there and in both cases they were enthralled.

Patience is a virtue

Patience is a virtue, a virtue is a grace, Grace is a little girl who wouldn't wash her face. A nice little rhyme which I could do well keeping closer to my heart. I have done it again. I correctly forecast the top of the channel for gold. Indeed when gold got to the top I sold half of my holding. Then it poked its head above the channel and I promptly bought back. Then it dithered at the top of the channel for a couple of days and plonk, down it dropped to about three quarters of the way towards the bottom of the channel.

Take profits before its too late

My trading error with silver was worse. I actually stocked up with an extra holding when it pulled back to the bottom. Did I take my profits when it rose? I did not. It's greed and it's impatience. These market conditions are brutal because the moves are so violent, even when they are inside a channel, and it is hard to judge the moment when there is going to be a break out.

At least with gold and silver I had the excuse that we were at the bottom of the channel. The stock markets were a fair way from the top and still I could not sit on my hands the way I should.  I have a good friend from Australia staying. He is an econometrician. We used to work together and he has much greater forecasting skills than mine, but he has less knowledge of stock market trading. I have been showing him the techniques I use and have introduced him to the VectorVest service and its various share picking tools. It is great working on something like this with a friend because you can stumble on new ideas. I had a 'conversion on the road to Damascus' moment when we used VV's portfolio backtesting system and applied stop losses over a period where I would not have expected them to make a difference. I was backtesting a bottom fishing strategy over the period 10th August to 12th October - an unpromising period for trading and found that it worked very well and the stop lossing at 10% loss or 20% gain. The stop loss almost doubled returns.

I then explained that I found VVs market timing system unhelpful. Instead I use the methods that readers of this blog will recognise. I try to identify areas of support and resistance based on price action during earlier periods. I also use a very few chart patterns to help nail turning points. Finally I mentioned the  importance of volume spikes.

We were looking at the chart for Lloyds Bank and noticed that the price was approaching a support level and that there had been a volume spike a few days ago. There are two resistance levels - one 14% away and the other 34% away. The support level is just 3% away - a natural point at which one can review the situation and bail out if necessary. Terrific risk reward ration. So I bought Lloyds Bank on a whim.  So now I have the uncomfortable decision to make. Do I just pull out of Lloyds or do I wait for the market, which is now approaching the bottom of the channel much faster than I could have hoped, deliver a new buying opportunity and make Lloyds a part of that stock purchase alongside new bottom fishing candidates that I find.

Patchy service this week

Missed opportunity on the Hang Seng

This week and into next we have house guests so the service is likely to be patchy. I will endeavour to ensure that any crucial developments will be covered promptly but there may be gaps.

I am writing this post on Tuesday morning, a day after the markets did very little. The Dow was modestly up. These days 83 points counts as a modest move! And the FTSE was modestly down. So the FTSE may play catch up when it opens, though its move may be subdued because the futures market is currently pointing to a 60 odd point fall in the Dow at the open. We continue to sit on the 200 day moving average. See Friday's chart.

Gold and silver look more interesting and, from a trading point of view, worrying. Gold had a good run yesterday and overnight has risen sharply to touch its next resistance level at 1793. So big decision: do I take profits or will it power through. My inclination is to take part profits as soon as London opens and then repurchase if the price moves on upward. On the other hand there are no volume signals to suggest that a reversal is about to take place, so I may just hold on. There is no good news on the Euro Zone crisis and gold is the only protection against an ugly end to that political saga. Silver has cleared the downward diagonal that I pointed out on Thursday's chart, and so it looks set to move on to the next resistance at 3570 2.5% up from here.

Today's chart is the Hong Kong index - the Hang Seng. I put it up to show how I missed an opportunity by watching the world with blinkers on. I was sitting fiddling about with gold and silver and fretting about movements on the Dow and the FTSE while the Hong Kong market moved up 25% in a month. I am set up to pick shares in Hong Kong and to buy and sell them easily. I have a stock of HK$ sitting idle in my brokerage account and I take my eye off the ball. This blog is doing its job in reminding me how stupid I can be. My guess is that the opportunity has passed since we have hit resistance. But I will keep my eye on this from now on. There remains a gap to be filled so another run up is possible. And there is a potential support line around 19050 which could provide a sensible entry point.

Mid channel doldrums

We're back in the doldrums. It feels even more boring now that I only have gold and silver. There are no shares to watch. Silver is continuing with its pull back, respecting the diagonal resistance line I spoke of yesterday. If it continues on this course I may have a chance to buy a bit more - if I dare. In the mean time it weighs down on my portfolio.

I am showing the Dow chart again today to show how it is stuck at the level of the 200 day moving average having bounced off the 11720 support line. I believe it is working its way along a broad channel between 11520, the top of the previous channel, and 12284, the high reached on Thursday 27th October. That's about 750 points  - not much different from the width of the previous channel. I wonder whether it will take another two months to break out?

A favour please. I notice that I have a number of regular followers. If you enjoy reading the blog why not share it with friends. There is an envelope symbol at the bottom of each post which makes it easy to email your friends. Good luck in your trading.

Picking shares

Trading is all about state of mind. I make no bones about the fact that I have had a terrible year and have lost a lot of money. It was just not my type of market. Despite this I could not leave it alone and I lost. I was chasing price movements. Taking positions too late and holding on to losing positions too long. Then realising losses just as the market turned. I was reading the market correctly but I was trading badly. Luckily for me I have faith and continue to try to learn about how to make money in such unfavourable conditions. I need to because those conditions could easily return.

But now conditions have changed. We are back in my kind of market and in just a few days I have made back well over half of my losses.

At heart I am a share picker and the table shows what share picking can achieve. You can see the shares I bought, the date on which I bought them and the percentage profit, after costs, that they have generated. Most have been held for a week or less. The first batch are US shares and the second UK. The performance of the latter is nothing like so spectacular because the UK market moves more slowly.

I have bought some Honk Kong shares too but I only bought them last night they have not yet had time to cook. I bought the following shares: 88 712 571 4 17 and 903. (HK shares have numbers as codes).

But now I start to worry about protecting my profits. Making a return of 60% on a share in a week is brilliant but I begin to wonder when other buyers will start to take profit. Same is true of all the high return positions. Perhaps a little turnover in holdings is needed.

And then there is the market risk. A long solid upward run like the one we have just had is bound to have pull backs. I have no way to tell when a pull back is part of the rising trend and when it signals the beginning of the end. You see what I mean about state of mind. Worry on the way down, worry on the way up. My decision to change tack will be made on a whim. I am not bound by a system. And that, I believe, is how I win in the end. I have never heard a systems player admit to what their return on capital is. I would dearly like to know. Because if they are doing better than I am I will try their system and leave behind all anxiety.

I have repurchase gold and silver. I started to read Boomerang: the Meltdown Tour by Michael Lewis and began to feel very queasy. He talks about disaster waiting to happen inside the world's national banks. It reminded me why I was holding all that gold.

Today has been a sad day. My father has had Alzheimer's disease for the last 14 years. For most of that time he has been cared for by my exceptionally patient and loving step-mother. For the last few months he has moved into a home where the care is exemplary. I went to visit him today. It is disheartening watching human wreckage. Men and women who have lived rich and full lives reduced to sitting staring into space unable to do even the most mundane things for themselves. My father feeds himself and has a huge enthusiasm for his food. I played a game of chess with him. His recollection of the moves is still there but only just. It passes the time.

At the last minute I decided to take profits on the three highest performing shares and hold onto the cash until it is clear that the market continues upward.

Portfolio structure is now: precious metals 16%, Commodities 5%, equities 52%, cash 27%.

Gold gaps upward

What a wonderful day. Blue sky. Low sum illuminating golden autumn trees. Light chilly wind. This morning I saw a rainbow the like of which I have never seen before. It was sitting on the horizon. It was not a complete arc. In fact it rose only a short distance into the sky. But it was so broad and all its colours were intense and distinct. Not only that but market that has treated me well once more.

Gold gaps upward

Today's rise in the gold price has been accompanied by a rise in the dollar. My American shares are also doing well. As I suggested might happen, STP lost the ground that it had made by close of business but is doing well again now.GTIV has also chipped in a good performance. The UK shares I bought are, sadly, fading. About half are winners but they are offset by the losers. 

The big question is what will tomorrow bring. It looks to me that the Dow has stalled at the first area of resistance and is now deciding whether to bounce back off a weak area of support at 11720. If it does we should be in for another upward move. If not we return to the doldrums.

But today's chart shows the gap up made by gold. I ought to be taking some profits. But I see the main resistance a little higher than the present price. Today's rise is on low volume so there may be a bit more to go for. Greedy, I know but that's how I feel at the moment.

Invited out for an unusual tea. Cucumber sandwiches, beautiful harpsichord playing and a lovely bay horse. Exciting conversation on a wide variety of topics including renting cottages on  the Balmoral Estate  and ancient organs. And then a drive through the hills to enjoy the autumn colours.

Balls of steel

DJI 5 October 2011

I have had a bleak couple of days. Victim of wishful thinking again I suppose. Looking for a rise in precious metals that has not come to pass. And a belief that the downward break of the Dow was the start of a large fall which also failed to materialise. So we're still stuck in the old channel where its hard to make money and easy to lose it. I'm not clear in my mind what to do next. To pull out and lick my wounds or carry on trying.

The viciousness of the moves is illustrated by yesterday's candle for the Dow. A candle in the wind if ever there was one. A 244 point move down to 10405 was transformed into a 157 rise in the last couple of hours of trading. It's impossible to know where we go next. A friend asked me whether I thought the problems of the Dexia Bank would hit the market. He thought that the end of the world was nigh. He was shocked when I said I doubted that it would make any difference. Wasn't the fall in the stock market, that we were seeing, the beginning of a new collapse? I said I was convinced that yesterday's fall was entirely due to European markets following the American ones. And so it turned out. Yesterday's recovery in the Dow has led to a 158 point rise in the FTSE and a 256 point rise in the DAX. I notice a that there is no more talk about the Dexia effect by commentators today, even though we now also have a downgrade of Italian debt. The market has lost touch with reality and we can only see what is happening by watching the charts.

In order to get through a time such as this you need balls of steel and a belief that you will win through in the end. I'd feel that much stronger if I felt better able to calculate the odds. At present I would advise no one to follow me because I am gritting my teeth and treading a precarious path. My life-line is the knowledge that when conditions return to normal I will know exactly what to do.

In the mean time the weather has broken. No more sunny days. Falling temperature and drizzle turning to rain. My spider friend has taken to nocturnal habits. I don't know if the wind has cut food supplies during the day or if it is the harsher conditions. But she spends most of the day curled up on the window frame with two legs holding threads of her web, presumably to alert her if a fly were to stray into her trap. My photo is again rather fuzzy but you can clearly see one of those legs out there feeling for the twitch of the arrival of a meal. My feelers are out there too. But the wind is whistling round them and they are mighty uncomfortable right now.

Has the $ come to the end of its dramatic rise?

£ to $ exchange rate May to October 2011

Dow Jones support lines have been breached and we must hold our breath to wait for a confirmation that this is not a false break out. I have jumped in with both feet and bought a range of shorts increasing the share of my portfolio dedicated to them to 16%. This makes me vulnerable to a reversal so I must keep a sharp eye on progress.

My vulnerability is shown by the way my portfolio has responded to the the reversal in precious metal prices. A decent profit on the day has morphed into a heft loss.That's what happens when you fail to diversify. Unfortunately in this market there is little else you can do.

Today's chart looks at the dramatic rise of the US$. I show it against the British Pound. The data is presented with the £ as the primary currency as indicated by the code GBPUSD (first currency is always the dominant one). In this convention a downward slope indicates that the £ is falling and the $ rising. We can see that since its low point on the  19th August the $ has strengthened by 7.5%. The chart also shows that it has twice failed to break through the resistance at $1.534 to the £ and has made a possible double bottom. This could indicate the end of its upward travel.

Some people think that the fall in gold and silver is down to the strength of the $. If they are correct and we do indeed get a retracement in $ value perhaps this will accelerate the recovery in gold and silver prices.

This morning I went to an interesting lecture by Anne Sebba on Jenny Churchill, Winston's mother. Jenny was a feisty woman and her marriage to Winston's father was a true love match. Through her life she had a powerful sense of her own destiny. For example she had no doubts that the she and Randolph would marry and Winston was conceived two months before their wedding. She had taken a great risk by sleeping with him before they had tied the knot in those Victorian days. Through her life nothing cowed her and she taught her son to believe in his own destiny, in his turn. So, the lecture argued convincingly, the spirit that led Winston to hold the line through the Second World War was a spirit passed to him by his American mother.

Fear is out there

Citigroup share price compared to DJI end March to present

I've caught that falling knife and my hands are soaked in blood. Silver and gold are sliding gently downwards. With silver there are some support levels round about here but you have to go back to the turn of the year to find them and they aren't especially convincing. With gold I am forced by desperation to draw a Fibonacci retracement and hope that the nearby 78.6% level represents some sort of bottom. Frankly it's whistling in the dark. No question, I should have stayed away from these blessed precious metals but now that I'm in I dare not let go until the pain gets too great. And then you'll see me walk away. Or the true state of the world's economies will catch up with investors' imagination and we'll be back on our way to the $2000 level for gold.

I have taken some profits on my short S&P so I have stopped being stupid about the indices and will wait till the market reaches the top of its travel before I go short again. (See post from Tuesday when I gave myself a sharp rap on the knuckles.)

Today's chart provides a different take on the market. It compares the price movement of Citigroup, the US bank, with the DJI. It shows that investors are worried about the health of the banking sector. You could look at pretty much any bank and you would get a similar picture. Investors are shunning a sector that is vulnerable to disaster. The prospective PE for Citigroup is 6.55. I prefer to look at the reciprocal: the earnings yield which works out at 15% a colossal figure which either indicates a fantastic bargain or the fear that something terrible is about to happen. The chart shows that from May onwards investors have been dumping the stock so I put my money on the terrible option. The left hand scale shows that while the market as a whole (the thick blue line is the DJI) has fallen by 10% since end March Citigroup has fallen by 40%. Barclays RBS and Lloyds have all fallen by about 45%. Only HSBC and Standard and Chartered have done slightly better with falls around 20%. My interpretation is that the fear is out there but it is obscured by all that cash that governments have poured into the hands of speculators who are making hay. Let's pray that it doesn't all come to a horrible sticky end.

My little friend

There is a spider that sits beside me while I watch the markets. She lives on her web that is just outside my window. It seems to be a great place to live because she catches flies two or three times a day. The rest of the time she sits very still. Perhaps I should learn from her. Only move when it's worth your while. My picture is a bit fuzzy because I failed to defeat my camera's automatic focus which looked at the window and not the spider. But she's a good friend.

All that is gold does not glister

Silver 230911

Both gold and silver fell through support levels in a spectacular manner. I show the silver chart because it is more dramatic. But go back a few days and you will see that the potential double top is now confirmed for gold. I have scurried to drop my holdings.
I have also closed out my index short position with a super profit. I may reopen a small position before the US market closes to take advantage of any bad news that comes out over the weekend. But I do have to be fearful of good news.
I have a dear friend who is keen on the more explosive bits of the stock market and he has tempted me away from the straight and narrow path. He has introduced me to some derivatives called covered warrants. They can be bought like shares and can be held in a SIPP. Society Generale, a French bank issues a slew of them and I have popped into the bookies and bought one whose code is SN13. It expires in the middle of next year and unless the price of gold goes up it expires worthless. In the mean time its price magnifies the movement in the price of gold massively. If the price of gold reaches $2000 by mid December good old SN13 will rise in price by 93%. My friend was very excited when he saw this figure. I prefer to think first about how much I could lose and bought a quantity where I could live with losing all my money. I see it as an experiment from which I can learn. So far it has taught me that you can lose a lot of money quite fast if you really want to.

Out to lunch today in the Oxfordshire Cotswolds. Lunch was cooked for us by a lovely 94 year old lady who managed to produce a roast meal using only a microwave. An astonishing feat. Her son and daughter have disconnected her cooker because of the number of fires that it started.
Being out meant that I did not watch the gold price fall. But I pulled out when I phoned to check on the American market open. I then discovered something was amiss. My cash holdings are now up to 97% with just a few petty holdings: in COW, those warrants, and a position that I have held for far too long shorting US treasuries. I will keep a sharp eye out all evening for a possible change in direction and will act accordingly.

The best laid plans of mice and men

US Cattle 200911

Today those plans did go awry. The markets took it into their heads to make up the ground lost yesterday. Luckily I was out when all this was happening so I did not have the chance either to worry or to attempt to deal with a problem that had no real solution. Positive point at time of writing is that the DJI has kissed the resistance line and has not moved on.
I am going to be bold and buy some more shorts on the US markets. After all, silver and gold have repaid my patience as has COW. This will be my chart today. I bought when that long resistance line was breached. Then there was a worrying pull back but now the price has broken up a second time.

My reason for being out today was a long awaited follow up appointment at the hospital. I was in hospital some months ago for a period of two weeks. I had an illness with severe neurological symptoms. It remains undiagnosed but the symptoms have abated. I had hoped that the follow up would involve a kiss and goodbye. But some autoimmune antibodies which appeared while I was in hospital remain and are serious enough to warrent further investigation despite the fact that I feel 99% better. So more tests and appointments are in the offing.

Never be afraid to cut and run

S&P 150911

A bleak day for me as gold dropped to its support line. I dumped my remaining market shorts (too late for the FTSE) and I weeded out more of my silver. But he who fights and runs away lives to fight another day. And I have not lost too much. Still only 5% down since April and I have loads of cash. My day will come.
So what's happening. The markets are rallying but they're all inside their channels. I should pay far more attention to those lines I draw on the charts because they do work. I could make more money and lose less if I watched them more carefully and did a bit less wishful thinking.
I've done it again today. Gold touched the support line and bounced off (see yesterday's chart) and then came back down again. As I write it's sitting on the line. And starting to pull back a bit. But I've sold a chunk of my holding because I don't have the nerve to wait for it to break down. And I've been listening to too many doomsayers.This evening and tomorrow will tell if I was a coward or if I was wise.
As for the indices:

• the FTSE is well inside its channel despite its strong rally
• Ditto the Dow Jones
• the S & P has broken one resistance line and is touching another (Today's chart)

Result: all bets off on what happens next. I've taken most of my money off the table.
A friend has brought the cattle situation to my attention and it does look promising. Since nothing else inspires confidence I have bought an ETF in live cattle in the US (COW). I might do a chart tomorrow to show the opportunity.

The dog had a hair cut yesterday. He hates the process but loves the effect. He is getting very old. We got him second hand from a rescue some eight years ago and at the time the vet gauged his age at six or seven so he could be fifteen or even sixteen. It seems he was ill treated before we got him and he tended to snap. But life with us has mellowed him. He is showing his age now and probably has not many months left. He is a mixture of various kinds of dog but no-one we know in the dog world can identify what goes into that mix. Tibetan Terrier is the best they can come up with, but he's long and sags in the middle.

Did I say dull?

The indices are moving comfortably inside their channels but the movements are huge. FTSE is up 162 points (3%ish) and the Dow is up 204 points (almost 2%). Those bulls are there and am I glad I dumped my short ETFs yesterday. But I dumped some more as each market opened. I am learning to grab profits when I can. But I am not there yet. Not enough confidence in my judgement! I also relinquished most of my gold. That was a decision after the event but in these volatile markets you have to go with the flow.

I had another lovely lunch out today( Kempsford this time, where they have done a beautiful restoration of their church ceiling) So I set up my sale of short Dow ETF (DXD) before I went out. 

When I got home I found that silver looked promising, a nice bounce off a support line. I was too late to buy my favourite PHAG on the UK market so I went to the US market and bought AGQ a leveraged silver ETF. (PS It was only this morning I spotted that there is a resistance line that I need to take into account when planning my next move with silver. It is now included in the chart.)

I started the day 95% in cash, with the silver purchase cash dropped to 92% but precious metals is still down to 4%, the rest is my remaining shorts.

As for the market tomorrow, it could be up, it could be down. Inside the channel it's hard to tell.