Friday, 22 February 2008

Sayonara, Silver. Thanks for the Memories.

Woah, what a crazy mess of new signals from today's Commitments of Traders report. For one thing, it's the end of my nine-month bullish signal for silver. Sad day. This one was good to me. But time to move on, says the COTs data. My setup for silver is my best one in terms of statistical robustness, and I'd never second-guess it, so I'll be saying bye-bye to my SLV iShares Silver for the open of Monday's trading. Interestingly, my gold and HUI Gold Bugs Index setups both remain in bullish mode. I'm still packing some XGD Canadian Gold iShares, so should be interesting to see what unfolds.

See the Latest Signals page table for all the gory details from this afternoon's data. Some other highlights: the crude oil data is giving me a bearish signal, for execution in a month's time. (The trade delay for this setup is four weeks.) Also, my new setup for the BKX Bank Index, based on the Eurodollars COTs data, has flipped back to bullish, with a one-week trade delay. That's kind of amusing because the setup gave a bearish signal last week, for execution this Monday. What does this mean? I'm going to take a nibble on an inverse financials ETF for Monday's opening, but I'm holding it for just one week. It's that kind of setup. Fast and furious.

What else? Oh yes. My Russell 2000 setup has flipped to bearish. This one trades off a seven-week delay, meaning for execution April 14. Will that be the end of this "rally" - or whatever you wanna call it? The wise, far-looking RUT setup says: yes.

Housekeeping: You'll notice a change to my latest signals table. I took out the column for renewed signals and replaced it with one giving the dates for execution of any pending new signals. The renewed signals table was becoming less relevant for two reasons: (1) As I've mentioned before, there's limited correlation between week-to-week fluctuations of the COTs data, and I've never studied the usefulness of acting on the renewed signals, and (2) They can be misleading because of how the various setup parameter values work. In some cases, the signals lines are so close together, or in a few cases identical, that the setup gives renewed signals practically every week, if not every week.

I think the trade execution info is more useful because many of the setups have trade delays and I often find myself needing to recalculate the dates for pending trades. So this table will be a good reminder. Hope you did okay this week, and have a great weekend!

27 comments:

Anonymous said...

Alex:

Your projections are quite interesting, but I'm having trouble seeing the Dow bearish now, while the S&P remains bullish. Also I'm not sure silver and gold have ever moved in different directions before, have they? How would you reconcile these things? Thanks for your great work. Ray

Johnabi said...

Alex,
Thank you, Johnabi

RayA123 said...

Hello,

Wouldn't it be very unusual for silver and gold to move in different directions? Has it ever happened before? You mentioned silver was at the end of a 9 month bullish signal...is gold's bullish signal of a different time frame? Thanks.

Anonymous said...

Hi, if you have a sell signal for silver does this equate to a shorting opportunity?

Thanks
silverharp

Joe said...

What would a good trading vehicle be for the BKX Bank index?

Thanks for you blog, really great!

Joerg

Alex Roslin said...

Hi Ray,

It can be confusing when signals in the same market don't agree, but you have to remember how they work: the setups are based on how that dataset has given statistically robust signals in the past over the life of the signal. Each setup reacts on somewhat different timeframes to the data, so one might be more sensitive and might trade more often than another. When faced with conflicting signals, I might take the trade that makes most sense within my existing portfolio or the one from the setup with the more robust past results.

Regards,
Alex

Alex Roslin said...

Hi Raya,

It would indeed be unusual for silver and gold to move in opposite directions, but what often happens is they move in differing proportions to each other, with silver tending to outperform in a bullion bullish period. So trading both signals could be a way to hedge the portfolio. Personally, what works best for my portfolio is to sell my SLV iShares Silver position and hold my XGD Canadian iShares Gold position, without shorting silver.

Regards,
Alex

Alex Roslin said...

In response to anonymous, yes, the bearish silver signal would be a short. The results on the Latest Signals table are for being long during bullish signals and short during bearish signals.

Regards,
Alex

Alex Roslin said...

Hi Joerg,

Can't advise you on purchases, but I will say I bought SKF UltraShort Financial ProShares on the open this morning. Will update my portfolio page soon with that.

Regards,
Alex

BillGross the Buffetthater said...

I too am at odds with your suggestions that gold and silver will deviate as will the S&P500/Russ2K/QQQQ.
I have never known them to do anything but move in tandem, if they do decouple, it would be a sign of impending collapse, interesting yes, but very destructive.

BillGross the Buffetthater said...

BTW, did you stop out of the SKF this afternoon on the rally? I did but the tech work agrees with your short of financials.

Alex Roslin said...

Hi Bill,

Thanks for your comment. I don't believe silver would ever decouple from gold. They usually move in tandem, however in different proportions to each other, with silver usually experiencing more volatility. Lately, silver has outperformed gold, but the data may be suggesting that will now cease.

Regards,
Alex

Alex Roslin said...

Hi again,

Did I stop out of SKF this morning? No. My stop is 14% below my entry point - the past largest drawdown for this setup. I use that stop as the basis for my portfolio allocation. Please check the Latest Signals table and my "How It Works" page for more details.

Regards,
Alex

Anonymous said...

Don't look now but silver is up and holding its own while gold is falling.
Barry

Anonymous said...

Your bearish signal sucks - silver at $18.80

C.L.B. said...

Your projections don't line up with reality. Hi O"Silver Away

C. L.B.

Anonymous said...

Your Bearish set-up on silver, is really so funny. I wont say it sucks, but I'm sure your less than Happy with your Sayanora Set-Up. Hey , I like the sound of that. Sayanora Set Up.Jim

Anonymous said...

Interesting, Silver is now pushing well above 19 bucks. Based on the charts I'm looking at - very little resistance remains till maybe 22-24 an ounce. Fundamentals are incredibly strong.

Anonymous said...

Major egg on your face. I hope you 'fess up!!
So much for your tech analysis.

RGL

Anonymous said...

Sayonara Al,

Really bad call.

Anonymous said...

Wow - could your timing - in the short term at a minimum - have been any worse?

Anonymous said...

So much for your bearish silver! It rose over a dollar since your kitco commentary.

Alex Roslin said...

Hi Jim,

Am I unhappy with my silver setup? Uh, no. That's one of my favourite setups. Sold my position with a nice profit and, meanwhile, my 200% long natural gas position is up nine percent on the day at this point, while my 200% short financials position is up five percent today. So I think the system is doing okay.

Regards,
Alex

Anonymous said...

Great call!! HHHHHHHHHHHHHHHAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

John said...

Sayonara Silver, the train has left the station.

Anonymous said...

Alex, Have You and Your system set ups, ever been so, so Wrong, as it has been ever since your arrogant slant, "Sayonora Silver", and your dismissing others critical comments to you, as You are the Real contrarion,and Bullish comments by person's, are good indicator you are right?? Well, Your sell call on Silver, we all now know, officially is a Looser, Bad Call!!! Why can't you just be a Man about it, and fess up to the facts.You were way off!!No system is perfect,and people sure aren't. You need to to take back the aggorant miss call on Your Sayonora Silver call, before You will gain any Creadability with me again. You were as wrong as it goes. Ifeel bad for those that listened to you, and went short.They are waiting in Vain for the Silver to drop to $14 to $15 an oz. Either clean up your system,and fess up to a Hugely Bad Call, or You should go back into investigative journalism, and maybe investigate, your system, set ups. Sayonora to You,James

Alex Roslin said...

Thanks for your comment. See my responses above.

Regards,
Alex