Getting bold with gold …

… or stupid. It’s a fine line.

Last week I abandoned the ERTS trading program because it had already averaged to using up 80% of the cash, and contained a fair number of leveraged positions (ETFs) to boot. The risk in that was that, given the credit uncertainty in Europe and the still relatively high US stock market, if this was about to turn into a bear market then the whole position stood to lose a whole heck of a lot more. So I went to battle stations and set stops under everything to limit further major losses. At the one point the portfolio was down 21% on the year.

Given the continued weakness at the time, most positions stopped out except for a few – notably the precious metals, and as of today, Potash Corp (POT) and Cenovus (CVE) which are still alive but still trying to decide. Sometimes you need to take a bit bolder action when under duress. Back when silver almost hit $50, a had a large losing position on the short ETF. Silver was looking quite toppy after a geometric run-up, so one day on a big up-spike in silver I doubled the short ETF position (protected by a stop of course) and managed to catch the top close enough that the stop held. Silver fell away quickly after that and I was able to cover the doubled up position at almost break-even … although had I held. So with a few precious metal positions still alive, and with the stocks so badly beaten down I had the sense that while there was no particularly bullish news for gold as such, the stocks were probably ripe for some kind of a relief rally. So over the week I more than doubled the precious metals exposure, and now have a long position equivalent to about the full value of the portfolio taking into account the leverage in two of the ETFs. So that is one big-ass position trade in precious metals. Talk about pushing in all the chips.

The PM stocks acted quite well this week, and are showing either firm basing or higher-high/higher-low patterns. The position is mostly concentrated in the 3x leveraged NUGT and 2x leveraged HGU, with smaller positions in Silver Wheaton (SLW) and Osisko Mining (OSK), and the overall portfolio equity has already recovered by 6%.

Osisko is actually quite interesting as a contrarian play. It just went online with an 11M oz open pit mine in Malartic, Quebec, about 4 hours from where I live. It has had some growing pains coming up to its full target 55000 tons of ore per day production capacity, and the market has punished it for that much more so than its peers. Here’s the elevator pitch …

1 – Hammered down (further than just market conditions would warrant) because of a fire which slowed down production (now restored) and delays to new crushers that will double the production – but not likely to be fully implemented until the fall. Temporary delays

2 – At current cash cost, $6-$7 stock price, $1550 gold, it’s trading about 8-10 x earnings.

3 – When production fully ramps up – cash cost is projected to halve down to about $400/oz – net earnings at current prices has the stock trading at 4-5 x earnings

4 – Mine just started production last year – about $11m oz of gold projected to be mined at 400,000 to 600,000 oz per year.

5 – Largest open-pit gold-mine in Canada and brand new with state of the art technology

6 – Safe jurisdiction

7 – Massive volume spike in the past two weeks on this air-pocket. (See chart of OSK trading on the TSX) More so than other producers. Someone dumped a heck of a lot of stock; someone else stepped in and bought it.

8 – A geologist I know who worked in Val d’Or (25km from Malartic) for many years for a number of mining companies, a year and a half ago told me this mine had excellent geology and her family was invested in it.
9 – They have an equivalent-sized deposit in Ontario called North Hammond. This still needs to be turned into a mine.
10 – It’s been talked about quite a bit as a take-over target

For anyone still interested in gold, I think this is a good contrarian play. Unless they can’t get their new crushing circuit going for whatever reason (company guidance is that they are about 3 months delayed), and/or gold prices really tank, this company is going to start minting money in the second half. Their current financials won’t be all that great, but next year … The smell of temporary difficulties seems to be masking some decent value here – at least in the gold context. To get excited about it, you have to think that gold is going to either hold its value or keep rising. As a trade I like it because of the scruffy-now-but-should-clean-up-nice factor, and I think gold will do OK. I don’t think we’re done with QE yet.

Also some interesting context … seems to be a consensus on good management/good property http://www.stockchase.com/Company-sl–slq-ID-slv-Osisko–Exploration–Ltd..php

I was actually thinking of taking my sons up there this weekend to kick the tires and just to see the mine and the technology, but the mine tours don’t start until mid-June.

Here are the results for this week …

TRADING			25-May-12	UPDATE		690
#	Trade	Qty	Stock	Symbol		Price		Acct
			21-May-12
	No trades
			22-May-12
17	Bought	5.5%	Silver Wheaton	SLW	@	$25.72		3
22	Sold	9.8%	Osisko Mining	OSK	@	$6.82		4
			23-May-12
2	Sold	6.4%	HBP Silver 2X ETF	HZU	@	$4.40		1
16	Sold	4.8%	Cameco	CCO	@	$19.11		3
			24-May-12
22	Bought	9.6%	Osisko Mining	OSK	@	$7.09		4
			25-May-12
	No trades
Qty   % is the portfolio weighting

EXTENSION   REVERSAL TRADING SYSTEM (ERTS)
***********************************************************
25-May-12
S&P500	1317.8	-2.9	-0.2%
TSX	11576.5	10.4	0.1%
***********************************************************
PORTFOLIO STATUS
	Market	MAY12	YTD	Incep
Canadian Dollar	0.9710	-4.1%	-0.8%	-6.4%
S&P500	1317.8	-5.7%	4.8%	3.7%
TSX	11576.5	-5.8%	-3.2%	-13.0%
	Weight
Portfolio % USD	35.3%	-8.6%	-21.5%	-7.3%
Portfolio % CAD	64.7%	-8.2%	-15.3%	-20.5%
	FX
PORTFOLIO EQUITY	CAD	-6.3%	-14.7%	-14.6%
USD ERTS vs SP500	USD	-2.9%	-26.3%	-11.0%
CAD ERTS vs TSX	CAD	-2.3%	-12.1%	-7.5%
ERTS vs SP500/TSX	CAD/USD	-2.5%	-17.1%	-8.7%
Inception is 30 Jun 11
***********************************************************
Portfolio Direction	Long	Short	Net
Position	72.5%	0.0%	72.5%	long
ETF Leverage-adjusted	122.1%	0.0%	122.1%	long
CURRENT POSITIONS
STOCK/ETF	SYM	LAST	Profit	WGT
CASH				27.5%
Drxn Real Est 3X ETF	DRN	closed	0.35%	0.0%
Drxn Energy 3X Sh ETF	ERY	closed	0.02%	0.0%
Cameco	CCO	closed	-0.01%	0.0%
Potash Corp	POT	$40.98	-0.05%	11.3%
Cenovus Energy	CVE	$32.39	-0.23%	7.8%
Drxn Gold Sh 3X ETF	NUGT	$11.50	-0.32%	18.6%
Claymore BRIC ETF	CBQ	closed	-0.34%	0.0%
EnCana Corp	ECA	closed	-0.36%	0.0%
Silver Wheaton	SLW	$27.30	-0.37%	12.9%
Drxn Real Est 3X Sh ETF	DRV	closed	-0.42%	0.0%
Osisko Mining	OSK	$7.12	-0.44%	9.4%
Drxn Agribus 3X ETF	COWL	closed	-0.45%	0.0%
Drxn Em Mkt 3x ETF	EDC	closed	-0.67%	0.0%
HBP Cr Oil 2X ETF	HOU	closed	-0.68%	0.0%
Drxn Tech 3x ETF	TYH	closed	-0.73%	0.0%
Drxn Energy 3X ETF	ERX	closed	-0.74%	0.0%
Teck Corp	TCK.B	closed	-0.87%	0.0%
HBP Nat Gas 2X ETF	HNU	closed	-1.10%	0.0%
Drxn Em Mkt 3x Sh ETF	EDZ	closed	-1.57%	0.0%
Drxn Tech 3x Sh ETF	TYP	closed	-1.66%	0.0%
HBP Silver 2X ETF	HZU	closed	-1.75%	0.0%
HBP Glb Gold 2X ETF	HGU	$8.35	-1.99%	12.4%
Win Ratio		Winning	13.64%	100.0%
SECTOR WEIGHTING	SYM	Profit	Portfolio	Levered
			WGT	WGT
Agricultural	AG	-0.50%	11.34%	11.34%
Base Metals	BM	-0.88%	0.00%	0.00%
Broad Indices	IX	-5.03%	0.00%	0.00%
Energy	EN	-3.09%	7.77%	7.77%
Precious Metals	PM	-4.86%	53.36%	103.03%

Commodity stocks and ETFs becoming interesting

Just poking around today to see what’s out there, now that I need to generate some trading ideas. Commodities have been hammered down quite hard this year, as have the stocks of companies that produce and process them. My portfolio is currently loaded on the long side with gold and silver stocks, about half held over from when I was trading a reversal system, and the other half added last week – of course on the expectation of a bounce after the recent thrashing.

Gold stocks seem as cheap as they have ever been on an earnings basis, and that’s also reflected in the decent yields that are now available.

Other commodity markets and their stocks that seem to be bottoming are uranium, cocoa, coffee – and while not really forming a base yet, cotton. Natural gas has had a nice really, but that is off really low prices. I expect gas to top out and pull back again – given its spikey nature and no fundamental change in its supply and demand prospects. Oil I think you could short in the near-term because of some oversupply issues in the Bakken and Canadian oil sands, but it doesn’t feel quite as compelling a trade.

A building drought in the US mid-west has been stimulating some movement in wheat, which could spill over into the whole grains complex. This is worth watching as well.

In addition to the gold and silver stocks in the portfolio, currently I’m keeping an eye on Cameco (CCO) – already a position in the portfolio – NIB (cocoa ETF), JO (coffee ETF), and BAL (cotton ETF) and DAG (wheat, corn, soybeans, sugar) ETF. COW (livestock ETF), though not very volatile, is worth a look at as well.

Run away!

This week, after continuing to get hammered in the current commodities, and now broader market, downturn this was my measured, sober reaction …

.
Already down 20% on the year, the buy-and-hold nature of the ERTS reversal trading program just puts the whole portfolio at a catastrophic risk. We may or may not be going into a bear market, but if we are, this is only the beginning, with a potential 15-21 months to go. It’s no fun cutting your losses, but at some point it needs to be done. So I decided to suspend the ERTS program and try to carefully trade my way out of the hole the traditional way – directional trades using stop-loss orders for protection.

That’s not to say this is a full retreat from the market. What I did this week was set stops under all the positions and let them stop out or not come what may. Looking at precious metals as appearing to be quite oversold, I then added to these positions, essentially turning a large chunk of the portfolio into a long bet on a gold and silver bounce. Gold and silver did show some firmness at week’s end, but in a bear market – which commodities have been since the middle of last year – trying to time bottoms is a dicey proposition. Anyway, stop loss orders will determine the fate of the current positions – hopefully they will turn out to be profit-taking stops down the road rather than stop-losses now. But I believe that precious metals will find a bottom soon if they have not already, so I’ll keep taking entries on the long side – even through some false starts if necessary.

Natural gas has rebounded quite impressively. I was able to pare the losses in the earlier positions by selling into the rally. Unfortunately had I been trading directionally earlier, I would still be in the position, likely with some profit, because for a month gas has risen smoothly and would not have stopped out yet given the way I place my stops. Anyway, it will take a little time to stabilize things and then hopefully claw my way back. I will be trying to do that by concentrating on larger position trades – no more than 6 at a time to make it manageable. What do I like now? – precious metals as mentioned already, and uranium (via Cameco), though that may be subject to weakness in the broader markets. Oil looks like it might have a rough time – especially West Texas Intermediate crude. Believe it or not, there is a developing glut in North America because of the oilsands, and the Bakken in North Dakota, Saskatchewan, and Manitoba. There’s no easy way to get all that production to market, so its starting to pile up. An oil short, and maybe some nibbles on the short side of nat gas (anticipating the imminent demise of the current rally) may be in order.

TRADING			18-May-12	UPDATE		689
#	Trade	Qty	Stock	Symbol		Price		Acct
			14-May-12
8	Bought	1.9%	Drxn Energy 3X ETF	ERX	@	$40.29		2
12	Bought	1.8%	Drxn Em Mkt 3x ETF	EDC	@	$78.51		2
10	Bought	1.8%	Drxn Tech 3x ETF	TYH	@	$50.74		2
15	Bought	1.8%	Drxn Agribus 3X ETF	COWL	@	$24.25		2
21	Bought	2.0%	HBP Cr Oil 2X ETF	HOU	@	$5.40		3
			15-May-12
	No trades
			16-May-12
20	Sold	0.9%	HBP Nat Gas 2X ETF	HNU	@	$13.32		4
15	Sold	3.4%	Drxn Agribus 3X ETF	COWL	@	$21.79		2
5	Sold	2.6%	Claymore BRIC ETF	CBQ	@	$23.08		1
			17-May-12
1	Bought	2.6%	HBP Glb Gold 2X ETF	HGU	@	$6.59		1
8	Sold	5.2%	Drxn Energy 3X ETF	ERX	@	$36.90		2
12	Sold	3.2%	Drxn Em Mkt 3x ETF	EDC	@	$70.17		2
22	Bought	4.4%	Drxn Gold Sh 3X ETF	OSK	@	$7.05		4
10	Sold	5.0%	Drxn Tech 3x ETF	TYH	@	$47.46		2
			18-May-12
14	Bought	11.3%	Drxn Gold Sh 3X ETF	NUGT	@	$9.98		2
19	Sold	6.2%	Teck Corp	TCK.B	@	$30.32		4
22	Bought	6.0%	Drxn Gold Sh 3X ETF	OSK	@	$7.35		4
21	Sold	5.6%	HBP Cr Oil 2X ETF	HOU	@	$5.07		3
Qty   % is the portfolio weighting

 

EXTENSION   REVERSAL TRADING SYSTEM (ERTS)
***********************************************************
18-May-12
S&P500	1295.2
TSX	11280.6
***********************************************************
PORTFOLIO STATUS
	Market	MAY12	YTD	Incep
Canadian Dollar	0.9798	-3.2%	0.1%	-5.5%
S&P500	1295.2	-7.3%	3.0%	1.7%
TSX	11280.6	-8.2%	-5.6%	-15.2%
	Weight
Portfolio % USD	33.6%	-21.3%	-35.7%	-17.0%
Portfolio % CAD	66.4%	-12.6%	-20.0%	-23.6%
	FX
PORTFOLIO EQUITY	CAD	-12.4%	-20.3%	-20.1%
USD ERTS vs SP500	USD	-13.9%	-38.7%	-18.7%
CAD ERTS vs TSX	CAD	-4.4%	-14.3%	-8.5%
ERTS vs SP500/TSX	CAD/USD	-7.6%	-22.5%	-11.9%
Inception is 30 Jun 11
***********************************************************
Portfolio Direction	Long	Short	Net
Position	76.5%	0.0%	76.5%	long
ETF Leverage-adjusted	126.6%	0.0%	126.6%	long
CURRENT POSITIONS
STOCK/ETF	SYM	LAST	Profit	WGT
CASH				23.5%
Drxn Real Est 3X ETF	DRN	closed	0.35%	0.0%
Cameco	CCO	$19.34	0.04%	5.0%
Drxn Energy 3X Sh ETF	ERY	closed	0.02%	0.0%
Osisko Mining	OSK	$7.00	-0.26%	10.2%
Claymore BRIC ETF	CBQ	closed	-0.34%	0.0%
EnCana Corp	ECA	closed	-0.36%	0.0%
Cenovus Energy	CVE	$31.56	-0.40%	8.1%
Potash Corp	POT	$39.45	-0.41%	11.7%
Drxn Real Est 3X Sh ETF	DRV	closed	-0.42%	0.0%
Drxn Agribus 3X ETF	COWL	closed	-0.45%	0.0%
Drxn Em Mkt 3x ETF	EDC	closed	-0.66%	0.0%
HBP Cr Oil 2X ETF	HOU	closed	-0.68%	0.0%
Drxn Tech 3x ETF	TYH	closed	-0.72%	0.0%
Drxn Energy 3X ETF	ERX	closed	-0.73%	0.0%
Teck Corp	TCK.B	closed	-0.87%	0.0%
HBP Nat Gas 2X ETF	HNU	closed	-1.10%	0.0%
Silver Wheaton	SLW	$25.04	-1.16%	7.2%
HBP Silver 2X ETF	HZU	$4.80	-1.28%	7.1%
Drxn Em Mkt 3x Sh ETF	EDZ	closed	-1.56%	0.0%
Drxn Tech 3x Sh ETF	TYP	closed	-1.64%	0.0%
Drxn Gold Sh 3X ETF	NUGT	$9.22	-3.44%	15.8%
HBP Glb Gold 2X ETF	HGU	$7.12	-3.55%	11.3%
Win Ratio		Winning	13.64%	100.0%
SECTOR WEIGHTING	SYM	Profit	Portfolio	Levered
			WGT	WGT
Agricultural	AG	-0.86%	11.68%	11.68%
Base Metals	BM	-0.83%	4.97%	4.97%
Broad Indices	IX	-4.99%	0.00%	0.00%
Energy	EN	-3.25%	8.10%	8.10%
Precious Metals	PM	-9.69%	51.73%	101.83%

Quite the mess …

Cheers,
Allocator

What’s in a name?

A lot more than I expected.

I’ve led a charmed life.  I was born in Budapest, Hungary into a revolution in 1956.  My parents, at great risk, took me away to safety from an oppressive system, and had to start their lives again from scratch in a strange land in a new language, and I’ve never been in any real danger since, or have had anything at all to complain about it.  Even before then, my father risked his career as an officer in the Hungarian army by having me baptized in (what he thought was) secret on the outskirts of Budapest.  This was mainly in deference to my maternal grandmother – who, bless her and may she rest in peace, as an avid Catholic was utterly determined to protect my soul.  This was a big no-no with the communists, and they called him on it – every last detail. (My father had been followed.)  Complicit in this little venture, and taking the same risks on my completely unaware infant behalf, was a man named Gyorgy Dirner, who my father had befriended in the army.  Gyorgy (George) – or Gyurka, the more affectionate form – acted as and became my godfather at the baptism.   I was born Zoltan Parkanyi, but the custom in Hungary at the time was for a boy to take the name of the godfather as his middle name, so I became Zoltan Gyorgy Parkanyi.  In Australia, to where we emigrated, my parents changed that to George Zoltan Parkanyi, thinking George would go easier on me as a child growing up in that country.  And so George Parkanyi it is.

 

So today may father, at the cottage, reminiscing about those times, tells me the rest of the story, the part that I’d never heard before.  Back to Hungary 1956.  Fast forward from my baptism to November, in the depths of the short-lived, but brutal, revolution.  One day Gyurka shows up at my parents’ apartment to check on my father and make sure he’s OK.   He mentions to my father that he is somehow involved, but doesn’t go into the details.  They part.   Events unfold quickly and my father is forced by circumstances to make the decision to leave Hungary, and my parents escape with me a few weeks later across the border into Austria.

 

My father loses touch with Gyurka, but every trip to Hungary thereafter (once he started visiting again in the late 60’s) he looks for Gyurka’s phone number in the Budapest directory.  There is never any listing for Dirner, although my father painstakingly checks every time.  Then about 5 years ago, while visiting a cemetery in Budapest to pay respects to the deceased parents of one of his other friends, something makes him divert from the normal pathway and cut across a different section.  As he’s walking to where he’s intending to go he stumbles upon a headstone that stops him in his tracks and shakes him to his core.  It says Dirner Gyurka …. 1930 – (November) 1956.  Gyurka – my godfather – was killed within days, at most weeks, of when my father last saw him.

I’m named for a man, who, at no more than 3 years older than my eldest son now, either lost or gave his life to an unwinnable fight for freedom.  What do I feel?  Love.  Gratitude.  How do I feel?  Unfinished.

Commodities on the ropes

Further erosion this week. The account equity continues to take a beating. Slowing down in Europe and China, plus the flight to quality into US dollars is about the worst prescription for a commodities rally possible. The only thing going for them (using contrarian logic) is that things look so terrible. I just checked the Commitments of Traders report from last Friday, and the following commodities have not been at such extremes (speculators least net-long and commercials most net-long) within 10% percentile in the past 18 months …

Hogs
Wheat
Swiss Franc
Gold
Frozen Orange Juice
Cotton
Platinum
Coffee
Euro
Corn
Silver

For me precious metals have been my undoing to this point – the stocks in particular getting severely hammered. They look so oversold, I actually tried a discretionary long trade in NUGT with some of the spare cash in the account but got stopped out intraday as it rolled over again on Friday. Looks VERY tempting, but I think I’d better hold the line and stick to the system. The commitments data suggest an extreme, but markets can take a while to turn even with the commercials on your side.

Based on the behaviour of commodities, markets really look like they are discounting a global recession. But – this is the time to be especially carefully. It’s the most tempting to cut your losses when markets are at the extreme end of a move. Short-term there should be some kind of bounce like there was recently in natural gas – though the commitments data conversely look quite bearish there (the other extreme) with specs having scrambled to covers and commercials selling heavily into that.

So for now its a mess, and I’m working on the principle that this is a bending, not breaking, situation. The ETFs are sector or commodity in a few cases; the individual stocks natural resource blue-chips. In retrospect too much concentration, but I believe each component will still have its day.

TRADING			11-May-12	UPDATE		688
#	Trade	Qty	Stock	Symbol		Price		Acct
			7-May-12
3	Bought	2.5%	Cenovus Energy	CVE	@	$32.16		1
21	Bought	2.1%	HBP Cr Oil 2X ETF	HOU	@	$5.74		3
19	Bought	1.4%	Teck Corp	TCK.B	@	$34.10		4
			8-May-12
15	Bought	2.0%	Drxn Agribus 3X ETF	COWL	@	$26.36		2
20	Sold	1.6%	HBP Nat Gas 2X ETF	HNU	@	$11.72		4
			9-May-12
	No trades
			10-May-12
	No trades
			11-May-12
14	Bought	16.3%	Drxn Gold Sh 3X ETF	NUGT	@	$10.43		2
14	Sold	16.3%	Drxn Gold Sh 3X ETF	NUGT	@	$10.42		2
14	Bought	16.2%	Drxn Gold Sh 3X ETF	NUGT	@	$10.36		2
14	Sold	15.8%	Drxn Gold Sh 3X ETF	NUGT	@	$10.16		2
20	Sold	1.7%	HBP Nat Gas 2X ETF	HNU	@	$12.27		4
Qty   % is the portfolio weighting

EXTENSION   REVERSAL TRADING SYSTEM (ERTS)
***********************************************************
11-May-12
S&P500	1353.4	-4.6	-0.3%
TSX	11694.7	-41.5	-0.4%
***********************************************************
PORTFOLIO STATUS
	Market	MAY12	YTD	Incep
Canadian Dollar	0.9993	-1.3%	2.1%	-3.6%
S&P500	1353.4	-3.2%	7.6%	6.6%
TSX	11694.7	-4.9%	-2.2%	-11.8%
	Weight
Portfolio % USD	34.2%	-10.3%	-23.4%	-8.7%
Portfolio % CAD	65.8%	-7.3%	-14.3%	-19.9%
	FX
PORTFOLIO EQUITY	CAD	-7.2%	-15.6%	-15.4%
USD ERTS vs SP500	USD	-7.1%	-31.0%	-15.4%
CAD ERTS vs TSX	CAD	-2.4%	-12.2%	-8.1%
ERTS vs SP500/TSX	CAD/USD	-4.0%	-18.6%	-10.6%
Inception is 30 Jun 11
***********************************************************
Portfolio Direction	Long	Short	Net
Position	76.0%	0.0%	76.0%	long
ETF Leverage-adjusted	126.5%	0.0%	126.5%	long
CURRENT POSITIONS
STOCK/ETF	SYM	LAST	Profit	WGT
CASH				24.0%
Cameco	CCO	$21.59	0.50%	5.2%
Drxn Real Est 3X ETF	DRN	closed	0.34%	0.0%
Drxn Energy 3X Sh ETF	ERY	closed	0.02%	0.0%
Potash Corp	POT	$41.00	-0.05%	11.5%
Drxn Agribus 3X ETF	COWL	$25.10	-0.08%	1.9%
Cenovus Energy	CVE	$32.96	-0.11%	8.0%
Drxn Energy 3X ETF	ERX	$41.83	-0.23%	3.6%
Claymore BRIC ETF	CBQ	$24.28	-0.24%	2.6%
Drxn Em Mkt 3x ETF	EDC	$82.72	-0.28%	1.7%
HBP Cr Oil 2X ETF	HOU	$5.57	-0.29%	3.8%
Drxn Tech 3x ETF	TYH	$51.92	-0.36%	3.5%
EnCana Corp	ECA	closed	-0.36%	0.0%
Drxn Real Est 3X Sh ETF	DRV	closed	-0.41%	0.0%
Teck Corp	TCK.B	$32.99	-0.42%	6.5%
Silver Wheaton	SLW	$26.44	-0.84%	7.2%
HBP Nat Gas 2X ETF	HNU	$12.25	-1.16%	0.8%
HBP Silver 2X ETF	HZU	$4.90	-1.16%	6.9%
Drxn Em Mkt 3x Sh ETF	EDZ	closed	-1.53%	0.0%
Drxn Tech 3x Sh ETF	TYP	closed	-1.61%	0.0%
Drxn Gold Sh 3X ETF	NUGT	$9.91	-2.38%	4.8%
HBP Glb Gold 2X ETF	HGU	$7.17	-3.67%	8.1%
		Winning	14.29%	100.0%

Slam and dunk

Another week of new equity lows. Same script as last month for the markets, except with an extra day’s lag. A big up-day on the first, and then they backed up the pile- driver. Next week isn’t looking much better with France going socialist in its election, and Greece just … going.

There were a couple of sells actually on Monday, and even Cameco touched on Wednesday before the markets roared south. The only buy in the week was a tranche of HZU (2x silver ETF). Precious metals stocks finally firmed a little on Friday, but they may not last if the Euro falls against the dollar because of the weekend election results. Markets are down overnight as I write this at 1:15 AM early Monday morning.

The continuing damage …

TRADING			4-May-12	UPDATE		687
#	Trade	Qty	Stock	Symbol		Price		Acct
			30-Apr-12
			See April 2012 monthend
			1-May-12
16	Sold	2.0%	Cameco	CCO	@	$22.45		3
			2-May-12
	No trades
			3-May-12
2	Bought	2.6%	HBP Silver 2X ETF	HZU	@	$5.29		1
			4-May-12
	No trades
Qty   % is the portfolio weighting

 

EXTENSION   REVERSAL TRADING SYSTEM (ERTS)
***********************************************************
04-May-12
S&P500	1369.1	-22.5	-1.6%
TSX	11871.2	-143.7	-1.2%
***********************************************************
PORTFOLIO STATUS
	Market	APR12	YTD	Incep
Canadian Dollar	1.0044	-0.8%	2.6%	-3.2%
S&P500	1369.1	-2.1%	8.9%	9.3%
TSX	11871.2	-3.4%	-0.7%	-9.7%
	Weight
Portfolio % USD	34.3%	-5.3%	-17.9%	-4.5%
Portfolio % CAD	65.7%	-3.7%	-10.5%	-17.1%
	FX
PORTFOLIO EQUITY	CAD	-3.8%	-12.4%	-12.3%
USD ERTS vs SP500	USD	-3.3%	-26.7%	-13.7%
CAD ERTS vs TSX	CAD	-0.2%	-9.8%	-7.4%
ERTS vs SP500/TSX	CAD/USD	-1.3%	-15.6%	-9.6%
Inception is 30 Jun 11
***********************************************************
Portfolio Direction	Long	Short	Net
Position	72.0%	0.0%	72.0%	long
ETF Leverage-adjusted	121.2%	0.0%	121.2%	long
CURRENT POSITIONS
STOCK/ETF	SYM	LAST	Profit	WGT
CASH				28.0%
Cameco	CCO	$22.37	0.66%	5.2%
Drxn Real Est 3X ETF	DRN	closed	0.34%	0.0%
Potash Corp	POT	$42.32	0.27%	11.4%
Drxn Energy 3X Sh ETF	ERY	closed	0.02%	0.0%
Drxn Agribus 3X ETF	COWL	closed	0.00%	0.0%
Drxn Energy 3X ETF	ERX	$43.57	-0.10%	3.6%
Drxn Em Mkt 3x ETF	EDC	$91.85	-0.12%	1.8%
Claymore BRIC ETF	CBQ	$25.30	-0.14%	2.6%
Teck Corp	TCK.B	$34.79	-0.15%	5.2%
HBP Cr Oil 2X ETF	HOU	$5.89	-0.15%	1.8%
Drxn Tech 3x ETF	TYH	$54.92	-0.19%	3.5%
Cenovus Energy	CVE	$32.18	-0.27%	5.1%
EnCana Corp	ECA	closed	-0.36%	0.0%
Drxn Real Est 3X Sh ETF	DRV	closed	-0.41%	0.0%
Silver Wheaton	SLW	$28.21	-0.43%	7.4%
HBP Silver 2X ETF	HZU	$5.40	-0.57%	7.3%
Drxn Em Mkt 3x Sh ETF	EDZ	closed	-1.52%	0.0%
Drxn Gold Sh 3X ETF	NUGT	$11.15	-1.58%	5.2%
Drxn Tech 3x Sh ETF	TYP	closed	-1.60%	0.0%
HBP Nat Gas 2X ETF	HNU	$10.34	-1.64%	3.3%
HBP Glb Gold 2X ETF	HGU	$7.82	-3.04%	8.6%

Portfolio results for April 2012 – down 4.1%

I suppose you could say that’s better than March’s -6.5%, but all in all I’d rather have things going in the other direction. The broad indices went sideways in April, but commodities continued the downward spiral, with negative economic news continuing to bleed out of Europe and China – more so Europe. And they were all pretty-much correlated though crude oil and energy stocks did a little better. Natural gas and the metals got hammered, but there was a bit of improvement right at month end. In fact today, on the 30th, ERTS actually sold off 3 tranches – another of Cenovus (one went last week), HNU (2x nat gas) and ERX (3x energy stocks). If this firming continues for another week or two, then that may provide the opportunity to re-load a little cash if the markets then turn down again.

Precious metals stocks have been really battered, while gold and silver themselves haven’t pulled back all that severely. These companies should be making decent money at these commodity prices. That value could spark a sharp rally if there’s even a hint of further central bank easing. North American growth numbers disappointed a little this week, so that (ironically) works to the benefit of the hard assets trade (as things get worse, governments will be pressured to ease, and the US dollar in particular will weaken again – though against what?). There was a bit of improvement in the metals this past week, though fairly tepid.

So, through all that, the portfolio is down 9.0% on the year while the S&P500 is up 11.2% and the TSX 2.8%. Since the December rally started, I never really had a chance to load up on the things that did go north, so I was out of those while the commodities had a really bad couple of months. Some of that should improve as the various trends correct.

The portfolio is now 72.7% invested, with a long bias of 121.9% taking ETF leverage into account. So a semi-decent rally will make the losses back fairly quickly. More declining and the losses will accelerate in that direction for a while.

TRADING			30-Apr-12	UPDATE		687
#	Trade	Qty	Stock	Symbol		Price		Acct
			30-Apr-12
3	Sold	2.3%	Cenovus Energy	CVE	@	$35.22		1
20	Sold	1.4%	HBP Nat Gas 2X ETF	HNU	@	$10.38		4
8	Sold	1.9%	Drxn Energy 3X ETF	ERX	@	$49.48		2
			1-May-12
	No trades
			2-May-12
	No trades
			3-May-12
	No trades
			4-May-12
	No trades
Qty   % is the portfolio weighting

 

EXTENSION   REVERSAL TRADING SYSTEM (ERTS)
***********************************************************
30-Apr-12
S&P500	1397.9	-10.6	-0.7%
TSX	12292.7	-99.5	-0.8%
***********************************************************
PORTFOLIO STATUS
	Market	APR12	YTD	Incep
Canadian Dollar	1.0127	1.0%	3.4%	-2.4%
S&P500	1397.9	-0.7%	11.2%	10.6%
TSX	12292.7	-0.8%	2.8%	-6.8%
	Weight
Portfolio % USD	34.5%	-4.0%	-11.9%	0.7%
Portfolio % CAD	65.5%	-3.9%	-6.6%	-14.0%
	FX
PORTFOLIO EQUITY	CAD	-4.1%	-9.0%	-8.8%
USD ERTS vs SP500	USD	-3.2%	-23.0%	-10.0%
CAD ERTS vs TSX	CAD	-3.0%	-9.4%	-7.2%
ERTS vs SP500/TSX	CAD/USD	-3.1%	-14.1%	-8.1%
Inception is 30 Jun 11
***********************************************************
Portfolio Direction	Long	Short	Net
Position	72.7%	0.0%	72.7%	long
ETF Leverage-adjusted	121.9%	0.0%	121.9%	long
CURRENT POSITIONS
STOCK/ETF	SYM	LAST	Profit	WGT
CASH				27.3%
Cameco	CCO	$21.86	0.51%	6.9%
Drxn Real Est 3X ETF	DRN	closed	0.34%	0.0%
Drxn Energy 3X ETF	ERX	$49.38	0.32%	3.9%
Cenovus Energy	CVE	$35.85	0.23%	5.4%
Potash Corp	POT	$42.00	0.19%	10.9%
Teck Corp	TCK.B	$36.86	0.13%	5.3%
Drxn Tech 3x ETF	TYH	$59.88	0.09%	3.7%
HBP Cr Oil 2X ETF	HOU	$6.68	0.06%	2.0%
Drxn Energy 3X Sh ETF	ERY	closed	0.02%	0.0%
Silver Wheaton	SLW	$30.16	0.02%	7.6%
Drxn Agribus 3X ETF	COWL	closed	0.00%	0.0%
Drxn Em Mkt 3x ETF	EDC	$97.88	-0.02%	1.8%
Claymore BRIC ETF	CBQ	$25.96	-0.09%	2.5%
EnCana Corp	ECA	closed	-0.36%	0.0%
Drxn Real Est 3X Sh ETF	DRV	closed	-0.40%	0.0%
HBP Silver 2X ETF	HZU	$5.67	-0.42%	4.6%
Drxn Gold Sh 3X ETF	NUGT	$13.12	-0.78%	5.8%
Drxn Em Mkt 3x Sh ETF	EDZ	closed	-1.51%	0.0%
Drxn Tech 3x Sh ETF	TYP	closed	-1.59%	0.0%
HBP Nat Gas 2X ETF	HNU	$10.44	-1.61%	3.2%
HBP Glb Gold 2X ETF	HGU	$8.50	-2.39%	9.0%