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A good month building – on gold and gas

allocator — Sat, 28 Jan 2012 14:07:31 +0000

Big reversal moves in gas and gold this week completely turned around the fortunes of the portfolio. Last week it was up just 1.3% after having given up about 2% of earlier gains, and today it’s up 4.9%. There are two trading days left in January, and looks like the lion’s share of those gains will hold. ERTS (and I was a couple of discretionary adjustments) took profits in both the gas and gold shares positions, and the rest is essentially short ETF positions. In fact the portfolio is currently 30% net short on a leverage adjusted basis (all the short positions are 3x leveraged). The worst-case scenario is a big 20+ point S&P500 rally on Monday and/or Tuesday, with gas and gold pulling back at the same time. Something like that could happen; stocks have been in market bull trend since late November, if you don’t want to count a short 40-point dip in early December – pretty much straight up. Markets seem to have grown weary of the news noise coming out of Europe. They have a way of doing that once the news about some major issue is in your face day after day and becomes stale. They react to new unexpected information.

The US portfolio is dragging 3% behind the S&P500 this month because its carrying all the short ETFs, while the Canadian positions are ahead of the S&P/TSX by 3.3%; every single Canadian position is profitable, and most of the gold and gas trading was also concentrated there. ERTS overall is beating the two market indices by 7.3% since inception – that’s over a period of 7 months. The Canadian side is still down .9% in absolute terms because commodities had a rough ride over that period, but still ahead of the index by 5.4%. The US side has done really well, up 14.6% in absolute terms and 11.1% ahead of its index benchmark. Hopefully these results are setting the tone for a good year.

The following trades were all discretionary, designed to capture gains to date. I may come to regret, or I may benefit like I did yesterday, buying back a tranche of HNU at $5.07 that I had sold the day before at $5.75. Today I sold it again at $5.66. After an outburst like this week’s big short-covering rally, there are volatile swings as traders re-position themselves – short covering, re-shorting the rally, buying the key reversal, and otherwise short-term trading for whatever reason. I did a little bit of the latter because I’m comfortable buying the dips here because the initial entry was so well placed. All in all it’s worked out so far.


TRADING			27-Jan-12	UPDATE		671

#	Trade	Qty	Stock	Symbol		Price	Acct
4	Sold	2.7%	Potash Corp	POT	@	$46.73	1
20	Sold	2.1%	HBP Nat Gas 2X ETF	HNU	@	$5.66	4
14	Sold	2.2%	Drxn Gold Sh 3X ETF	NUGT	@	$25.95	2

Qty % is the portfolio weighting


EXTENSION REVERSAL TRADING SYSTEM (ERTS)
***********************************************************
27-Jan-12

S&P500	1316.3	-2.1	-0.2%

TSX	12466.5	2.2	0.0%

***********************************************************
PORTFOLIO STATUS
	Market	JAN 12	YTD	Incep
Canadian Dollar	1.0010	2.2%	2.2%	-3.5%
S&P500	1316.3	4.7%	4.7%	3.5%
TSX	12466.5	4.3%	4.3%	-6.3%
	Weight
Portfolio % USD	34.5%	1.7%	1.7%	14.6%
Portfolio % CAD	65.5%	7.5%	7.5%	-0.9%
	FX
PORTFOLIO EQUITY	CAD	4.9%	4.9%	5.1%
USD ERTS vs SP500	USD	-3.0%	-3.0%	11.1%
CAD ERTS vs TSX	CAD	3.3%	3.3%	5.4%
ERTS vs SP500/TSX	CAD/USD	1.1%	1.1%	7.3%

Inception is 30 Jun 11
***********************************************************

Portfolio Direction	Long	Short	Net
Position	13.0%	19.6%	-6.6%	short
ETF Leverage-adjusted	28.1%	58.7%	-30.6%	short

CURRENT POSITIONS
STOCK/ETF	SYM	LAST	Profit	WGT
CASH				67.5%
Drxn Gold Sh 3X ETF	NUGT	$25.97	2.15%	2.2%
HBP Nat Gas 2X ETF	HNU	$5.65	2.03%	4.1%
HBP Glb Gold 2X ETF	HGU	$13.70	1.82%	6.7%
Potash Corp	POT	closed	0.78%	0.0%
Drxn Real Est 3X ETF	DRN	closed	0.34%	0.0%
Silver Wheaton	SLW	closed	0.33%	0.0%
Cenovus Energy	CVE	closed	0.28%	0.0%
Drxn Energy 3X ETF	ERX	closed	0.24%	0.0%
Cameco	CCO	closed	0.23%	0.0%
Teck Corp	TCK.B	closed	0.19%	0.0%
Drxn Energy 3X Sh ETF	ERY	$10.28	0.02%	2.1%
Drxn Gold Sh 3X Sh ETF	DUST	closed	0.00%	0.0%
Drxn Tech 3x ETF	TYH	closed	0.00%	0.0%
Claymore BRIC ETF	CBQ	closed	0.00%	0.0%
Drxn Em Mkt 3x ETF	EDC	closed	0.00%	0.0%
HBP Glb Gold 2X Sh ETF	HGD	closed	0.00%	0.0%
Drxn Real Est 3X Sh ETF	DRV	$31.71	-0.20%	1.9%
EnCana Corp	ECA	closed	-0.36%	0.0%
Drxn Em Mkt 3x Sh ETF	EDZ	$13.85	-0.79%	7.8%
Drxn Tech 3x Sh ETF	TYP	$12.89	-0.96%	7.7%

…

The wacky world of gas

allocator — Fri, 27 Jan 2012 04:35:09 +0000

Natural gas has always had a significantly different character from other markets – even the other energies. It’s probably the punk commodity out of all the lot, given it’s penching for spiking out of the blue. In the past it tended to do it more during hurricane season, more recently in violent short-covering bursts after long bouts of drip-drip-drip downsliding. It’s been in a brutal bear market since mid 2008, mainly on the fundamentals of oversupply as more and more shale gas comes on stream – and also because of the recessionary state of the U.S. economy. Natural gas, being what it is, is mostly landlocked to North America with relatively little being exported. I remember trading the futures in the early 2000’s at around $2.40-$2.50 per Mbtu. In the great commodities rally of the mid-2000’s it reached $15.65, only to fall mightily and once again tag a recent low of $2.23, lower even than at the depths of the great 2008-2008 bear market when it touched $2.41.

So once again, this Monday it began the current 4-day short-covering spike that started from $2.23 and touched $2.81 today, before dropping back down today to close at $2.605. Last Thursday, fortuitously as it turns out, I swapped out the more conservative Encana gas producer position for the aggressive Horizons Beta-pro 2x natural gas ETF (HNU) – only because of the stunningly low price point that day. The reasoning was that it would find a bottom here somewhere soon, possibly benefit from a short-term spike, and at worst, morph into a long flat sideways market, though volatile enough to produce decent returns from my reversal system. Eventually that would feed into a more lasting rally that ERTS would continue to work from the long side. Well, things worked out much better than expected, when just two days later the price soared and the ETF gained 16%, where I took the first partial profit, selling 25% of the position. Two days later again it ran another 16% and I took profits on the 2nd 25% of the position. Which brings us to today.

Yesterday I sold the second tranche at $5.75. This morning gas edged a little higher and suddenly reversed, with the ETF collapsing back down to just over $5. So I bought back yesterday’s tranche at $5.07, rebuilding the long position to 3 of 4 allowable (per my risk management) tranches. Even if this particular spike is over, I can live with that. Being long gas at under $2.50 I think is a good risk-reward situation to be in. Right now I have an open order to buy in the last tranche of HNU at $4.09.

The two gold stocks leveraged ETFs HGU and NUGT also did great, themselves spiking out of a hole just yesterday morning on the news that the U.S. federal reserve was going to hold interest rates low through late 2014 instead of just mid-2013. That may just re-kindle the dollar-is-shit trade and get precious metals going again. Remains to be seen; however the initial reaction turned out to be decently profitable. On Tuesday, HGU filled its fourth tranche at $11.66, and today ERTS sold off a second tranche at $13.42. NUGT did really well also, yesterday morning buying at $19.39, and today also selling out a second tranche at $24.61. (Yesterday I sold the first tranche of each to capture the big one-day move.)

So gas and gold saved the day on what was turning out to be a barely break-even month. Today the portfolio is up 4% on the month and year. There was even a small contribution from the short positions, primarily in TYP and EDZ, as the S&P500 finally took a breather and coughed up 7 points. The portfolio is currently about 20% net short on a leverage adjusted basis. The way things stand, it will be more profitable now if the market tanked tomorrow rather than rose. It will be interesting to see of gas and gold can keep pushing higher, or if they were just one-week wonders.


TRADING			26-Jan-12	UPDATE		670

#	Trade	Qty	Stock	Symbol		Price	Acct
1	Sold	2.9%	HBP Glb Gold 2X ETF	HGU	@	$13.42	1
14	Sold	2.1%	Drxn Gold Sh 3X ETF	NUGT	@	$24.61	2
20	Bought	1.9%	HBP Nat Gas 2X ETF	HNU	@	$5.07	4

Qty % is the portfolio weighting


EXTENSION REVERSAL TRADING SYSTEM (ERTS)
***********************************************************
26-Jan-12

S&P500	1318.4	-7.6	-0.6%
TSX	12464.3	-74.9	-0.6%

***********************************************************
PORTFOLIO STATUS
	Market	JAN 12	YTD	Incep
Canadian Dollar	0.9982	1.9%	1.9%	-3.8%
S&P500	1318.4	4.8%	4.8%	4.1%
TSX	12464.3	4.3%	4.3%	-5.7%
	Weight
Portfolio % USD	34.7%	1.4%	1.4%	14.2%
Portfolio % CAD	65.3%	6.4%	6.4%	-2.2%
	FX
PORTFOLIO EQUITY	CAD	4.0%	4.0%	4.2%
USD ERTS vs SP500	USD	-3.4%	-3.4%	10.1%
CAD ERTS vs TSX	CAD	2.1%	2.1%	3.6%
ERTS vs SP500/TSX	CAD/USD	0.2%	0.2%	5.8%

Inception is 30 Jun 11
***********************************************************

Portfolio Direction	Long	Short	Net
Position	19.0%	20.0%	-1.0%	short
ETF Leverage-adjusted	39.5%	59.9%	-20.4%	short

CURRENT POSITIONS
STOCK/ETF	SYM	LAST	Profit	WGT
CASH				61.1%
Drxn Gold Sh 3X ETF	NUGT	$24.29	1.86%	4.2%
HBP Glb Gold 2X ETF	HGU	$13.22	1.57%	6.5%
HBP Nat Gas 2X ETF	HNU	$5.15	1.46%	5.6%
Potash Corp	POT	$45.99	0.73%	2.7%
Drxn Real Est 3X ETF	DRN	closed	0.34%	0.0%
Silver Wheaton	SLW	closed	0.33%	0.0%
Cenovus Energy	CVE	closed	0.28%	0.0%
Drxn Energy 3X ETF	ERX	closed	0.24%	0.0%
Cameco	CCO	closed	0.23%	0.0%
Teck Corp	TCK.B	closed	0.19%	0.0%
Drxn Energy 3X Sh ETF	ERY	$10.20	0.00%	2.2%
Drxn Gold Sh 3X Sh ETF	DUST	closed	0.00%	0.0%
Drxn Tech 3x ETF	TYH	closed	0.00%	0.0%
Claymore BRIC ETF	CBQ	closed	0.00%	0.0%
Drxn Em Mkt 3x ETF	EDC	closed	0.00%	0.0%
HBP Glb Gold 2X Sh ETF	HGD	closed	0.00%	0.0%
Drxn Real Est 3X Sh ETF	DRV	$31.91	-0.19%	2.0%
EnCana Corp	ECA	closed	-0.36%	0.0%
Drxn Em Mkt 3x Sh ETF	EDZ	$14.06	-0.67%	8.0%
Drxn Tech 3x Sh ETF	TYP	$12.97	-0.92%	7.8%

….

A tale of two rallies

allocator — Wed, 25 Jan 2012 23:03:26 +0000

Just what the doctor ordered …

Yesterday, natural gas exploded higher on a short covering rally, and doubled that today. I sold one tranche yesterday for a 16% gain was able to sell a second tranche today at $5.75 – that tranche having been bought 4 sessions ago at $4.33 – for a 32% gain. Not bad work if you can get. I wish I could attribute that to genius, but alas I think I’ll have to settle for good fortune.

Then today, with gold and gold stocks looking grim, ERTS bought the 3rd tranche of NUGT at $19.39 at the opening on a small gap below an outstanding limit order at $19.44. NUGT closed the day at $23.28, fully 20.5% higher 6 ½ hours later after the Fed announced in the morning that they would extend their low-interest rate posture all the way out to late 2014. Christmas in January. I sold the NUGT tranche a little early at $22.07, and also one of HGU on the Canadian side at $12.47 (bought only yesterday at $11.66).

That puts the portfolio up 3.7% on the month/year, and at a new equity high from I started the ERTS reversal trading program last July – despite erosion of the short positions that have accumulated over the month as the market has rallied. They are a drag for sure right now, but will come in handy on the down days.

So there you have it, lemons to lemonade.


TRADING			25-Jan-12	UPDATE		669

#	Trade	Qty	Stock	Symbol		Price	Acct
14	Bought	2.2%	Drxn Gold Sh 3X ETF	NUGT	@	$19.39	2
20	Sold	2.1%	HBP Nat Gas 2X ETF	HNU	@	$5.75	4
14	Sold	2.1%	Drxn Gold Sh 3X ETF	NUGT	@	$22.07	2
1	Sold	2.9%	HBP Glb Gold 2X ETF	HGU	@	$12.47	1

Qty % is the portfolio weighting


EXTENSION REVERSAL TRADING SYSTEM (ERTS)
***********************************************************
25-Jan-12

S&P500	1326.1	11.4	0.9%
TSX	12539.2	144.0	1.2%

***********************************************************
PORTFOLIO STATUS
	Market	JAN 12	YTD	Incep
Canadian Dollar	0.9960	1.7%	1.7%	-4.0%
S&P500	1326.1	5.4%	5.4%	3.2%
TSX	12539.2	4.9%	4.9%	-6.8%
	Weight
Portfolio % USD	34.4%	-0.1%	-0.1%	12.5%
Portfolio % CAD	65.6%	6.6%	6.6%	-1.9%
	FX
PORTFOLIO EQUITY	CAD	3.7%	3.7%	3.9%
USD ERTS vs SP500	USD	-5.5%	-5.5%	9.3%
CAD ERTS vs TSX	CAD	1.7%	1.7%	4.9%
ERTS vs SP500/TSX	CAD/USD	-0.8%	-0.8%	6.4%

Inception is 30 Jun 11
***********************************************************

Portfolio Direction	Long	Short	Net
Position	22.1%	19.8%	2.3%	long
ETF Leverage-adjusted	47.6%	59.4%	-11.8%	short

CURRENT POSITIONS
STOCK/ETF	SYM	LAST	Profit	WGT
CASH				58.1%
HBP Nat Gas 2X ETF	HNU	$5.77	1.90%	4.2%
Drxn Gold Sh 3X ETF	NUGT	$23.38	1.59%	6.1%
HBP Glb Gold 2X ETF	HGU	$12.94	1.32%	9.1%
Potash Corp	POT	$45.48	0.70%	2.7%
Drxn Real Est 3X ETF	DRN	closed	0.34%	0.0%
Silver Wheaton	SLW	closed	0.33%	0.0%
Cenovus Energy	CVE	closed	0.28%	0.0%
Drxn Energy 3X ETF	ERX	closed	0.25%	0.0%
Cameco	CCO	closed	0.23%	0.0%
Teck Corp	TCK.B	closed	0.19%	0.0%
Drxn Gold Sh 3X Sh ETF	DUST	closed	0.00%	0.0%
Drxn Tech 3x ETF	TYH	closed	0.00%	0.0%
Claymore BRIC ETF	CBQ	closed	0.00%	0.0%
Drxn Em Mkt 3x ETF	EDC	closed	0.00%	0.0%
HBP Glb Gold 2X Sh ETF	HGD	closed	0.00%	0.0%
Drxn Energy 3X Sh ETF	ERY	$9.78	-0.09%	2.1%
Drxn Real Est 3X Sh ETF	DRV	$32.60	-0.15%	2.0%
EnCana Corp	ECA	closed	-0.36%	0.0%
Drxn Em Mkt 3x Sh ETF	EDZ	$13.90	-0.76%	8.0%
Drxn Tech 3x Sh ETF	TYP	$12.76	-1.05%	7.8%

…

Promising start – smackdown finish

allocator — Tue, 24 Jan 2012 22:00:43 +0000

The portfolio was weighted 16% or so net-short going into today’s session, and an 8-point down open had things up a smidge at the opening. But the market came back over the day to close only fractionally lower, and the wild-card long gold-stocks position got hammered. So the +.2% start ended in a 1% loss. C’est la vie.

There was one trade, and that was to buy the 4th and final tranche of HGU.


TRADING			24-Jan-12	UPDATE		668

#	Trade	Qty	Stock	Symbol		Price	Acct
1	Bought	2.9%	HBP Glb Gold 2X ETF	HGU	@	$11.66	1

Qty % is the portfolio weighting


EXTENSION REVERSAL TRADING SYSTEM (ERTS)
***********************************************************
24-Jan-12

S&P500	1314.7	-1.3	-0.1%
TSX	12395.2	-126.5	-1.0%

***********************************************************
PORTFOLIO STATUS
	Market	JAN 12	YTD	Incep
Canadian Dollar	0.9896	1.1%	1.1%	-4.6%
S&P500	1314.7	4.5%	4.5%	3.3%
TSX	12395.2	3.7%	3.7%	-5.9%
	Weight
Portfolio % USD	34.8%	-1.6%	-1.6%	10.8%
Portfolio % CAD	65.2%	3.9%	3.9%	-4.6%
	FX
PORTFOLIO EQUITY	CAD	1.5%	1.5%	1.7%
USD ERTS vs SP500	USD	-6.2%	-6.2%	7.5%
CAD ERTS vs TSX	CAD	0.2%	0.2%	1.2%
ERTS vs SP500/TSX	CAD/USD	-2.0%	-2.0%	3.4%

Inception is 30 Jun 11
***********************************************************

Portfolio Direction	Long	Short	Net
Position	24.5%	21.0%	3.4%	long
ETF Leverage-adjusted	51.2%	63.1%	-11.9%	short

CURRENT POSITIONS
STOCK/ETF	SYM	LAST	Profit	WGT
CASH				54.5%
HBP Nat Gas 2X ETF	HNU	$5.07	1.11%	5.7%
Potash Corp	POT	$44.90	0.66%	2.7%
Drxn Real Est 3X ETF	DRN	closed	0.35%	0.0%
Drxn Gold Sh 3X ETF	NUGT	$19.74	0.35%	4.9%
Silver Wheaton	SLW	closed	0.33%	0.0%
Cenovus Energy	CVE	closed	0.28%	0.0%
Drxn Energy 3X ETF	ERX	closed	0.25%	0.0%
Cameco	CCO	closed	0.23%	0.0%
HBP Glb Gold 2X ETF	HGU	$11.67	0.20%	11.2%
Teck Corp	TCK.B	closed	0.19%	0.0%
Drxn Gold Sh 3X Sh ETF	DUST	closed	0.00%	0.0%
Drxn Tech 3x ETF	TYH	closed	0.00%	0.0%
Claymore BRIC ETF	CBQ	closed	0.00%	0.0%
Drxn Em Mkt 3x ETF	EDC	closed	0.00%	0.0%
HBP Glb Gold 2X Sh ETF	HGD	closed	0.00%	0.0%
Drxn Energy 3X Sh ETF	ERY	$10.13	-0.01%	2.2%
Drxn Real Est 3X Sh ETF	DRV	$33.90	-0.07%	2.1%
EnCana Corp	ECA	closed	-0.36%	0.0%
Drxn Em Mkt 3x Sh ETF	EDZ	$14.40	-0.47%	8.5%
Drxn Tech 3x Sh ETF	TYP	$13.15	-0.81%	8.2%

Explosive move in natural gas – as it were

allocator — Tue, 24 Jan 2012 04:10:41 +0000

Makes me look like a genius, considering I swapped out the unleveraged Encana position for a 2x leveraged ETF position in gas itself just two trading sessions ago. But truth be told, my reasoning (I did not crunch a single number) was that gas looked really sold down and this looked like “about right” for where a rally might spring from, and the thing could have been down 18% just as easily as it was up 18% at the close today. Because rallies in this brutal bear market that started in July of 2008 have been rather fleeting – there have been some good ones but they haven’t lasted long – I wasn’t about to let a two-day 16% profit vaporize without taking at least something away. So I sold one tranche at $5.02, leaving three in play per the normal parameters of ERTS (the trading system). I opened the position at $4.33. If the rally continues, this will be very profitable. If it doesn’t, at least I took a useful partial profit and have the means to buy back that tranche at lower prices and just keep grinding it out.

I did some analysis over the weekend, and it looks like using a weekly time frame rather than daily will produce as good as, or better results than the current daily, with the added bonus of cutting trades down by a factor of 5 (reducing transaction costs). So that’s what I’ve implemented – though you wouldn’t know it based on today’s 4 trades. Besides the gas sale, ERTS sold the one tranche of SLW and bought two more short ETFS, shifting the leverage-adjusted portfolio bias to 16% net-short. I would have had a losing day had it not been that power-pop in gas.


TRADING			23-Jan-12	UPDATE		667

#	Trade	Qty	Stock	Symbol		Price	Acct
13	Bought	2.2%	Drxn Em Mkt 3x Sh ETF	EDZ	@	$14.70	2
7	Bought	2.2%	Drxn Real Est 3X Sh ETF	DRV	@	$34.94	2
17	Sold	2.4%	Silver Wheaton	SLW	@	$31.74	3
20	Sold	1.9%	HBP Nat Gas 2X ETF	HNU	@	$5.02	4

Qty % is the portfolio weighting


EXTENSION REVERSAL TRADING SYSTEM (ERTS)
***********************************************************
23-Jan-12

S&P500	1316.0	0.6	0.0%
TSX	12521.7	124.6	1.0%

***********************************************************
PORTFOLIO STATUS
	Market	JAN 12	YTD	Incep
Canadian Dollar	0.9924	1.3%	1.3%	-4.3%
S&P500	1316.0	4.6%	4.6%	3.3%
TSX	12521.7	4.7%	4.7%	-6.8%
	Weight
Portfolio % USD	34.9%	-0.3%	-0.3%	12.3%
Portfolio % CAD	65.1%	4.5%	4.5%	-4.0%
	FX
PORTFOLIO EQUITY	CAD	2.3%	2.3%	2.5%
USD ERTS vs SP500	USD	-4.9%	-4.9%	9.0%
CAD ERTS vs TSX	CAD	-0.2%	-0.2%	2.8%
ERTS vs SP500/TSX	CAD/USD	-1.9%	-1.9%	4.9%

Inception is 30 Jun 11
***********************************************************

Portfolio Direction	Long	Short	Net
Position	22.2%	20.9%	1.2%	long
ETF Leverage-adjusted	46.9%	62.8%	-16.0%	short

CURRENT POSITIONS
STOCK/ETF	SYM	LAST	Profit	WGT
CASH				56.9%
HBP Nat Gas 2X ETF	HNU	$5.09	1.13%	5.7%
Potash Corp	POT	$45.93	0.73%	2.7%
Drxn Gold Sh 3X ETF	NUGT	$21.15	0.70%	5.2%
HBP Glb Gold 2X ETF	HGU	$12.12	0.52%	8.6%
Drxn Real Est 3X ETF	DRN	closed	0.35%	0.0%
Silver Wheaton	SLW	closed	0.33%	0.0%
Cenovus Energy	CVE	closed	0.28%	0.0%
Drxn Energy 3X ETF	ERX	closed	0.25%	0.0%
Cameco	CCO	closed	0.23%	0.0%
Teck Corp	TCK.B	closed	0.19%	0.0%
Drxn Gold Sh 3X Sh ETF	DUST	closed	0.00%	0.0%
Drxn Tech 3x ETF	TYH	closed	0.00%	0.0%
Claymore BRIC ETF	CBQ	closed	0.00%	0.0%
Drxn Em Mkt 3x ETF	EDC	closed	0.00%	0.0%
HBP Glb Gold 2X Sh ETF	HGD	closed	0.00%	0.0%
Drxn Real Est 3X Sh ETF	DRV	$34.66	-0.02%	2.2%
Drxn Energy 3X Sh ETF	ERY	$10.06	-0.03%	2.2%
EnCana Corp	ECA	closed	-0.36%	0.0%
Drxn Em Mkt 3x Sh ETF	EDZ	$14.50	-0.41%	8.4%
Drxn Tech 3x Sh ETF	TYP	$13.20	-0.78%	8.2%

…

Relatively quiet upward drift; slowly shifting to the short side

allocator — Fri, 20 Jan 2012 23:48:44 +0000

If you look at a chart of the S&P500, you’ll see it rising steadily in a very tight channel all January so far. None of that wild swinging volatility we became accustomed to all through the second half of last year. Off-hand I’d say it looks bullish, but who’s to know with Europe still being the way it is. I’m a tad concerned ERTS may be getting me short somewhat early. But we’ll let it run its course and see what happens.

Today natural gas recovered for a modest up day after yesterday’s horrendous 6-7% drop. I’m only a few cents under water at the moment on HNU, but that’s better than yesterday’s close. Yesterday I swapped out ECA for HNU with HNU at $4.33. It closed at $4.19 yesterday and is back to $4.29 today. Gold stocks were having a good day until sold off again late in the session, but SLW hung on for a decent gain and closed near its high. Not sure what’s up with that.

Not a lot of trading today – ERTS sold off the remaining partial tranche of DRN, and went short oil stock with ERY and added to the EDZ short emerging markets positions. On a leverage-adjusted basis, the portfolio shifted fractionally short. This is a fairly neutral set-up for next week. Most of my longs are concentrated in precious metals, so there’s some vulnerability there.


TRADING			20-Jan-12	UPDATE		666

#	Trade	Qty	Stock	Symbol		Price	Acct
6	Sold	0.7%	Drxn Real Est 3X ETF	DRN	@	$56.07	2
9	Bought	2.2%	Drxn Energy 3X Sh ETF	ERY	@	$10.18	2
13	Bought	2.2%	Drxn Em Mkt 3x Sh ETF	EDZ	@	$14.79	2

Qty % is the portfolio weighting


EXTENSION REVERSAL TRADING SYSTEM (ERTS)
***********************************************************
20-Jan-12

S&P500	1315.4	0.9	0.1%
TSX	12397.1	16.4	0.1%

***********************************************************
PORTFOLIO STATUS
	Market	JAN 12	YTD	Incep
Canadian Dollar	0.9870	0.8%	0.8%	-4.8%
S&P500	1315.4	4.6%	4.6%	3.2%
TSX	12397.1	3.7%	3.7%	-6.9%
	Weight
Portfolio % USD	35.6%	0.1%	0.1%	12.7%
Portfolio % CAD	64.4%	2.5%	2.5%	-6.0%
	FX
PORTFOLIO EQUITY	CAD	1.3%	1.3%	1.4%
USD ERTS vs SP500	USD	-4.5%	-4.5%	9.5%
CAD ERTS vs TSX	CAD	-1.2%	-1.2%	0.9%
ERTS vs SP500/TSX	CAD/USD	-2.4%	-2.4%	4.0%

Inception is 30 Jun 11
***********************************************************

Portfolio Direction	Long	Short	Net
Position	25.1%	17.2%	7.9%	long
ETF Leverage-adjusted	50.1%	51.6%	-1.5%	short

CURRENT POSITIONS
STOCK/ETF	SYM	LAST	Profit	WGT
CASH				57.7%
Potash Corp	POT	$45.24	0.68%	2.7%
Drxn Gold Sh 3X ETF	NUGT	$20.12	0.44%	5.1%
HBP Glb Gold 2X ETF	HGU	$11.90	0.37%	8.5%
Drxn Real Est 3X ETF	DRN	closed	0.35%	0.0%
Silver Wheaton	SLW	$31.95	0.34%	2.4%
Cenovus Energy	CVE	closed	0.28%	0.0%
Drxn Energy 3X ETF	ERX	closed	0.25%	0.0%
Cameco	CCO	closed	0.23%	0.0%
Teck Corp	TCK.B	closed	0.19%	0.0%
Drxn Energy 3X Sh ETF	ERY	$10.26	0.02%	2.2%
Drxn Gold Sh 3X Sh ETF	DUST	closed	0.00%	0.0%
Drxn Tech 3x ETF	TYH	closed	0.00%	0.0%
Claymore BRIC ETF	CBQ	closed	0.00%	0.0%
Drxn Em Mkt 3x ETF	EDC	closed	0.00%	0.0%
Drxn Real Est 3X Sh ETF	DRV	closed	0.00%	0.0%
HBP Glb Gold 2X Sh ETF	HGD	closed	0.00%	0.0%
HBP Nat Gas 2X ETF	HNU	$4.29	-0.06%	6.4%
Drxn Em Mkt 3x Sh ETF	EDZ	$14.87	-0.21%	6.6%
EnCana Corp	ECA	closed	-0.36%	0.0%
Drxn Tech 3x Sh ETF	TYP	$13.36	-0.68%	8.4%

…

January was going well until …

allocator — Fri, 20 Jan 2012 04:23:45 +0000

… I started getting short a frisky market while at the same time all my longs started simultaneously disintegrating. So the short positions are losing for now, but precious metal stocks in particular – a heavy current weighting – suddenly decided to tank as well, so the portfolio had a resoundingly down day while stocks markets in general had a good one. The S&P500 picked up just 6.5 points, but it was a steady sloping rise that flattened out but still held into the close.

There were 6 trades in all, two of which was me replacing big-cap gas producer ECA with the riskier HNU – the 2x ETF of the actual commodity. I sold off HNU back at the beginning of December at over $10, and swapped it back into the portfolio at $4.33. The move is based on my assessment of natural gas futures being hammered down to $2.32 mBTU as putting it into a good risk reward range going forward. At this point the chances are fairly good that you could get a short-covering or weather-related spike, or just a useful sideways range that will work well with ERTS. I see ECA itself as having more risk now with gas prices being so low and its revenues bound to get hit hard. There’s also the risk now of a dividend cut. So I did the swap. Whether or not this was a smart move remains to be seen.


TRADING			19-Jan-12	UPDATE		665

#	Trade	Qty	Stock	Symbol		Price	Acct
3	Sold	3.1%	Cenovus Energy	CVE	@	$36.00	1
13	Bought	2.2%	Drxn Em Mkt 3x Sh ETF	EDZ	@	$15.06	2
11	Bought	2.2%	Drxn Tech 3x Sh ETF	TYP	@	$13.61	2
8	Sold	2.4%	Drxn Energy 3X ETF	ERX	@	$50.92	2
18	Sold	6.3%	EnCana Corp	ECA	@	$17.70	4
20	Bought	6.5%	HBP Nat Gas 2X ETF	HNU	@	$4.33	4

Qty % is the portfolio weighting


EXTENSION REVERSAL TRADING SYSTEM (ERTS)
***********************************************************
19-Jan-12

S&P500	1314.5	6.5	0.5%
TSX	12380.7	53.2	0.4%

***********************************************************
PORTFOLIO STATUS
	Market	JAN 12	YTD	Incep
Canadian Dollar	0.9888	1.0%	1.0%	-4.7%
S&P500	1314.5	4.5%	4.5%	2.7%
TSX	12380.7	3.6%	3.6%	-7.3%
	Weight
Portfolio % USD	35.7%	0.3%	0.3%	12.9%
Portfolio % CAD	64.3%	2.2%	2.2%	-6.3%
	FX
PORTFOLIO EQUITY	CAD	1.1%	1.1%	1.3%
USD ERTS vs SP500	USD	-4.3%	-4.3%	10.2%
CAD ERTS vs TSX	CAD	-1.3%	-1.3%	1.0%
ERTS vs SP500/TSX	CAD/USD	-2.4%	-2.4%	4.3%

Inception is 30 Jun 11
***********************************************************

Portfolio Direction	Long	Short	Net
Position	25.6%	12.8%	12.8%	long
ETF Leverage-adjusted	51.9%	38.4%	13.5%	long

CURRENT POSITIONS
STOCK/ETF	SYM	LAST	Profit	WGT
CASH				61.6%
Potash Corp	POT	$46.10	0.74%	2.8%
Drxn Gold Sh 3X ETF	NUGT	$20.09	0.44%	5.0%
HBP Glb Gold 2X ETF	HGU	$11.89	0.36%	8.5%
Drxn Real Est 3X ETF	DRN	$55.54	0.34%	0.7%
Silver Wheaton	SLW	$31.06	0.28%	2.3%
Cenovus Energy	CVE	closed	0.28%	0.0%
Drxn Energy 3X ETF	ERX	closed	0.25%	0.0%
Cameco	CCO	closed	0.23%	0.0%
Teck Corp	TCK.B	closed	0.19%	0.0%
Drxn Gold Sh 3X Sh ETF	DUST	closed	0.00%	0.0%
Drxn Tech 3x ETF	TYH	closed	0.00%	0.0%
Claymore BRIC ETF	CBQ	closed	0.00%	0.0%
Drxn Em Mkt 3x ETF	EDC	closed	0.00%	0.0%
Drxn Real Est 3X Sh ETF	DRV	closed	0.00%	0.0%
HBP Glb Gold 2X Sh ETF	HGD	closed	0.00%	0.0%
Drxn Energy 3X Sh ETF	ERY	closed	0.00%	0.0%
Drxn Em Mkt 3x Sh ETF	EDZ	$14.89	-0.22%	4.3%
HBP Nat Gas 2X ETF	HNU	$4.18	-0.23%	6.3%
EnCana Corp	ECA	closed	-0.36%	0.0%
Drxn Tech 3x Sh ETF	TYP	$13.51	-0.58%	8.5%

…

Markets breaking higher; equity dragging

allocator — Wed, 18 Jan 2012 23:26:24 +0000

… or appear to be. S&P500 was up 14 points today in a fairly robust rally – except in precious metals stocks which really lagged again, to the point where I ended up buying back a tranche of SLW and adding a third of HGU. So I’m locked and loaded for gold and silver at the moment – but also starting to feel the headwinds on uptrends, as I’m now short three tranches of tech stocks (TYP) and just went short one of emerging markets (EDZ). The portfolio still has a leverage-adjusted 32% net-long bias, but will quickly start to give up ground if this rally continues unbroken to say 1400 S&P. But at least the correlations have broken down somewhat and I’m in a situation of being filled both on the long and short side depending on the vehicle being traded. That should smooth out the overall equity performance a little bit. Still up 2.2% on the month and the year, but’s it’s been fading the past couple of sessions.


TRADING			18-Jan-12	UPDATE		664

#	Trade	Qty	Stock	Symbol		Price	Acct
3	Sold	2.8%	Cenovus Energy	CVE	@	$35.08	1
6	Sold	2.2%	Drxn Real Est 3X ETF	DRN	@	$54.83	2
11	Bought	2.2%	Drxn Tech 3x Sh ETF	TYP	@	$14.32	2
13	Bought	2.2%	Drxn Em Mkt 3x Sh ETF	EDZ	@	$16.25	2
17	Bought	2.3%	Silver Wheaton	SLW	@	$30.94	3
1	Bought	2.9%	HBP Glb Gold 2X ETF	HGU	@	$12.28	1
8	Sold	2.2%	Drxn Energy 3X ETF	ERX	@	$49.28	2

Qty % is the portfolio weighting


EXTENSION REVERSAL TRADING SYSTEM (ERTS)
***********************************************************
18-Jan-12

S&P500	1308.0	14.4	1.1%
TSX	12327.5	94.7	0.8%

***********************************************************
PORTFOLIO STATUS
	Market	JAN 12	YTD	Incep
Canadian Dollar	0.9888	1.0%	1.0%	-4.7%
S&P500	1308.0	4.0%	4.0%	1.6%
TSX	12327.5	3.1%	3.1%	-8.0%
	Weight
Portfolio % USD	35.8%	1.9%	1.9%	14.8%
Portfolio % CAD	64.2%	3.1%	3.1%	-5.5%
	FX
PORTFOLIO EQUITY	CAD	2.2%	2.2%	2.4%
USD ERTS vs SP500	USD	-2.2%	-2.2%	13.2%
CAD ERTS vs TSX	CAD	0.0%	0.0%	2.6%
ERTS vs SP500/TSX	CAD/USD	-0.8%	-0.8%	6.4%

Inception is 30 Jun 11
***********************************************************

Portfolio Direction	Long	Short	Net
Position	31.6%	8.5%	23.2%	long
ETF Leverage-adjusted	57.3%	25.4%	31.9%	long

CURRENT POSITIONS
STOCK/ETF	SYM	LAST	Profit	WGT
CASH				59.9%
Drxn Gold Sh 3X ETF	NUGT	$21.50	0.79%	5.3%
Potash Corp	POT	$45.99	0.73%	2.7%
HBP Glb Gold 2X ETF	HGU	$12.36	0.70%	8.7%
Drxn Real Est 3X ETF	DRN	$54.80	0.33%	0.7%
Silver Wheaton	SLW	$31.61	0.32%	2.3%
Cenovus Energy	CVE	$35.55	0.24%	3.1%
Cameco	CCO	closed	0.23%	0.0%
Drxn Energy 3X ETF	ERX	$50.21	0.21%	2.4%
Teck Corp	TCK.B	closed	0.19%	0.0%
Drxn Gold Sh 3X Sh ETF	DUST	closed	0.00%	0.0%
Drxn Tech 3x ETF	TYH	closed	0.00%	0.0%
Claymore BRIC ETF	CBQ	closed	0.00%	0.0%
Drxn Em Mkt 3x ETF	EDC	closed	0.00%	0.0%
Drxn Real Est 3X Sh ETF	DRV	closed	0.00%	0.0%
HBP Glb Gold 2X Sh ETF	HGD	closed	0.00%	0.0%
Drxn Energy 3X Sh ETF	ERY	closed	0.00%	0.0%
Drxn Em Mkt 3x Sh ETF	EDZ	$15.29	-0.14%	2.1%
EnCana Corp	ECA	$17.69	-0.36%	6.2%
Drxn Tech 3x Sh ETF	TYP	$13.84	-0.41%	6.4%

…

Stocks beginning to diverge

allocator — Wed, 18 Jan 2012 06:02:31 +0000

Although not favourably to the portfolio today – which lost .4% on a mixed day. Correlations seem to be breaking down. Today real estate, energy, and tech did well enough, while precious metal stocks took a hit despite gold and silver rallying. In a wierd twist, on the one hand I sold the last of Silver Wheaton, while late in the afternoon buying NUGT. Both have buy set-ups for tomorrow. And that was the extent of the trading.


TRADING			17-Jan-12	UPDATE		663

#	Trade	Qty	Stock	Symbol		Price	Acct
17	Sold	1.3%	Silver Wheaton	SLW	@	$32.26	3
14	Bought	2.2%	Drxn Gold Sh 3X ETF	NUGT	@	$21.42	2

Qty % is the portfolio weighting


EXTENSION REVERSAL TRADING SYSTEM (ERTS)
***********************************************************
17-Jan-12

S&P500	1293.7	4.6	0.4%
TSX	12232.8	-25.8	-.02%

***********************************************************
PORTFOLIO STATUS
	Market	JAN 12	YTD	Incep
Canadian Dollar	0.9851	0.6%	0.6%	-5.0%
S&P500	1293.7	2.9%	2.9%	1.2%
TSX	12232.8	2.3%	2.3%	-8.0%
	Weight
Portfolio % USD	36.1%	2.4%	2.4%	15.4%
Portfolio % CAD	63.9%	2.9%	2.9%	-5.6%
	FX
PORTFOLIO EQUITY	CAD	2.5%	2.5%	2.6%
USD ERTS vs SP500	USD	-0.4%	-0.4%	14.2%
CAD ERTS vs TSX	CAD	0.6%	0.6%	2.4%
ERTS vs SP500/TSX	CAD/USD	0.2%	0.2%	6.7%

Inception is 30 Jun 11
***********************************************************

Portfolio Direction	Long	Short	Net
Position	33.4%	4.4%	29.0%	long
ETF Leverage-adjusted	64.7%	13.3%	51.4%	long

CURRENT POSITIONS
STOCK/ETF	SYM	LAST	Profit	WGT
CASH				62.2%
Drxn Gold Sh 3X ETF	NUGT	$21.33	0.75%	5.3%
Potash Corp	POT	$46.24	0.75%	2.7%
HBP Glb Gold 2X ETF	HGU	$12.37	0.68%	5.8%
Drxn Real Est 3X ETF	DRN	$53.73	0.27%	2.9%
Silver Wheaton	SLW	closed	0.27%	0.0%
Cameco	CCO	closed	0.23%	0.0%
Teck Corp	TCK.B	closed	0.19%	0.0%
Cenovus Energy	CVE	$35.06	0.19%	5.9%
Drxn Energy 3X ETF	ERX	$48.11	0.05%	4.6%
Drxn Em Mkt 3x Sh ETF	EDZ	closed	0.00%	0.0%
Drxn Gold Sh 3X Sh ETF	DUST	closed	0.00%	0.0%
Drxn Tech 3x ETF	TYH	closed	0.00%	0.0%
Claymore BRIC ETF	CBQ	closed	0.00%	0.0%
Drxn Em Mkt 3x ETF	EDC	closed	0.00%	0.0%
Drxn Real Est 3X Sh ETF	DRV	closed	0.00%	0.0%
HBP Glb Gold 2X Sh ETF	HGD	closed	0.00%	0.0%
Drxn Energy 3X Sh ETF	ERY	closed	0.00%	0.0%
Drxn Tech 3x Sh ETF	TYP	$14.63	-0.09%	4.4%
EnCana Corp	ECA	$17.58	-0.40%	6.2%

…

Nuisance trade

allocator — Tue, 17 Jan 2012 04:25:37 +0000

US markets were closed so only the Canadian stocks were trading. Potash kept inching up, and actually stumbled into a trade – the only one of the day. The only thing of note other than that was natural gas crashing to a new low of something like $2.67 per MBTU; at one point it was as low as $2.62. Ouch for the producers, including Encana.


TRADING			16-Jan-12	UPDATE		662

#	Trade	Qty	Stock	Symbol		Price	Acct
4	Sold	2.9%	Potash Corp	POT	@	$45.79	1

Qty % is the portfolio weighting