The profit taking that has hit the gold sector has continued and two of my three holdings, Avo and Pru, are well down while Sbm is steady but took its medicine in the last session. I was lunching with a friend on Friday and we discussed the possibility of gold getting crunched and then reversing course to soar back up. It could be wishful thinking, but it was in the context of gold having reached the explosive stage of a rally where that sort of thing is quite common. It means that you have to hold on for the ride I guess, since stops have to be wider, and perhaps reduce position size. Here's the Spot Gold chart. So far today, we've held above short term support at the breakout level of 1355.
The chickens are coming home to roost for me today because I've taken hits on Mbn and Mmx which are two positions which weren't really happening for me and which I could have stopped out of late last week.
It was the usual issue of being vague and unclear.
For Mbn, I'm using 172 which is fine I suppose but I was trying to buy a fast moving vehicle and I really had plenty of time to get out once it was hovering in that little range around 180. What I'm saying is that technically, it's fine, but in reality the stop at 172 is more of a worst case stop and I usually try to use my intuition so that if the stock isn't behaving as expected then I'll just get out. When I start to rely on my stop, it usually means that I'm not willing to accept that I'm wrong and it just adds to the damage. The stock is actually at 171.5 but is steadying so I'm hoping to get out at 173, 174.
Murchison is one I should have chopped last Thursday. I was essentially buying support and it failed to hold. It's been underperforming for ages and is probably due to turn but there's no catalyst now and I'd be wiser to take a clear breakout like the one in early September. Buying potential support is much more sensible when you're going with a clear trend rather than a potential turnaround. I'll have to bite the bullet on this one too.
It's not all doom and gloom though, I'm essentially happy with my gold positions despite them being sold off today. While I can see that there's the possibility of having to chop them if they fail to hold support, it's not the Mbn situation where I feel that I should be getting out before then. My other two positions in Kzl and Lnc are also tracking quite well despite being a little flat to down and again, they show potential for further gains even though they may pull back for a day or two.
Here's the Avoca resources daily chart and the stock today is still well above the breakout level of 303ish.
1.23 Chinese markets are weak today and the Australian market is following the Hang Seng and Shanghai markets down. The Xjo index is down 38 points but it's still in an awkward spot where it's unclear whether we've made a lower high or not. Here's a 60 minute chart.
It's still possible that this is a retracement of last Thursday's 70 point rally although it will need to find a floor soon.
Anyway, I'm out of Mbn at 172.5 and 173 and Mmx at 147.5 and 147. I'm comfortable enough with the rest of my positions.
2.25 Just looking at CNBC, I realise that the Shanghai market is slightly up, it's Shenzhen that's down. However, the Hang Seng and Kospi are both lower by about 1%.
Gee, it's been tricky the last few weeks. Expanding tops (or potential ones) are like that. I actually had quite a good week, last week, but at this point I've given back all of that profit by Monday afternoon. The Xjo index is only down 41 points but the speccy end of the top 200 is much harder hit.
3.24 Just sold out of Kagara at 76 as there's a sell signal on the 60 minute chart and it's too much of a gap down to the breakout. ie I think there's a fairly good chance it could get down to, say, 72.
This is turning out to be a nasty day for me, easily the worst this financial year which is strange when the market is down just 1%.
For example, a month ago, the first little correction in Kzl from 82 to 77 would probably have provided enough of a pause before further strength but now, even a strong chart like this one, is having more of a deep correction.
3.48 Technically, Perseus is a cut for me, having broken the last swing low at 280 but I'm inclined to leave it overnight because it's regaining that level and physical gold is only down 7 or 8 dollars now. Every man, woman and child with an interest in investment is long gold now so I've got to expect some pretty whippy action. In this case, I probably should have been panicking early and since I can't do that now, I'll give it a chance to chop back up.
Since this is a catalogue of woe today, I may as well add Linc which was firmer early, despite saying they had no explanation for Friday's rise when responding to a please explain from the Stock Exchange. That strength didn't last and now they're down 17 to 188. Fortunately, I sold a few at 208.
They're still holding ok but the mood in the market is pretty unforgiving.
4.13 That's that then. The Xjo closes down 37 points, really a pretty normal day, and even my watch list is not that bad, it's just been a perfect storm for me of big reversals in a few stocks.
I suppose my book reflects a fair bit of caution though, long 3 gold stocks which are sort of defensive - at least, in theory - and Linc, which is a stock backed by a fair amount of cash in the bank with attractive assets close to being sold.
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