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BestOnlineTrades Nails the Turn in the SLV ETF

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I sent out an email to BestOnlineTrades Letter Subscribers (the green form at the top of this site) yesterday on how I thought that the SLV was a short term long setup and buy for 1 to several days based on the recent 1 day washout.

I wrote in the BestOnlineTrades Letter yesterday:

Yesterday I did a post that the SLV was ‘topping’.  My main point was that it was likely a very short term top.  But in the near term I think there is a minor long trade developing in the SLV slightly under the 44 level.  43.67 is the exact number that I think could be a great short term buy. So near the close today if the SLV is between 43.50 and 44 I would rate it as a short term buy, with a possible 1 to several day up move, and this up move could eventually exceed the 47 level by a small margin.

and then went on:

My main reasoning here is the speed with which RSI (relative strength index) has become oversold back down to the 70 level.  During extreme momentum runs, a quick RSI crash to 70 range again is usually a good short term buy point again. However, it should be noted that these types of drops DO start to setup the possibility of a bearish divergence and eventual more important top.

Today the iShares Silver Trust (ETF) SLV blasted higher almost 7% in one day.  The strategy of identifying extreme momentum stocks and then watching the daily RSI blast down to oversold 70 range in one day is usually an ideal long setup and today was not exception.  This may be one of the most highly probable trades in existence today.  It is essentially an automatic rally and heavy short covering the day after a previous big drop that went counter to extreme upside momentum.

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Silver ETF May Have Topped Today

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I think it is possible the SLV ETF may have topped today.  If not today then it has a high probability of topping tomorrow if it happens to trade between 47 and 50 range.  Anything between 47 and 50 tomorrow, if it occurs, would be ideal selling juncture if entry was much lower.  That is … Read more

Cheetah Trading System Big Pattern Strategy Update

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DBLE, the second trade of the Cheetah Trading System seems to be performing well after two days of draw down after entering the trade.  Yesterday 4/21/2011 DBLE had a pull back on 75% less volume and as a plus managed to avoid exceeding the 4/20/2011 high by one penny.  This is good because I like to see strong volume contraction on pull back days without touching the previous days high.  In this case DBLE managed to avoid doing so by one penny.

DBLE is not really a ‘big pattern’.  But I only recently decided to focus this first Cheetah trading system on big patterns.  So I am stuck with DBLE for now and if all works according to plan will hope to exit DBLE in the 12 to 13 range?

If I can get an exit on DBLE within the next month or two, I would then like to consider a long entry in TLR, a possible big pattern I have been watching.  Ideally TLR will wait for me until the DBLE trade is finished.

TLR is a highly speculative gold exploration company with transitional potential to a production company by early 2012.  I have spotted TLR as a potential big pattern and will now start to study it like a cheetah in the tall grasses.

cheetah

I probably do not have to inform you that the gold price has been hitting record life time highs and will maybe continue to do so for a while longer.

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Amarin Corporation plc AMRN a Lost Opportunity

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AMRN came up in one of my metastock scans a week or two ago and I failed to act on it.  It was actually a cup and handle scan and it also pulled up DBLE which I am currently long in.

It is unfortunate that I did not do a posting on AMRN as I look at the chart now it was maybe one of the best trading setups I have seen a long time.  I think part of the reason I did not do a posting on it was because it was a biotech stock with no revenue, 31 million in cash and had a 800 million market cap at the time.

Small and Mid cap Biotech stocks are probably famous for not having substantial earnings, but instead trading on potential and FDA approvals and milestones.  Perhaps they could be compared to exploration gold and other mining stocks.

Anyway a few days after AMRN came up in my scan I gave it a thumbs down despite the apparent massive positive cup and handle structure.

Sure enough a week or so later AMRN gapped up 100%. 

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The Cheetah Trading System Large Pattern Strategy

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After further contemplation it has occurred to me that there probably ought to be two trading strategies for optimized chances of longer term success.  The 5% and 10% Cheetah Trading System strategy being the first, and then a 30% Cheetah Trading System ‘Big Pattern’ Strategy as the second.

At this point I am thinking it better to continue with the second ‘Big Pattern’ Strategy going forward.  Depending on how it works out, I will then make the next attempt the 5% and 10% Cheetah Trading System Strategy.

The reason why is because I am slowly coming to the firm conclusion that fewer trades out of bigger patterns is the best approach to long term trading success.  If you are reading this then you are probably familiar with a man named Warren Buffett.  If you are not, then just know that he is probably one of the top 10 investors of all time.  I would not consider him a trader.  But he has sold positions and bought them over very long periods of time.  His tendency is to buy and hold for a VERY long time.  By doing so he has become extremely wealthy.  He has bought brand name companies with very strong long term sustainable economics.

So as crazy as it may sound, I like to think of the Cheetah Trading System 30%er strategy as a ‘Mini Warren Buffett Swing Trader’ type strategy.  It is a strategy where targeted trades are made out of big patterns and are then ‘held’ but not ‘forever’.  Only for targeted time durations.  So I am applying part of the principle of Warren Buffett’s success except that I am doing it from a trader’s mindset, not a fundamental one.  I am also applying the principle of compounding (which Warren Buffet always credited as key to longer term success), but on my own terms, not on annual buy and hold terms.

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Silver ETF SLV Deep Into RSI Powerzone

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The SLV ETF continues to trade in near vertical fashion well into the RSI ‘powerzone’.  RSI is near the 83 range and the SLV still pushes higher.  Anytime the RSI is so ‘high’ there is always the risk of a very sharp downward pullback.  So it is a bit of an art to figure out when something is close to topping out.

My take is that SLV is not currently topped out quite yet.  It think it still has another 1 to 3 weeks of juice left in it.

Having said that if I was in SLV from the lows, I would be looking to scale out when/if the SLV gets near the 47 range.  There is a possibility that the SLV will blast above the 50 range first for a brief period and only thereafter start a sharp correction down back under 50.  This would be similar to what occurred with the gold price at 850.

But the 47 range is where I see top channel resistance start to come in and max resistance is near the 50 range.

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