Stops Triggered

This is a pretty weak rally attempt.  I thought after going down 400 points in two days, we’d be up maybe 50-70.

I let go of a few holdings today even though I didn’t want to.  You have to stick to a discipline.  I got stopped out on my energy trusts and my shipping stocks.  Keep in mind I don’t like to use specific price stops but rather conditional stops based on several parameters. 

The shipping stocks may continue to come under some pressure based on a report from bloomberg:

Commodity-Shipping Stocks Slump on China Iron Ore Speculation

2008-05-22 11:41 (New York)

 

 

By Alaric Nightingale

     May 22 (Bloomberg) — Commodity shipping stocks had their biggest decline in more than two months as ship-hire rates fell on speculation Chinese steelmakers will start using record iron ore stockpiles.

     The Bloomberg Dry Ships Index slid 5.2 percent to 5,606.82 points as of 4:38 p.m. in London. A close at that level would be the biggest one-day drop since March 17. Ship-rental rates, which climbed to a record on May 20, fell today by the most since April 2, according to prices from the London-based Baltic Exchange.

     The Baltic Dry Index, a measure of commodity shipping costs on international trade routes, dropped 1 percent to 11,648 points today, according to the Baltic Exchange. It climbed to a record

11,793 points on May 20.

     “China’s restocking of iron ore has been a key driver for significant rate increases we’ve seen lately,” Erik Helberg, an analyst at Pareto Securities ASA, said by phone today. “If that trading slows down, it will have a negative impact on the market.”

     Investors may be “taking profit” after the China Iron and Steel Association said yesterday the nation’s steelmakers must curb speculation in the iron ore market, Helberg said. The National Development and Reform Commission, the nation’s top planning agency, said today that ports should raise storage costs to discourage iron ore hoarding.

     Credit Suisse Group today downgraded Asia’s dry-bulk shipping sector, citing China’s plans to reduce its inventories and the possibility Brazilian iron ore ports will close to clear congestion, freeing up ships.

     Some shipowners may consider cutting prices in case the Chinese announcements do curb vessel demand, Helberg said.

 

 

 

 

Where’s Gold Going

I’ve been getting comments regarding my thoughts on gold and where it’s going.

I had written a couple of months ago I though gold would go down to $830.  It went to $850 and then bounced only to fall to $830 in late April.  At that point, I was saying I’d short into any rally for the medium term.  I still liked gold long term.  Well, after hitting $830, we did get a rally up to about the $870 level but I didn’t short but was still negative.  Over the past 6 trading sessions, gold has gone from $850 to around $925 per ounce.  I must admit I didn’t see this move coming.  I thought we would continue to drift lower and continue to make lower highs as it had the previous few months.

So, now that it’s broken its almost 3 month downtrend, where’s it going from here?  It’s basically in a spot that I wouldn’t take a position.  It could have reached a double top around the $930 range.  This has been a big move recently.  It could easily come back to $870 and then continue up.  If it’s in a new downtrend, then it should start now.  For now, I wouldn’t take any position.  However, I will keep you updated on exactly when do take that position.  (I’m starting to sounds like a politician)