Stopped out of DTO @ 73.0$

My readings this evening

- Warren Buffett to CNBC: U.S. Economy In "Shambles" .. No Signs of Recovery Yet

- OECD warns on pensions crisis and Defined contribution pensions on the rise

- Fears of big bank problems return

- Derivatives: The risk that still won't go away

- Not just straw men: The biggest emerging economies are rebounding, even without recovery in the West

- OECD foresees end to global slide

Summary of portfolio positions

ProShares UltraShort Financials (SKF)

The ETF SPDR Select Sector Financial (XLF) represents the value of the financial service firms that are part of the S&P500 index (about 13.7% of the total index). It can be used as a kind of proxy of the health of the US financial sector.
From the beginning of March 2009, XLF has been in an uptrend. It recently broke the trendline, failed to cross the 200 day moving average, and today crossed the 50 day moving average to the downside. This might be the signal that a downtrend is starting.

Let's now look to the inverse ETF: the ProShares UltraShort Financials (SKF). This ETF seeks daily investment results, before fees and expenses, that correspond to twice (200%) the inverse (opposite) of the daily performance of the Dow Jones U.S. Financials Index.

What does the chart say?
1) The price has been in a trading range since early May.
2) Early June it broke the trendline and started raising (n°1 on the chart).
3) It then retraced a little bit (n°2 on the chart).
4) Then today it moved up a lot and finished the day above the previous high reached 3 days ago (n°3 on the chart).
5) That 1-2-3 setup is generally a bullish price configuration, especially when the volume of transactions increases simultaneously as it is the case here (see yellow zone on the chart).
6) Additionally the MACD lines form a bullish divergence: the MACD lines are moving up whereas the price stays around the same level during the same period (from early May till today).


I bought SKF @ 45$ before the close today.
Stop loss @ 40$.

PowerShares DB Crude Oil Double Short ETN (DTO)

The oil uptrend that started mid-April until last week seems to have ended. See the chart above.

How to still make money while betting on a decrease of oil price? With PowerShares DB Crude Oil Double Short ETN (ticker: DTO). 1% decrease of oil price will produce about 2% of price increase of the DTO.


I buy DTO @ 81.76$.
Stop loss: 73$

Summary of portfolio positions

Sold ECH @ 45.5$

I prefer to take my profits off the table: +23% compared to my buy price of 37.0$ on April 16.
I am now 100% in cash.

Stopped out of VALE @ 17.95$

UK Sterling (GBP) chart analysis

In my previous posts made on April 10 and on May 4, I warned about a potential trend reversal in the UK sterling and that I would buy the British pound if it could break out above the resistance at 1.5000. This did indeed occur and the pound index is now trading at 1.6492 (see above chart).
The related ETF (Rydex CurrencyShares British Pound Sterling Trust ETF, ticker: FXB) is now trading at 164.83$ versus 146.56$ when I made my post on april 10.

Now what? the next resistance level appears to be at 1.6600. If the GBP breaks out above it, we might be heading towards a new uptrend. I would then buy the ETF FXB at around 166$. Stay tuned!

Silver chart analysis

Let's have a look at the chart of the price of silver:
1) trendline is rising
2) price reached 16$/oz in early June and then pulled back to 14$
3) the 200 daily moving average is turning up for the first time since July-August 2008
4) we can clearly see that the support level is at 14$ and the resistance is at 16$
5) now what? my expectation is for silver to rise back up to 15-16$ and then break out above 16$. This scenario would be cancelled is price falls below the trendline around 13-13.5$.
6) Do I buy? not yet. If price stays above 14$ the coming week, I will start buying and add more to my positions if price breaks out above 16$.

How can you buy silver? an easy way is to do it through the ETF iShares Silver trust ETF (ticker: SLV) listed on the New York Stock Exchange.

Summary of portfolio positions

What a week! I am now out of almost all my positions. Preferring to safeguard my profits in this uncertain market which has been in a trading range for the last two weeks.
Only remaining positions are: Vale Do Rio Doce (VALE) and the Chile ETF (ECH).
I expect to enter new positions when the market will have decided which way to go.
Natural gas and silver are on my radar screen.

Sold USO @ 39.05$

Stopped out of FXI @ 37.0$

Summary of portfolio positions

Stopped out of FSLR @ 173.0$

Stopped out of MOO @ 35.50$

Summary of portfolio positions

Let's incorporate some money management rules here:

1) let's assume that our initial investment on April 10, 2009, has been USD 100,000.
2) for each trade entered into (long or short), let's assume that 10,000 USD is invested each time
3) a maximum of 10 positions can be opened at once
4) the rest is in cash

On that basis, the current situation of the portfolio is as follows:

Two trades were closed today: the Brazil ETF (EWZ) and the Commodities ETF (DBC) were exited because their price reached our predetermined stop loss.

The current return reaches +11.7% in a bit more than 2 months (period from April 10, 2009 till today).

Stopped out of EWZ @ 54.0$

Stopped out of DBC @ 23.5$

Summary of current positions (charts)

Summary of current positions

Almost 20% return since I started this investment portfolio 2 months ago! All the trades I entered into are in positive territory, ranging from +1.7% to +31%.

I updated the stop loss levels for each trade in the above chart.

Summary of portfolio positions

Natural Gas chart analysis, United States National Gas Fund (UNG)

Price of natural gas has been going down since mid-2008 (see weekly chart above). But this downtrend might soon be ending.

In the daily chart below, you will notice the bullish divergence between the price and the MACD lines. I would go long if the price breaks out above 4.500 and go short if price goes below 3.500.



One way to invest in gas is through the ETF United States Gas Fund (ticker UNG), listed on the New York Stock Exchange.

You will notice how the volume of transactions in UNG has been drastically increasing since early May, which denotes an increasing interest from investors in this commodity.

If UNG goes above 17.0, I will buy.