With this selloff, some names are finally coming into play - however, some of them are not just pulling back into support but breaking down, so it's a tricky area. While the large cap indexes have been holding up - the Russell 2000 (and Wilshire 5000) which has the smaller and middle cap type of names more heavily represented have been much weaker the past few days.
First, I was stopped out of 80% of my remaining Gafisa (GFA) - an amusing trade. We jumped back into this name in a material way last week on a pullback into the $32s, I was greedy and hoping to sell at $37. Just missed.... so instead we lost all the gain from the trade and now take a loss as I placed the stop at $30.42 which executed. One reader congratulated me on the trade after the initial bounce but I wrote to him, the trade is not done until the sell order goes through. I don't have trailing stops in Investopedia.com (the tracking mechanism we are using) so that's a bit of handicap; would of probably sold it earlier if we did. Oh well.
All the world is a dollar trade as you should know ny now. If the dollar goes on a very overdue oversold rally precious metals (and just about everything else) will get hammered. But we took profits on silver quite a bit higher, and the SLV ETF has filled a gap, and pulled back to the 50 day support. This is more of a long term play so all I am doing is replacing exposure we sold off higher and getting about 0.9% of our exposure back at a lower cost basis. We are using Ultra Silver (AGQ) for our instrument; I am not so worried about a break of support - as this is different than a stock. The chart for AGQ is immaterial - since its just a reflection of silver but with leverage. To me the precious metals are now a store of value versus a world gone mad printing paper money. At some point I believe, like David Einhorn, it won't just be an inverse dollar trade. Hence I am more than happy to see silver pull back to $14s where I want to make this a much larger position - with the US economy weak and politicians desperate I believe all this talk of caring about the budget will be a farce - more stimulus, handouts, and the like will continue to rain on us.
Obviously the US dollar is all that matters - a break over this $77 level would mean some interesting things. I want to reiterate than in the old days the US dollar going up used to be a good thing for the market - things have changed a lot these days.
I will update this post with other things I might do this morning; many moving parts.
Long Ultra Silver, Gafisa in fund; no personal position