July 1st is an important day for XLF

I think tomorrow will be important day for XLF. If it can bounce, it has to be tomorrow. Today, last day of June, mutual funds were still selling financials and buying the hot ag and coal companies. If financials have any chance to bounce, tomorrow it has to show it. Otherwise, I think my thought that it will bounce maybe wrong.

But I'll give it time to work out.

For example, today LEH was down 10%, since no funds wanted to show LEH as their holdings as the end of June. But tomorrow, they'll buy it back, since they have another three months before they report their holdings. Similarly, XLF and UYG should at least have a minimum bounce tomorrow. If it's sold again towards end, then I really question it has any strength left in it.

Be careful

1. Need to be careful, UYG bounce is not a done deal, it can certainly go lower before it bounces. Even though UYG has the history of bounce back to 50 EMA, doesn't mean it can't go lower at current level, 27.92 is the 50 EMA.


2. I need slow down the speed of adding UYG. Cash is a good thing in this market. If there is another sharp down in UYG, will average down again. Unless it's a huge down move like March and January, then I may add all the cash I prepared for UYG.


3. GLD and GDX looks good now. While I am not sure about oil and agriculture, and coal.


4. POT and MOS had a meaningful pull back, but I didn't add, since I was too greedy and think I could catch it lower.


5. Tomorrow there is the USDA report on grains, and several reports this week, ahead of the holiday. So it's better to not make new mistakes than to use all the cash.

Try to catch a bounce

1. I added UYG at the close to average down.
2. Since market is down over 3% and more than 95% of S&P500 stocks are down, I think that's a good enough indicator for me to bet on a bounce.
3. Also added XLF and MF during the day.
4. Today my GDX had a 5% bounce, at least balanced my portfolio.
5. Now I am still have over 50% in cash and then have UYG as the main position, plus GDX, MF and XLF.
6. Tomorrow if it stays down, it will close lower at the close, since people don't want to add ahead of weekend in a down market.
7. On the other hand, an open slightly lower and then turn higher, and close sharply higher is a very bullish sign for the short term.
8. Unlike last year, which I played options, I don't need to worry against time this time. I think holding ETFs and stocks, you know they'll make a comeback, unless Israel attacks Iran, or something in that magnitude happens, I see a strong bounce near term.

Too early again!

1. I did great by selling POT,MOO,KOL,MOS,AGU,PCX. They are all done big from where I sold.
2. I sold DBA and DAG two days too early, today I could have additional 10% in DAG!
3. I bought UYG and MF two days too early, and yesterday I had 5% gain in UYG but didn't sell, today I had 5% loss right now. Talking about bad timing!
4. Short term, I think market is oversold and can be a decent bounce. I'll add UYG and use dollar average to see if I can catch the bounce.
5. Glad I have lot of cash now and even UYG I bought is not too bad, considering lot of people jumped in last week.
6. MF showed some strength finally in this tough market today, now Dow is off 260 points.
7. I think the market may close at the low, if that's the case, I may add more UYG.

Sold DBA, DAG. Bought UYG and MF

Finally I decided to sell DBA and DAG. Both for a decent profit. I'm waiting for DBA to pull back to add. And if they do pull back, I may choose MOO over DBA.

On the other hand, I think XLF is oversold and can have a short term bounce. So I added UYG and MF.

Today XLF had a new all time low, but bounced back, in a general negative market, I think short term bottom in XLF is in. So I added UYG as a proxy to play this theory.

1. I added MF again, but think will not add again. It's such a risky play and it may not play out, just like my LEH play several weeks ago.
2. POT and MOS are down today, I'll monitor them.
3. Tomorrow is Fed day, market may swing strongly after the announcement. A rally is likely, even though it maybe short lived.

Wait pullback in POT and MOS

I'll wait to add POT and MOS when the pullback is over. Target is 200-220 for POT and 130-140 for MOS.

Looking for a bounce in MF

Checked the weekly chart of MF, look for a bounce. Target is around 10-12.

Performance this year vs last year

So far, I did great this year. On the other hand, I did very bad last year. Here are some of the lessons:

1. Last year, I was shorting and the market was up. When the market finally gave up, at that time, I was giving up trading already since I lost big time, specially in one account which I traded options.
2. This year, I used commodities, GDX, DBA, and later on MOO and KOL to get some profits. Of course, the most profits are from fertilizers, POT,MOS and AGU. I'll continue to focus on these and hope to do well rest of the year.
3. I added MF again today. Still not big. I think I should limit the size of the position, it can easily go down. And I need to take profit when I have one.

Sold KOL, added MF

Overall, I think market may go side way for a while before it decides which direction it wants to go. So I raised cash recently to book the profit.

1. Sold KOL for a good and quick profit. I'll add coal related stocks on pull backs, same as fertilizer stocks.
2. Added MF. This is really a speculative play. Comparing to LEH, it's fundamentals are better, and I hope it will have an oversold bounce. I noticed when it tanked twice early this year, it always bounced back. Yesterday it closed almost at the low, today it touched a new low and then closed higher, with big volume at the last 30 minutes. I think big players were buying. Target is $10-13. Long term, this can be a $20-$40 stocks if financials are back.
3. Still hold DBA and DAG, hope it's not a mistake, but today it cut my profit big time. I hope it will stop soon. In a few months, any additional bad news will drive DBA over $50; but if we'll have good news to relieve the pressure, it can easily back to 36 and 35 area. I'll take the chances and think the June 30th report from USDA will start another round of rally. Let's see what happens. I may reduce the position size to reduce the exposure.
4. Still waiting for better entries in MOO and KOL as well.

Cut MOO, ARLP,PCX

Continue to raise cash and reduce positions.

1. Sold MOO, my biggest position, for a small percentage gain. Some analysts said farmers will use less fertilizers due to the flood and claim insurance and idle the land rather than replant. At least this is one point of view needed to be considered. If this is true, then it's negative for MOO and fertilizer stocks.
   
2. Sold ARLP and PCX, for a nice gain, considering I only bought them a week ago.
3. Keep DBA, DAG, GDX and KOL.
4. I think DBA and DAG can gain, even market tanks, due to flood in US and China, drought in Australia and some part of US.
5. GDX is a play of gold.
   
6. KOL is very strong even in a down market. May reduce it, if market tanks. Coal stocks had a great run recently.
   

Sold POT, MOS and AGU

Today is another great day for fertilizer stocks, with AGU, POT and MOS all hit new record high. I decided to cut my positions in agriculture stocks and still keep MOO, DBA and DAG.

1. I think POT, MOS and AGU can go higher, but I don't want to be the one without chair when the music stops. I took the good profit on all these three.
2. I hope to add all three of these back when they have a meaningful pull back. Until then, I'll raise cash.
3. Still hold MOO, DBA and DAG. I think short term, DBA may do better than MOO, and I may consider reduce them as well.
4. I still keep KOL, ARLP and PCX. I will consider to trim these as well.
5. Comparing to agriculture and coal, my investment in GDX is bad. This again proves you have to follow the market, let market lead you to find the correct investment, don't fall in love of a idea and stick to it. I think gold may do well if market tanks, but other than that, commodities should do better than gold.

Focus: Agriculture and coal

I added KOL, ARLP and PCX yesterday and today. Both of ARLP and PCX are at record high.

The focus right now are two sectors:

Agriculture:

1. Agriculture commodities and companies. I think the flood in corn belt states will push corn and soybean to new highs in the months to come. If we have very hot summer, the yield will be lower, due to the late planting and the wet conditions produce shallow corps that are not strong. It's almost like a perfect storm, we have global demand issues, record low inventory in corn, and now the flood. Corn can hit as high as $9, some analysts already projected that.
2. Check the wheat's parabolic run early this year, corn is nothing close to that. So it's very likely we'll have higher corn, soybean and wheat later this year.
3. How to play Ag:
4. DBA and DAG. These two are based on corn, soybean, wheat and sugar. Of course, DAG is the double long of DBA.
5. MOO. This is the ETF for agriculture business, including fertilizers, seeds, and other agriculture business. I think over time, it should do better than DBA.
6. POT, MOS, AGU are the individual stocks, I like them since the fertilizer price is in the middle of a long term upward move, some predicted potash will hit $1000 a ton from $650 right now, and remember, in early 2007, it's less than $200.

Coal: This maybe the best way to play higher oil price.

1. Some analysts predicted coal price will double in the next year or 2010. And comparing to oil, coal is still very cheap.
2. Over 50% of US electricity is generated by coal.
3. Clean coal energy is being researched.
4. US has the largest coal reserve in the world, and China is changing from a coal exporter to coal importer. I think China's demand alone will drive coal price much higher.
5. KOL is the ETF for coal companies.
6. ARLP, PCX, ACI, ANR and FCL are some individual coal companies. They are all near record highs. But the lessons I learned, record high indicate the sector is strong, and I should buy strong stocks.

If US and global economy is strong enough to avoid a recession, I think inflation and energy cost will be the major theme in the next few years.

Focus on strong sectors and the strong stocks. I will do that from now on. Avoid sticking to old thinking, like gold. I still have GDX down the water, and I'll use it to balance my portfolio, but will reduce that when I have the chance.

Lesson learned

1. This morning I was furious about the losses in LEH since I bought it at 29 on Monday, and I sold LEH at 25.3, and then it bounced back to 26.5, before it closed at 23.75.
2. And I added AGU at 99.50, a new record, it closed at 100.13.
3. So the result is in: a new low usually will lead to new record low, until it turns.
4. A new high will lead to a new high, until it turns.
5. From my perspective, I will never buy a new record low, until it turns.
6. I will keep buying new record high, until it turns.
7. Lessons learned.
8. My DBA and DAG are doing great today, MOO and KOL, not so good. MOS, POT and AGU are all doing great today.
9. Next: monitor these and take profit when I think it turns. Until then, keep them.
10. I think DBA can easily break the record high of 43.5 set early this year, the rain in corn belt will push up corn, soybean. In fact, corn, soybean and wheat all had limit up today, that's a good sign that it will continue to go up tomorrow.
    
11. Trading for over 5 years, now I think I finally agree with the "buy new highs" and "sell new lows" rule. I always did the opposite before.
12. I think agriculture commodities will be the best vehicle to fight inflation in the years to come, and fertilizer companies (POT,MOS and AGU) are the best stock group to own for the next few years.
13. The risk is government intervention, but I think U.S. government will more likely to intervene oil price than corn, since U.S. benefits from agriculture inflation (U.S. is the biggest exporter of corn and soybean in the world, for example), while on the other hand, U.S. is the biggest importer of oil.
14. Coal should be a good buy too. I have KOL in place and will add more when it pulls back.
    

Cut PAL and LEH, Add AGU

Yesterday, I added LEH and KOL again, think it's a great buy, specially in LEH. I also added AGU from the sales of POT and MOO.

1. Today LEH hit a new low, along with general markets. I sold it at the low of the day, talking about "good" timing!
2. And I bought AGU from the LEH money. AGU hit a new record high today.
3. Never try to pick up a great stock when it's down big, like LEH. At least wait three more days!
4. On the other hand, never wait to add a strong stock, like MOS breaks out recently, and I wait and wait, now it's way above my target.
   
5. But I decided to add AGU and buy it at record high today, to test if a new record high is better than new record low. I think the answer to this test is clear, regardless this trade is successful or not.
6. New record high is a good thing. Buy.
7. New record low is a bad thing. Sell.
   

Added KOL and LEH

Today, I added LEH and KOL.

1. I think LEH may be over punished on the down side. I added a small position here to monitor it. May add more if it continues to dive.
2. I added KOL. I think from growth perspective, it has more legs than oil companies, coal is cheaper comparing to oil, and it still the number one commodity used to generate electricity in US and China.
3. Looks like I sold POT too early last Friday, good thing I still have the most POT left. I think POT and MOS are still the strong stocks to be.

Reduce positions

Today I sold all DBC and a small portion of POT. I bought a very small position in KOL (Coal related ETF).

1. Recently, my DBC position turned out to be the best performer, too bad it's small. Since oil run up $17 in two days, I took profit in DBC and raise cash.
2. Also sold some POT for good profit, I bought them at 180s and 190s. Raise cash.
3. Bought a small KOL to monitor this sector. Comparing to oil, coal is cheap, so I'll use this ETF to monitor the sector. May add more in the future.
4. DBA and DAG are almost back to the price I paid, a few more days like this, I'll be in black.