Grail Investing

Donchian doesn’t predict price movements, he just follows them. His explanation for his success is simple and as old as the Dow Theory itself: ‘Trends persist.’ A lot of people say things like: ‘Gold has got to come down. It went up too fast.’ ‘That’s why 85% of commodities investors lose money,’ he says. Donchian tries never to be distracted from his system. ‘The fundamentals are supposed to be bullish in copper,’ he says. ‘But I’m on the short side now because the trend is down.’
– From the book, Trend Following, on Richard Donchian, ‘The Father of Trend Following’

RSI Reversal

The portfolio has two positions and is about 22% invested. You may want to read my response to a question on timing the entry and exit for the RSI Reversal Strategy. If you get a signal intra-day, and you’re in a position to take advantage of it, you don’t have to wait until the close or the next day’s open to buy or sell.

COT Strategy

The latest Blees numbers are posted. The Nikkei stock average looks like a buy. But the portfolio is already 100% invested, so there is nothing to do.

Long Term Timing

This is a pure trend following system. I still think gold, silver and the miners are way overbought and I would not be surprised to see a significant short-term pullback or at least some sideways, choppy action for awhile. On the other hand, markets can stay overbought for a long time. So I’m not going to to worry about it. As Donchian said in the quote above: “Trends persist.”

Gold/XAU Ratio

The miners are doing pretty well, huh? I hope you’re not surprised.

Have a prosperous week,

Larry

If you’re good, I mean truly good, be completely transparent… Being transparent with your performance is an important piece of the equation.
– Leigh Drogen

We’re totally transparent about performance around here. And with anyone who is not, you have to wonder why not?

RSI Reversal

As of Friday’s close the strategy is up 53.78%. Right now it’s about 25% invested. But because the average time to be in a position is about five calendar days, by this time next week that will likely have changed.

COT Strategy

Up 23.05%. The portfolio is 100% invested. The new Blees numbers are posted. The only buy signal is cocoa, which we already own. There are sell signals for soybeans, corn and cotton. We own soybeans and corn. So we have trailing stops below the highest close for when those markets decide to turn down.

Long Term Timing

Up 38.35%. Individual positions are up anywhere from 8.91% to 138.51%. However, I would be surprised if we don’t see a significant pullback pretty soon. Here’s why:

The above is a silver chart (SLV).  However, all the charts for this portfolio are similar. Since August 24th it’s gone vertical — straight up without hardly any pause at all, let along a pullback. Also, RSI is overbought. So it would be normal to have a meaningful pullback or, at least, a sideways pattern for awhile.

On the other hand, we are in a seasonally bullish time of the year for precious metals. So I wouldn’t expect any sell off to be long lasting.

Who knows. I’m not in the prediction business. I leave that to those who don’t want to be transparent enough to post their performance in real time.

Gold/XAU Ratio

The above chart is one of the primary reasons why I’m bullish on the stocks of precious mining companies. If you don’t know what I mean, read this.

Have a prosperous week,

Larry