Thursday, November 11, 2010

Alert: GDX


I have been looking to add to our position in GDX, but after Wednesday's flash crash in silver I hesitated. J.P. Morgan Chase and HSBC, got margin rules changed just for them, courtesy of being a well-connected insiders, while the exchange ICE change the margin rules suddenly. You see how that works now, you play by the rules, that the big boys, break, and outright change on you suddenly. Remember, the government mandated short squeeze on the too big to fail banks?

Looking at the chart of GDX you can see the gap and consolidation above $59. GDX is trading above $61 now, if it is going to continue up, then it probably shouldn't fall back into that gap. So, a spot just under that gap would be a good place for stops.

We are currently long a quarter position in GDX from $29.91. The stochastics are still going down. So, let's add only another quarter position here.

By 25 shares, GDX at $61.50.
Stop at $57.25


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