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[cedartree]

SKI Alert 3/22/05 I sold today. I actually pushed the sell button at 11:45 PST as it was clear that the gold stocks would be closing barely higher. Within minutes the gold stocks starting falling and closed down below the buy-in prices of USERX 8.17, 8.20, and 8.22. Another 1% loss and I am clearly shocked. Obviously, in retrospect, I should have sold yesterday as I always have. The 92-96 index certainly looks like it’s about to sell. The 16-20 index is also breaking and should give its oversold buy signal simultaneously with the 92-96 sell signal. And it looks like those signals will be tied: Generated on Thursday and executed officially on Monday’s closing USERX price. That is certainly a common and expected occurrence as you have usually seen the different indices generate simultaneous signals. I’ve never seen a double buy that sells at a loss like this, where prices rose nicely and now have collapsed at the end of the 21-day period to sell at a loss. The indices via the double buy pattern were predicting a high for the 21st day, next Monday. If/when we get signals for Monday, will they instead be marking a low for Monday? The mechanical system will sell on the day of the 92-96 sell and will probably take a “nice” loss because something is obviously wrong with this double buy signal. After 18 days on the buy signal, the trade is not supposed to go into any negative territory. It would be quite rotten and ironic if the 21st day, the day that the double buy officially gets stopped out of its buy, marks a low. It is possible. After all, I’ll be bearish, the opposite of “singing in the car”. Nonetheless, the system’s buy signal will have ended in failure. To make myself feel a little better here is a listing of the mechanical system’s buys-sells in the last year. Not terrible, not great. 1. Buy 6/18/04: 7.01 Sell 7/9/04: 7.37 2. Buy 9/17/04: 6.70 Sell 12/21/04 8.06 3. Buy 12/27/04: 8.23 Sell 1/3/05 7.87 +.5% dividend 4. Buy 2/9/05: 7.57 Sell 2/22/05 8.25 5. Buy 2/24/05: 8.17 Sell Monday? And here are my personal buys-sells during the same period. I get out faster than the system, but overall it works out similarly over time: 1. Buy 6/25/04: 7.16 Sell 7/9/04: 7.37 2. Buy 9/17-9/20/04: 6.705 Sell 10/4/04: 7.77 (going camping) 3. Buy some 11/3/04: 8.01 Sell 11/9/04: 8.46 4. Buy 12/27/04: 8.23 Sell 12/30/04 8.13 +.5% dividend 5. Buy 2/24-3/2/04: 8.17-822 Sell today: 8.13 The upcoming 92-96 sell signal will open the system’s Path to any new buy signal. It may still be possible, although difficult, to get a true 92-96 index buy signal on the Path and a “real” bull based upon the system. More on that this weekend. But when that 92-96 sell signal happens, the system will also be open to a further decline into a 35-39 index sell signal. I won’t know what’ll happen, but then again, the system apparently didn’t know what would currently happen either! I know that readers take interest in my colleague’s actions. We all follow a pattern and seeing his pattern can be helpful in recognizing one’s own “style”. He bought the 7.57 buy signal, sold 4 days later at 7.91 (a 16-20 sell signal), bought back half at 8.17 and half at 8.22, sold 2 days later at 8.41, then bought back last week at 8.53. He is holding on because he usually refuses to take a loss. I expect him to hold on through the 92-96 sell signal, waiting for a rise back up to at least break-even if prices return to 8.50. He often strings together ten consecutive wins but then takes one big loss. I take quite a few small losses and small gains, and then get a big gain. This trade was supposed to be a big win. If I had sold yesterday it would have been a tiny gain. Now I’ve got another 1% loss. CRAPOLA! And yes, I am also upset that I couldn’t email this morning to tell readers that I was going to sell: It looked OK early this morning, but then the selling started.