Issue #51
Dear Member,
Eleventh-hour moves by the House, Senate and White House late last night failed to break the budget standoff — with objections over President Obama’s health care law, front and center — causing the first government shutdown since 1995.
The impasse means that as many as 800,000 federal workers will be temporarily laid off while more than a million will be asked to work without pay.
I’m sure some sort of resolution will be reached soon. But with or without one, as far as the markets are concerned, it’s much ado about nothing. What will be more important is what happens if the debt ceiling isn’t raised. If that were to happen, Washington could actually default on some of its debt.
In yesterday afternoon’s trading session, silver rallied a tad. That negatively impacted the ETF ProShares Ultra Short Silver (ZSL), sending it lower, causing it to hit my recommended stop.
There was plenty of volume once the stop was hit, so you should have exited the position no worse than the specified stop limit of $74.54, which equaled a 9.55% gain for the position.
A question I’ve received from many subscribers: Are my stops being targeted by brokers and traders? My answer: Yes, and no.
Yes, in the sense that I am widely followed. And no, in the sense that no market can move without there being some movement in the underlying security, in this case, the price of silver.
It is doubtful, for instance, that the stop for ZSL would have been triggered yesterday if silver had not rallied first.
Were traders pushing up the price of silver so they could press the price of ZSL lower to hit the stop? Doubtful. Very doubtful. Reason: Gold, platinum, copper and palladium all rallied at the same time silver did. If silver were the sole metal being manipulated — to target my stop — then why did those other metals rally as well?
Traders can sometimes push around one market, but to push around several markets at the same time to get to one single stop in one single market rarely, if ever, happens.
Right now, I want to see more action before acting on any new trades. All metals remain caught in a sharp downtrend, but I need further confirming signals before recommending any new positions.
Hold your shares in DUST, with your protective stop in place, at $26.22 Stop, $25.29 limit, good till cancelled.
Stay tuned and best wishes,
Larry
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