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Lejun James Shao is the founder of (, WhitePine Investment Inc of USA, and CEO of WhitePine Software Inc, Beijing, China. He was the top finisher in MSN's 1st US One Million Dollar Investment Contest, "Strategy Open Tournament," with a +45.88%... More
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  • Gold - Ready To Buy

    In my previous article "Gold - Bottom Is Here. Ready To Switch Gear " published on November 7 here, I indicated that we may need to wait for 10 - 15 days before moving out of its oversold condition to buy.

    Now it is in day 11 of the gold base building stage. Let us find out what is current situation:

    Current chart pattern is quite similar to what we saw in gold previous run in July 24 - August 24.

    Gold stayed low and built its base for 13 days from July 22 - August 7 before breaking out. The run lasted 11 days and topped on August 24.

    Now we are in base building stage day 11 starting from November 6.

    The best time to buy is

    1. MACD crosses over zero

    2. STO crosses over 20;

    3. RSI crosses over 30.

    Now RSI is already at above 30;

    MACD is at -2.488 but it has been moving up and very close to see zero crossing.

    STO is at 17.27, also moving up.

    All technical indicators showed that another gold break-out is under way.

    I like magic number 13, which is also a Fib number (2->3->5->8->13->21->34->.... )

    Of course, history may not repeat. Invest with your own risk.

    Nov 22 4:39 PM | Link | 12 Comments
  • How To Profit From Mini-Market Crash

    In my previous article, I predicted that there would be a market mini-crash in November. Now market did have crashed last week.

    Quite few, after read my last article, asked me about the timing of market mini-crash.

    Now I would like to give a short answer to that question and also give some additional hints as how to benefit from the market crash.

    1. How to identify possible market breaking down

    2. How to make money when that happened?

    3. How to identify market bottom or take profit when market bottomed ?

    1. I used many historical data and chart patterns to look for the sign of market breaking down. But the simplest is using its 10 day moving average. See SPY daily chart below:

    I send out an alarm signal on November 09 when its 10 day MA crossed up its daily price (short term death cross). The signal is confirmed when I further found out that Friday is November 13.

    Wow, Friday the 13th!!

    In addition, VIX had the same break out patter seen in previous market crash:

    2. How to make money from such prediction:

    First is to buy UVXY or TVIX on their break out. See UVXY daily chart above. The best buy time is on November 12, when it broke out its base. It is still not too late to buy on Friday the 13th.

    The second is to buy SPY put options before market crash. I bought few contract just before market crash:

    (click to enlarge)

    Of course, my buy prices were not the best one. But all gave me sizable profit so far.

    Here are the close prices for above options:

    nov 20, 206.50 put - $4.38

    nov 20, 208.00 put - $5.67

    nov 27, 206.50 put - $4.70

    More gains expected for possible Black Monday.

    3. How to identify market bottom?

    There are few tools to identify the possible bottoms:

    The simplest is to know how low the crash may lead. My target is 5% - 7% from recent market top.

    For example, S&P 500 topped at 2,115.60, 5% - 7% correction will lead it to 2,009.82 - 1,967.50.

    Of course, additional tools will also be used.

    But 10 day MA will not be used to identify the market bottom. The reason: market top patterns and bottom patterns in most cases are totally different.

    Need to protect our profit when the target is met and look for market reversal signal to switch from short to long.

    Tags: SPY, vix
    Nov 14 4:46 PM | Link | 5 Comments
  • Gold - Bottom Is Here. Ready To Switch Gear

    My October 15 call for gold top proved to be perfect.

    Since the call, gold has dropped 8.68% and DUST ran up from 11.50 to 21.28, a gain 85% just by buy-and-hold.

    Anyone followed my advice would have made a killing in just three weeks by buying DUST or buying Nov 20 gold put options.

    Now I am ready to switch the gear to call gold bottom.

    Again, one chart is used for me to make the call:


    Gold - closed at 1,088.90, about to re-visit its July 24 year low.

    RSI - 25.93, entered its below 30 oversold condition. But in previous cases, it stayed at below 30 for 10 - 15 days before moving out of its oversold condition.

    STO - Its reading of 2.41 is the lowest in a year.

    BB - once again, 1,088.90 is 8.47 points below the lower bound of BB at 1,097.37.

    In general, it is much easier to identify gold tops and quite difficult to call at the exact bottoms as the gold overall trend is still down.

    In overall down trend, gold oversold can stay on oversold for a while. But once gold reached overbought, it will turn down quickly.

    How to identify the bottom:

    - Gold price stops the big drops and stay for the same levels for few days;

    - Gold price goes down but gold miners are not.

    - RSI stops moving down and stays at the same level.

    Stay tuned for further update.

    Nov 07 12:02 PM | Link | 6 Comments
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  • long on SCO and RUSS and will put stop-loss on SCO at 60.00. RUSS at 11.30. I am betting that oil price will drop Tuesday or Wednesday.
    Feb 16, 2015
  • $GLD topped on 1/22 and is now moving down slowly.
    Feb 5, 2015
  • $RUSS and $RUSL are good pair for short term trading.
    Feb 5, 2015
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