Seeking Alpha

John Wilson's  Instablog

John Wilson
Send Message
Long term buyer and holder of silver. I still have silver from when it used to be the actual US money- when it had intrinsic value. I plan to hold it and hopefully accumulate more. Began investing and charting on paper in the late 1980's (hey, a computer cost $5000 then). On Gold: it's not that... More
  • What's Going On With Gold, mREITs, And BDCs As Of Sept 26 5 comments
    Sep 23, 2013 12:00 AM | about stocks: GLD, GDX, AGNC, IVR, TWO, PSEC, RSO, MAIN

    I am always keeping an eye on what gold and silver are doing. I have mostly been out of the mining stocks since April and May. Yeah, I got caught in the big $140 drop in April and immediately sold a lot of miners and bought some DZZ. Still, it was not pretty or profitable. I was not fast enough to catch the bottom in gold on June 27.

    Now there may be a second chance coming if one wants it. Gold went up almost $80 on Tuesday and Wednesday the 17th and 18th. It gave back $60 by Friday. On the chart of (NYSEARCA:GLD) below we see it has gone below its 50 day MA and may be heading back down to the lower Bollinger Band line (50 day, 2 dev). This would be around $123 or $124 for GLD (horizontal line) which would also be a 62% retracement of its recent move from June 27 to August 27.

    (click to enlarge)

    Relative strength is also lagging around 40 after having peaked and declined sharply. I would wait to see if $125 for GLD holds.

    (click to enlarge)

    MINERS

    For those who speculate with NUGT and DUST, here is a chart of GDX. Short term it is negative. It is below the 50 day MA of $27.20 and now needs to find support. Yet, I would NOT short here using DUST. I would wait for support and then decide if I then want to go long.

    As I hold mREITS: (NASDAQ:AGNC), (NYSE:IVR), and (NYSE:TWO) I pay close attention to the mREIT (NYSEARCA:REM) which is an Etf that holds the major mREITs like NLY and AGNC. I watch REM to track the mREITS, like I use GLD to watch gold. I tried to catch these mREITS after making tentative bottoms because of the big yields, which may shrink if they cut the dividend as AGNC just did. Even though AGNC cut its dividend from $1.05 to $0.80, and sold down by 57 cents Friday 9/20 it is still above its 50 day MA.

    REM the Etf of mREITs has shown a bullish pattern too and had been above the 50 day MA. On Tue 9/24 it went ex-div, and cut its dividend 20% from $0.527 to $0.421. It was ex-div .41 on the open and is holding above $12. It is 5 cents under the 50 day MA on 9/25. It is holding above $12.

    Here is a chart of REM.

    (click to enlarge)

    Relative strength is positive, just under 60.

    REM reflects mREITS as a group. As a group they appear to have bottomed on August 19 and staged their first rally. They have held up in spite of dividend cuts. It is would be significant for REM to get back above th 50 day MA. If it fails, then it would revisit the lower Bollinger band area of $11.57.

    If REM's dividend held at .421, its yield would be almost 14%.

    It am holding mREITS AGNC, IVR and TWO as tentative short term positions, hoping they will strengthen and reward with a short term to intermediate recovery and also with 12% and higher yields. They may also turn into intermediate (or longer) holdings.

    (click to enlarge)

    (AGNC) went ex-dividend today, 9/26. The opening price was reduced by 0.80 at the opening. Then it traded down another 0.34. It is still above its 50 day MA which is still positive. Yahoo shows the price declining by $1.14 today where Charles Schwab shows the correct $0.34 decline. The 0.80 will come back as a dividend payment.

    I am ready to sell if the market, interest rates or other factors turn against mREITs.

    BDCs -Business Development Companies

    Finally, this chart is for IT who is a follower of (NASDAQ:PSEC)

    (click to enlarge)

    Strategy for PSEC. Buy around $10, or wait for major market downturn. to buy below $10. Hold for 13% or better yield. Sell when PSEC hits resistance at $12. Wait again for decline to $10. Re-buy.

    While on the topic of BDCs, here is a chart of (NYSE:MAIN), one of the very best BDCs. As you can see it topped in March at $34. (chart says April, but it was March). Since then, it hasn't been able to hold above $31 and it has just weakened by falling below its 50 day MA. It peaked, made two Right shoulders under $31, and now is showing more signs of weakness even as the general stock market has made new highs. This does not bode well for BDCs in general as MAIN is one of the best. Maybe it will trade sideways, but if the general market weakens, it will go with the market.

    (click to enlarge)

    Here is one more BDC, (NYSE:RSO) Resource Capital Corp.

    (click to enlarge)

    RSO is showing a deteriorating view. It is in a decending broadening pattern with four highs, each lower than the one before with three lows, each lower than the one before. In Oct 2011 RSO got down to $4.50 when its dividend was 0.25 quarterly. It is now 0.20 quarterly.

    Relative strength is (see below the chart) is making lower highs.

    Of the BDCs mentioned above, two of them (MAIN) and (RSO) are showing a negative picture. (PSEC) looks neutral, but MAIN and RSO may be indicating that BDCs are may be going lower.

    That's all for now.

    Check my most recent comments on stocks that I and others have taken positions in on IT's Portfolio Challenge

    seekingalpha.com/instablog/5038891-inter...;v=1379331900

    Best wishes and good investing to you

    John

    [JW]

    Disclosure: I am long AGNC, IVR, TWO.

    Themes: Gold, MREITs, BDCs Stocks: GLD, GDX, AGNC, IVR, TWO, PSEC, RSO, MAIN
Back To John Wilson's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (5)
Track new comments
  • Fear & Greed Trader
    , contributor
    Comments (5304) | Send Message
     
    John,
    Thanks for the commentary,,

     

    I would agree with your short term assessment on GLD at these levels.. I see pretty good resistance at the 130 level, (1350 -1360 on the spot price) where i believe it will fail again. Your support levels (125 GLD) can then come into play , and it will be important for anyone owning Gold for that level to hold. The debt ceiling nonsense may provide a short term boost , but I believe it will be short lived . Intermediate term, I believe it will retest the lows. and longer term my thoughts are bearish down to the $1000 level. Gold would have to rally and close above the 1430- 1450 area where the last rally was capped, for me to change my opinion . 1500-1550 level represents huge resistance .. I don't see the landscape as we move forward into '14 as being "kind" to gold.
    Just my .02

     

    I have just looked at two in the BDC universe, any thoughts , advice on (FSC) & (FDUS) ? I'll check out your recommendations ....
    27 Sep 2013, 09:29 AM Reply Like
  • John Wilson
    , contributor
    Comments (1355) | Send Message
     
    Author’s reply » Fear
    Good to hear from you.

     

    I did that chart of GLD on Sept when it was at 127.96. It's now about 129 and as you say it seems like resistance is at $130 which is where the 50 day MA is too. I don't know that the debt ceiling fight will take gold higher and QE continuing continuously is already factored in now. But, the economy may provide surprises to the downside. I am a long term metals man because I believe they are real money.

     

    Short term, I feel if I bought gold or miners here, they would probably reward me by possibly going down. And, I wouldn't want to short here because you never know when gold is going to jump by $50. like it did last week. I am just standing aside at the moment.

     

    When gold does make a second bottom, or when GLD hits $123. I will look at the miners and may sell puts on (GG) for income and a possible purchase if exercised. That may be the way to go.

     

    I have owned (http://bit.ly/P5J9Wy) although I don't right now, but I would like to as I like the yield and the monthly div payment. It's in a tight range between $10 and $11 for the year (similar to PSEC) Which way will it go when it comes out of that range?

     

    Using dividend yield as a "support" indicator, FSC has found support and bottomed when it yielded 12% as in 2011 and first half of 2012.

     

    I see FSC just did a public offering at $10.31, [FSC] "...has priced a public offering of 15,500,000 shares of its common stock at a public offering price of $10.31 per share"
    http://yhoo.it/15Ao9mD
    That accounts for its drop on Sept 19.
    I guess I would watch the market, the economy and interest rates for clues, and also compare with other BDCs like MAIN and PSEC for confirmations.

     

    I may take more of a look at the BDCs and maybe do them separately next time.

     

    Thanks for reading
    John
    27 Sep 2013, 06:50 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (5304) | Send Message
     
    John,

     

    thanks for the reply,,Your strategy (selling puts) on the miners may be the way to go.

     

    Best of luck
    27 Sep 2013, 07:23 PM Reply Like
  • Interesting Times
    , contributor
    Comments (11488) | Send Message
     
    John

     

    Great work, but did I miss it or did you state that (PSEC) went ex yesterday ??
    27 Sep 2013, 01:05 PM Reply Like
  • John Wilson
    , contributor
    Comments (1355) | Send Message
     
    Author’s reply » IT
    PSEC did go ex-div yesterday (11cents). I didn't mention it. It does go ex-div monthly. Here is a link to a Yahoo 5 day chart of it. It shows the ex-div drop at the open.

     

    http://yhoo.it/17XMT5S;range=5d;compare=;ind...

     

    The other BDCs like MAIN and RSO may give a clue to what the sector may be doing. PSEC has been in a range and has looked somewhat neutral.
    27 Sep 2013, 06:10 PM Reply Like
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.