Reversal of Fortune

Oh, you're a loaded gun
Oh, there's nowhere to run
No one can save me
The damage is done
--Bon Jovi

A few days back I began another 'pyramiding' trade in the gold (GLD) and silver (SLV) ETFs. Adding higher in mo-mo fashion is typically not my bag, but it has helped me participate in these strong trending moves while keeping me mindful of risk (by using gains to subsidize additional risk at higher prices).

However, the kind of action we saw this am--gappy, seemingly indiscriminant price chasing--always makes me uncomfortable. Particularly so when the pattern strings together in parabolic fashion. Silver sprinted out of the gate and was bid up another 3-4% , with spot prices north of $29/oz. Gold followed w/ another new high for the move above $1420.

The action was too frothy for my tastes, though, and I kicked both positions into the morning feeding frenzy.

Better lucky than smart, as early afternoon saw a major reversal. Both GLD and SLV just missed marking outside days to the downside after flipping over on huge volume. The hi/lo range on silver today was ~10%.

We'll see whether this was merely the inevitable release of near term speculative pressure, or whether this marks the beginning of a counter move. Can't help but spy that gap on SLV down at 24ish...

On a related note, the USD had a solid day to the upside gaining about 1%.

positions in gold, silver, UUP