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Page 9
of 9
As
you know from our emails regarding our trading positions,
the last 12 months, our biggest, and most profitable
trades were in the XAU.( see
client emails) In fact, the top three
-in terms of returns- were XAU trades! We see no reason for that to change.
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----Original Message-----
From: Aegean Capital [mailto:subscriberservices@aegeancapital.com]
Sent: Wednesday, February 09, 2005 6:03 AM
To: "Subscriber List"
Subject: XAU CALLS
Trade (XAU) WEDNESDAY 2-9-05 6:03 AM PACIFIC
At the opening, in our model portfolio (per
100k of funds)
1. We will place an order to BUY TO OPEN AT
MARKET 50 contracts of the March 90 calls.
We will add to this position another 50
contracts if the XAU closes above 95.
From: Aegean Capital [mailto:subscriberservices@aegeancapital.com]
Sent: Wednesday, December 22, 2004 8:12 AM
To: "Subscriber List"
Subject: XAU position
Trade (XAU) WEDNESDAY 12-22-04
In our model portfolio (per
100k of funds)
1. We placed an order to BUY TO OPEN AT MARKET
25 contracts of the JAN. 100 PUTS, AND 50
CONTRACTS* of the XAU JAN. 105 CALLS at market.
We will add to this position another 50 put
contracts if the XAU closes below 98.5, or,
another 100 call contracts, if the XAU closes
above 101.5.
-----Original Message-----
From: Aegean Capital [mailto:subscriberservices@aegeancapital.com]
Sent: Monday, August 16, 2004 10:25 AM
To: "Subscriber List"
Subject: XAUHQF 8-16-04
Trade (XAUHQ) MONDAY 8-16-04 6:52 AM PACIFIC
In our model portfolio (per
100k of funds)
1.We bought 50 contracts of the AUGUST 85, XAU
CALLS at $3.8 (symbol:XAUHQ) Our stop for this
position would be a trade BELOW 87.50 for the
XAU for two consecutive hours. We will add
another 50 contracts on a print ABOVE 92.00
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Between
now, and the end of the year, we strongly believe
-assuming gold stocks remain in a long-term bull market-
that the XAU will will continue to provide the most rewarding trading
opportunities. Here are our reasons why.
Gold
has been in a long-term up-trend for four years, and unless
it closed below $400.00 for two consecutive weeks, there is
no technical evidence to base upon any bearish view on gold,
other than speculation, based on intellectual
arguments. For all means and purposes, as long as the trend
remains positive, we will remain long-term bullish on
gold, although short-term we are bearish.
The
gold/xau ratio has been a rather accurate indicator
for intermediate term signals. Notice that the average
"cycle" duration between from entry point to entry
point, since the beginning of the bull market has been
roughly one year. We believe that over the next few
weeks we will see the beginning of another such cycle.
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Chart from the
report posted on 3-8-05 |
In
our analysis, posted on 3-8-05, we opined that the XAU was
in a declining channel, and that it would turn down
violently once it reached channel resistance.
We predicted that the XAU will collapse down to the
90-85 area in a matter of a few days. Last week in a
stunning 4 day decline the XAU lost 10% of its value,
vindicating our forecast, and giving us reason
to believe that since so far our forecast has been correct
the odds are better than even, that the rest of the
forecast may also turn out to be correct.
The XAU
gapped down and went straight thru its 20 dma, its 50 dma,
and all three fib retracement levels (see different color
lines) without the slightest hesitation. Based on our
measurements of the magnitude of the downside momentum
thrust, and on the chart pattern, we believe that going
forward, the two most probable scenarios are the
following; a) the decline will continue un- interrupted
all the way down to longer term channel support around
85-84, or b) we get a bounce between 89.9 and 90.90 up to
93.75-94.75, and then another leg down to 85-84.
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If gold and gold
stocks remain in a bull market, the
decline down to 89-84 zone ought to
represent the last buying opportunity for gold
and gold stocks, prior to a spectacular bullish
acceleration. If the XAU stays above 84 over the
next 2-4 weeks and then it begins to accelerate
to the upside, at this point in the bull
market we ought to see a rise from its
upcoming lows in the 89-85
zone in the next few weeks, to a high in the
155-165 zone by the end of the year, which will
represent an 100% gain. |
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If the XAU remains in a
bull market, it ought not to violate support at
84, on a weekly basis. We would allow for
an intra-day move to as low as 81. However,
two consecutive weekly closes below 84, or, even
worse below 81, accompanied by gold
closing below $400 for two consecutive weeks,
would call the bull market assumption into
serious question. |
If that was
to happen, at the very minimum we would change our long-term
view from bullish to neutral.
Trading
strategy:
Currently
we are holding XAU puts, because we expect the current
decline to continue down to the 90.9-89.9 zone, and perhaps
down to 85-84. If support holds between 89.9 and 90.9, we
will close the puts, and initiate a small call position
(20-40 contracts) which we will close if the XAU rallies up
to 94.75 and it reverses to the downside. At that point we
will open a 60-100 contract position in puts, which we
expect to close in the 85-84 zone.
Assuming
the 85-84 zone holds, and the XAU reverses to the upside, we
will start buying our favorite gold stocks, coupled
with XAU call options. If
the 85-84 support zone doesn't hold, we'll close the
puts and do nothing until we have enough data points to
re-evaluate.
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