UPDATE: broken link fixed!

• Lots of negative feedback both in email and on Seeking Alpha to my post describing why I sold gold stocks, and daytraded gold futures on the short side.  The consensus believe that I am missing out on a long-term move by trading a short-term pullback.  Perhaps, but preserving capital matters too.  In the past few sessions gold pulled back more than $30, silver pulled back more than $1.50, and junior mining stocks took a beating.  I currently have no positions, short or long, in gold or silver stocks or futures.  That may change at any moment — I’m ready to take any cues the market gives me.

• Some traders learned a valuable lesson in RH Donnelly.  The bankrupt company’s old common shares traded for over 2 cents as recently as last week.  That may sound cheap, but RHD told investors it would cancel those shares, and the bankruptcy court approved the reorg. plan.   From that moment on, the shares were worthless.  The SEC refuses to halt trading in these to-be-canceled shares, but traders should understand that there is no upside to this loser’s game.  Still itching to trade shares of bankrupt companies?  Here are two much better strategies: (1) buy the shares for a flip just as bankruptcy is declared (this strategy is outlined in detail by James Altucher in Trade Like a Hedge Fund: 20 Successful Uncorrelated Strategies & Techniques to Winning Profits); or (2) buy the new shares upon emerging from bankruptcy (here is a Forbes.com article on the strategy).

• Over on the Slope of Hope, Tim Knight is looking for markets to rebound in the very short-term.  He contends that this will present a very promising entry for short positions.  I agree.  Also worth considering – Adam Hewison’s video on why the S&P probably has topped out in the intermediate-term.

• FPB Financial Corp. (FPBF.PK) announced another quarter of very respectible earnings.  I am considering pairing a basket of long positions in community banks that have posted strong results and have little exposure to commercial real estate with a short position in the mega-banks (aka the idiots who drove this country into financial crisis).  Unfortunately, FPB trades by invitation.  To date I have been unable to build a position, though I will likely continue to try.

• The CEO of Cel-Sci (Amex:CVM), Geert Kersten, says that if the H1N1 flu virus mutates, "suddenly CEL-SCI could be the most important company in the world."   Geert’s hype job helped boost CVM to a market cap of $162.9 million, but its hardly the most important company in the microcap space, let alone the world.   

• There is still plenty of time to enter the microcap stock picking contest.  You can enter at any time, and results will be measured from date of entry to year-end.  See the complete rules. 

DISCLOSURE:  no positions

Related posts:

1. Sold gold
2. Gold hits all-time high
3. Gold resumes march upward