Today was perfect. Everything I'm dabbling in was on the up and up, except for the Swiss Franc FXF. SLV and IAU continue to make new highs, and I started a position in DGP. Even the double inverse funds made new short-term highs. DBA rebounded above 42, even though UDN failed to close higher after a very strong open. GDX, SLX and EEB recovered some of their losses, and remain technically sound, but close to danger.
The skinny of the story is, I'm having cake and eating it, and there is plenty more to go around if the trend towards hard assets remains intact. Financials took another step towards failure today, and if the home builders follow suit, this will be a panicky drop to the January lows.
Pairs idea: Double Gold w/ DGP (26.36) and Double Short Financials w/ SKF (121.50). Equal weight.
Monday, March 3, 2008
Sunday, March 2, 2008
Doubling Up On Gold
Deutsche Bank is offering leveraged and inverse Gold ETN's DGP (+2x), DZZ (-2x), DGX (-1x). This is very exciting, but also quite scary. Looking at DB in the charts gives me little faith in the banks debt, but so long as the market believes in these awesome debt instruments, I will certainly go along for the ride. DGP is trading @ 25, so if gold moves to 2000, it should trade around 75.
Bond yields continue to move lower as BSV, TLT and TIP are trading at all time highs. Still no sign of a major financial collapse as bonds continue to offer safety.
Bond yields continue to move lower as BSV, TLT and TIP are trading at all time highs. Still no sign of a major financial collapse as bonds continue to offer safety.
Saturday, March 1, 2008
Blamo!
The market shat on the bulls Friday, which made tons of cheddar in SRS, SKF, TWM, DXD. UDN, FXF and FXY are trading at all time highs, and continue to show strength as the markets weaken. Commodities were mixed as DBA moved lower w/ USO, and the precious metals IAU and SLV remain unchanged. GDX, EEB and SLX collapsed today, falling between 2 and 4%.
If the emerging market continues to weaken, I suspect we will visit the January lows, so keep the long trades hedged, or on a short leash. If EEB stays below 50, I will either exit or reduce my position. I'm still market neutral with a short dollar bias, but if the XLF can stay below 26.20, I will increase my position in SKF. Banking indexes have fallen roughly 7% in the last 2 days, and look poised for further deterioration.
IAU and SLV continue to offer a safe haven in this fiasco. Even though they are trading at lofty nominal heights, adjusted for inflation, there is plenty of room hard assets to run. Right now the Dow @ 12300 is worth ~13oz of Gold @ 960. I suspect this ratio will continue to favor gold, considering that sometime in 2000, the Dow was worth more than 40oz of Gold when it traded ~300. Peter Schiff predicts that the fall of paper equities will bring the ratio to a 1:1 parity, and points to the 1970's as a similar phenomenon. This implies a DJIA trading @ 5000 w/ Gold @ 5000. While I'm not quite as optimistic (pessimistic?) as Peter (not yet anyhow), 5:1 seem achievable without much difficulty. Dow @ 10000 and Gold @ 2000? Sounds good to me.
On another note, what happens when a civil judgment is entered against you in NYC for public urination?
If the emerging market continues to weaken, I suspect we will visit the January lows, so keep the long trades hedged, or on a short leash. If EEB stays below 50, I will either exit or reduce my position. I'm still market neutral with a short dollar bias, but if the XLF can stay below 26.20, I will increase my position in SKF. Banking indexes have fallen roughly 7% in the last 2 days, and look poised for further deterioration.
IAU and SLV continue to offer a safe haven in this fiasco. Even though they are trading at lofty nominal heights, adjusted for inflation, there is plenty of room hard assets to run. Right now the Dow @ 12300 is worth ~13oz of Gold @ 960. I suspect this ratio will continue to favor gold, considering that sometime in 2000, the Dow was worth more than 40oz of Gold when it traded ~300. Peter Schiff predicts that the fall of paper equities will bring the ratio to a 1:1 parity, and points to the 1970's as a similar phenomenon. This implies a DJIA trading @ 5000 w/ Gold @ 5000. While I'm not quite as optimistic (pessimistic?) as Peter (not yet anyhow), 5:1 seem achievable without much difficulty. Dow @ 10000 and Gold @ 2000? Sounds good to me.
On another note, what happens when a civil judgment is entered against you in NYC for public urination?
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