Another Step In The Bottoming Process – Buy Gold, Sell Oil
As usual, the market forces are not making it easy. Twice this week the stock market was set up for that whoosh lower to clean up the decline. And I think we need a down 1000+ point day on the Dow Industrials. Twice, there has been tweets and rumors and news about potential peace with Iran. Don’t get me wrong. 100% I want peace on earth. What I don’t want is the market to think it can bottom on peace. I would much rather it bottom like it usually does, well; before a geopolitical event ends.
The S&P 500 is below. Three steps have been met for a bottom. And that may be sufficient, but I think we need a final flush lower which may be below last week’s low.
A few weeks ago I wrote about the prospect and likelihood of oil peaking when it spiked to $119. That high is holding and my sense is that we have seen the peak. Of course, short-term news can overrule, but I would a seller on rallies.
I have also written a fair amount about gold and silver, starting to warm to the former and steering clear of the latter. As I wrote, I wanted to see gold breach $4400 and not unravel. It has done that and you can see at the where we took a full position in GDX which is in the lower chart. With our metals trades, I play the beginning very close to the vest, only risking a maximum of 1% of day one. It will then change day to day from there.
And for those wondering about things to do during declines like adding money, increasing risk, tax loss harvesting and ROTH conversions, I still think it’s early. If the markets do not flush again and go back to new highs, everyone should be happy. If they do flush again, we will see how deeply before reaching out to you about executing some of these tried and true strategies.
On Monday we sold some MQQQ. On Tuesday we bought GDX and more MQQQ. We sold some QLD.
