Thursday, June 23, 2011
NFTRH email update sent yesterday, pre-Fed
As expected, over sold technicals and over bearish sentiment (and some Greek bailout blather) have led to a burst of joy.
Note that the 50 day moving averages (in many cases now sloped down) have been approached or hit in markets ranging from the precious metals to US broads. If the relief rally is going to fail, it should do so at or around the 50. If the less favored scenario were to unfold, with MA 50's being surmounted and held, then the door opens up to a retest of the cyclical bull market highs.
If one is bearish for the intermediate term, some selling, profit taking and/or risk management is sensible now.
As noted on the blog on Monday, I reduced bear positions significantly. Today I am adding some back with an increase in the XXX high yield bear fund and a buy back of Ultrashort xxxxx xxxx (XXX) to go with the still-held XXXX. Please remember, I never suggest leveraged bear positions [for most people] because fighting policy makers is a rough way to go for most people. Cash is a good way to go because it will be safe, sound and ready for deployment in favored assets as needed.
I am also going to consider profit taking on a couple of items. As an example, xxx, which was highlighted as a 'bottom feeder' buy a few weeks ago, has finally rebounded hard up to the MA 50.
I am generally using this time to continue upgrading the quality of core holdings, take profits and manage risk.
The big picture is fundamentally sound for the gold sector, and I plan to remain in alignment with that view until such time as it changes.
One bear I reestablished yesterday after the update was to be long the VIX. This time using the inefficient yet a bit less volatile (than call options) VIXY. It is easier for me to hold bear positions when I think of them as insurance. I would never claim to be a bear hero.
BTW, some people I very much respect are calling for the relief rally to extend for a few weeks. My technicals told me to establish insurance on yesterday's euphoria. We'll see how it works out.