Tag Archives: GLD

Missed Gold Trade of the Day

It’s always good to go back and review your trades, so I hear… This is the trade I thought about, lines drawn, etc. but didn’t pull the trigger on. The RSI was indifferent, telling me nothing at all. When that happens, I sometimes go get a coffee, walk the dog or turn to other contracts. I could have setup buy orders on what eventually turned into a nice breakout. This was staring me in the face and I missed it. C’est la vie…

Have a good weekend.

Gold Chart

The Divergences Screaming, Hello?!

Rambling about nothing is better than proclaiming some truth based on limited information.

And as we know, we know very little when it comes to predicting market moves. Just this morning, for example, terrible numbers hit the tape and the S&P continues oozing skyward. Good is Good, Bad is Good, the Fed is Good, indefference is even good. Until it isn’t.

So I thought I’d ramble about a few divergences which have me perplexed.

The first jumped out at me yesterday while the VIX was climbing on momentum WITH the S&P. Technically that happens but it was screaming  “look at me” yesterday. Options in general and puts in particular were getting bid up while the market was climbing. Fear of a rising market?

VIX ES DIVERGENCE

The second has been obvious all year, but it’s worth thinking about. The Gold Story – some would call it the Apple Story…

If you take the premise that gold is a hedge against inflation, gold isn’t worried, atleast paper gold isn’t. That surprises me, because there’s another argument: easy money from the central bank leads to inflation. This argument seems on firmer footing, every central bank in the world is printing. Yet it’s the divergence which has me looking for a trade.

ES GC Divergence

Here are some other good divergences, credit/macro/vix/10yr, labeled ‘just plain silly‘ from ZH.

 

VIX Chart

Something is about to happen

Complacency is the adjective I would use to describe the current state of the markets. With the exception of GLD and SLV the markets feel less paranoid than they should, less afraid. Maybe there’s reason to be optimisitic, apparently the ECB has things back under control atleast in the credit markets. But there’s a few charts which are telling me, watch out…

Take the VIX which is sitting at nearly 1 year lows. Doesn’t it seem like something is going to happen which will motivate some insurance buying? Take Syria, Greece, the US debt politics, Iran, corporate earnings, etc. There’s a fair amount of risk still in front of us. Straddles might be the order of the day, or VIX futures?

VIX Chart

Look at the SPY and depending on your timeframe, some pullback here can only be healthy. We’re also sitting at some high range resistance. I wouldn’t be surprised if we bounce off this 135 level on the SPY.

SPY Chart

Tick, tick, tick

So everyone is waiting until 14h15… That gives me a few hours to think.

The pure futility of this press conference makes me think of Gold, yes, Gold. Strange, I admit, but there’s also a certain futility in Gold. And by way of Bloomberg I saw a quote from Warren Buffett. He was commenting on Gold (not the ETF $GLD but the stuff they dig up):

  • They take it out of the ground in South Africa, ship it to the Federal Reserve, where they put it back in the ground, if you were watching from Mars, you might think it’s a little peculiar.

What if we didn’t have this shiny competing currency? Would we (or could we) invent another ‘something’ to compete with government issued currencies?

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Monday 45

The CAC40 (-4%) is plunging but the DAX (-3%) and the FTSE 100 (-1.3%) aren’t nearly as bad. It looks like the banks are taking the worst of it with Societe General (-10%) and BNP (- 12%) under major selling pressure. You could even say crashing, on the ongoing Euro-ECB-Greece-Finland-Drachma drama. It looks to me like SocGen is in the worst shape. “SocGen set to accelerate asset disposals“.

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Welcome Back Europe

Today was the start of the school year here in France. Le rentrée. Welcome back DSK, welcome back BNP and Societe Generale. Wasn’t it better on the beach (or in prison)?

Merger Rumors? That’s a silly desperate long-shot: a lazy distraction.

The EUR.USD has broken under 1.40000. That’s a psychological level that’s held since this past July.

It’s Europe’s turn to scramble. There are parallels to the lovely little Republican -Democratic debt ceiling pissing match. But the obvious difference is that there are 17 members in the Eurozone each trying to cover their constituents proverbial backside.

It’s like 17 Tea Parties running amuck at the Republican National Convention!

American talking-heads say Europe is headed for disaster. Journalists looking for a story are like traders looking for resistance and breakouts. “The EU has to breakup, there could be civil war…” Count on UBS and ZeroHedge to titillate the gossiping financial classes with end-of-world scenerios. Here’s an example (link) and here’s another (link). And why not FT-Alphavilles “Who is the doomiest of all?”

Even if the end-of-world is near, it feels like we’re being “hard sold” a short position from a used car salesman. That’s a great sign to be sceptical. The unexpected move from the Swiss ($EURCHF) got me thinking about all that I don’t know. What other surprises might drop from the sky this week?

I have a good short position on the Euro but I’m starting do doubt it’s longevity. The Eurozone is a mess, agreed, but it’s structural. Therefore, fixable… Right? Who cares if the Greeks leave the Eurozone? Italy and Spain have huge black market economies, they’ll get by. Bridges and Tea Party extremists might save the US but you have to admit, consumption (demand) is maybe even MORE important… But is it AS important in Europe? They’re mostly Socialist, relatively poor, and good savers. European countries have historically dealt with far worse. Think German unification or Franco. But thinking about the US, since the civil war, what significant transformation have Americans’ “overcome”? September 11th? The jury is out still.

The perceived problems in Europe are potentially ‘less real’, than the perceived problems in the US. Just saying…

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Half Way Organic

I’m still perplexed… After the worst consumer confidence measure since 2009, the market is ‘rallying’ (it’s positive – barely). The SPY is consolidating as I type this around 121.50, GLD is holding up better than expected and the VIX is crumbling. Europe has closed at about even.

There was a commentary I saw pass that said “organic sellers” are non-existant and that headline shorters are all that’s left. Whomever “organic sellers” might be, I think there’s some truth to this. I mentioned earlier this morning that any positive news might hold greater sway than negative, this is playing out, even without positive news! To be fair there are whispers of QE3 and screams of, “duh”. What should we make of all this? Probably, sell straddles. Count on a channel until all the “organic gardeners” have come indoors?

If “organic buyers” are holding this market afloat, what would make the “organic sellers” come back to the party? They could look at their fibonacci’s and cross their fingers. They could even read ZeroHedge before they go to sleep.  If they haven’t come inside sooner, I’m guessing the ADP employement numbers on Thursday, and/or the non-farm payroll numbers on Friday might just do the trick.