I put out a midday Current Thoughts today concentrating on JNUG and JDST and how I would have traded them. If you haven’t had a chance, spend a few minutes to see how you could have profited on a JNUG trade today, along with the two I leaned long with yesterday, UWTI and UGAZ.
From the Trading Desk
Winter storm Juno paralyzed New York but even with many banks and funds not making it to the office today in the Big Apple, the precious metals still managed to show signs of life and all four are up on the day. US equities were down sharply today due to disappointing earnings from bellwether companies like Microsoft and Caterpillar while US Durable Good Orders had a sharp drop. The Dow was down 350 points during its session before ultimately rallying off the lows and closing above its 100 day moving average.
Equity weakness combined with a euro that surged 1.25% allowed gold and silver to make solid gains today. Gold rallied to psychological resistance at $1,300 before selling off later in its session. Prior to today, silver had tested its 100 day moving average four days in a row but was unable to achieve a close above it. This is now becoming increasingly important resistance and there should be sizable spec positioning around it.
Keep an eye out for the Fed rate decision at 11 AM PST tomorrow.
I would look to go long anything gold with a break of $1,300 again. JNUG long over 42.10 with stops and JDST over 7.66. Naturally these numbers will change based on how we open if they indeed open higher. Conversely, if they open lower, a higher high can also be traded. Keep an eye on gold to see what it does as well as the dollar for direction.
The dollar did get hit today. It’s still up over 94 sitting at 94.07. Look for a fall below 94 to be bullish for gold and the miners.
Stock Crash or Buy the Dip?
With today’s market decline there was blame put on some companies like Caterpillar (CAT) and Microsoft (MSFT) reporting disappointing results. For me it’s typical Fed meeting week volatility that market makers use to move markets up and down and take out stops on both sides. The DOW for example opened at 17,638, fell 349 points to 17,289, 212 points back up to 17,501 before falling 114 points to close at 17,387. This is why I call the week of Fed meetings for professionals only!
But by using the higher highs and lower lows, a good trader could have made money just by playing the trend throughout the day and most importantly, taking profit and waiting for the right set up.
As a trader who takes profit, I don’t care which way the market goes. Of course those of you who have IRA’s and 401k’s want to know when to get conservative with your holdings. Lots of opinions either way right now. I lean bullish to higher highs with a buy the dip attitude. This has worked as we work towards another move towards 80 on TNA. If we fall below 70 on TNA I would have reservations about my bullishness and keep a stop. We did hit a higher high since Jan. 8th on TNA yesterday the 26th. I would use today’s low of 76.28 as a stop. TNA moves 3 to 5 points at a time so you have to be a little looser with your stops and the longer it takes to break out, the more conservative you should be in looking for profit till it makes up its mind.
UGAZ is trying to make a move but it is still only 41 cents from it’s 52 week low. I think higher highs are tradeable for profit and am thinking we are in the buy the dip mode, but it is still too weak to make this a strong conviction. DGAZ is at 6.72 after hours and a break above 7.13 may bet us back to 8.16 then 8.73.
Oil still weak with UWTI bouncing a bit today but couldn’t break out. A move above 2.85 would make me a stronger believer but keep in mind we were 2 cents from the 52 week low of 2.60 today and so I’ll repeat; still weak.
RUSL took another trip from the 15’s to over 18 again. After hours it is at 18 even still feeling the effects of the S&P downgrade of Russia to junk. Very dangerous ETF to go long which is why I have been so conservative with my entry point on it still waiting for a price closer to 10.
With tomorrow’s Fed announcement, look for a trend and jump on it for the quick move up and watch for the quick reversals which means take profit or keep a stop. Tomorrow is for professionals only. Wait for the dust to settle and again, keep stops and take profits for the day. The trend may not develop or continue until Thursday after the market has digested the Fed’s announcement at 2:15pm EST. As I said before, I don’t expect the Fed to raise rates but just “talk the talk” that all is well and they are keeping a close watch on the data. I do expect a rise in rates in the next meeting as long as the data remains similar or a bit better (because of oil price declines not because of productivity) than today. Remember, the U-6 Unemployment rate is still above 11%. No one ever talks about that.
Gold and Silver Stock Mining Package
We will be coming out with a mining package where we pick what we believe to be the best mining stocks to buy based on my research the last 8 months. We have been patient in releasing this because of the timing in purchasing these mining stocks can be tricky. We were one of the only one’s who recommended selling mining stocks in September of 2010 when the HUI was trading at 512.56. Much has transpired in the mining industry since that call with many companies disappearing or being taken over. Today many companies are struggling and if we do get a further pullback in the price of gold and silver, more companies will go bankrupt. Knowing which companies have the best opportunity moving forward will be key to you getting returns that we believe will be in the 100% to 500% range, and possibly much higher for some of the miners. This package will be released in the next few weeks and we will announce it on the site.
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Doug Eberhardt is a 28 year financial services veteran and precious metals broker selling gold and silver at 1% over wholesale cost. Doug has written a book to help investors understand how gold and silver fit into a diversified portfolio, how to buy gold and silver, and what metals to buy. The book; “Buy Gold and Silver Safely” is available by clicking here Contact phone number for Buy Gold and Silver Safely is 888-604-6534
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