Hedging your portfolio is a strategy that is often employed by those who want to take out some downside protection against the possibility of a market drop. The most successful application of this process is to reduce your exposure in highly appreciated long positions with the assets that demonstrate inverse or non-correlated properties to the broad equity market. This will allow you the flexibility of reducing your risk profile without having to shift your holdings to cash or disturb your existing cost basis in a taxable account. Playing defense in the midst of a correction or even a bear market may help you sleep better at night knowing tha...
The time to buy stocks is when there is “blood in the streets”. In late August through early September 2015, my sentiment charts were screaming BUY. That was a great time to buy for a tradable rally. I took profits as the markets rallied through the end of 2015 and sentiment rose. Many sentiment indicators are now close to the lows of last year Currently, on an intraday basis the S&P500 is down 14.4% from its record high. Note how the Russell 2000 small cap index is in a bear market, down 27% from its all-time high and 12% below its 8/25/15 low. Every week I review my sentiment charts of the weekly data. In this article, I compare the...
The DAX 30 (FXCM: GER30) is bearish below Wednesday’s high of 9129 and given this downtrend, traders will most likely use a correction to 9000 as an opportunity to add to their bearish exposure with stops above 9129. They will most likely target this week’s low of 8696 and on a break to this level, the psychological key level of 8500. However, caution is warranted given that the DAX 30 has lost near to 11.5% of its value over the last 2.5 weeks. This will make it tempting for bearish traders to reduce their exposure. The Japanese government also looks to be ready to intervene in the forex markets, which may lift the USDJPY and equity ...
Technical Outlook: SPX went all the way down to the 1810 level momentarily, and thereby breaking the critical 1812 level. However, immediately right after a WSJ headline came out that OPEC was willing to consider a production cut and that send futures skyrocketing off of their lows – 27 points in less than 20 minutes. As a result, you have a near perfect test of the lows from January, but I would not find comfort in this bounce as it seemed manufactured with a headline that would guarantee an algo-generated buying spree. Instead, for there to be a true bottom and an ideal bounce place for the market, the longs need to get flushed, a...
Financial markets often behave like demanding, spoiled, and fickle children. If they don’t get what they want RIGHT NOW they throw a temper tantrum. That is exactly what bourses are doing around the world. The Dow Average rallied 500 points this week in the hope that my former Berkeley economics professor, Federal Reserve governor Janet Yellen, would suddenly turn into an ultra dove. It was thought that she would totally cave on any interest rate increases for the rest of 2016 at her Wednesday Humphrey-Hawkins testimony in front of a hostile congress. Instead, Janet laid an egg. Risk markets everywhere suffered cardiac arrest. The 500-p...
The USA is turning into the Weimar Republic. On the one hand we have a fervent nationalist and on the other a righteous socialist. Both of them have weird hair and, unlike their German predecessors, are not magnetic orators. But it is still scary to someone bi-cultural. I was raised by parents who had lived through Weimar and the rise of Hitler and always voted for mainstream candidates, even when a neighbor of ours was head of the US Communist Party, and even when changing demographics brought Latinos to what had been a German-Jewish enclave in northern Manhattan. They avoided leftism and jingoism from experience. Viscerally, I am frightened...
TM editors’ note: This article discusses a penny stock and/or microcap. Such stocks are easily manipulated; do your own careful due diligence. Pure Energy Minerals — all over the Nevada lithium scene, before anyone ever heard of a, “giga-factory” Pure Energy Minerals (TSX-V: PE) / (OTC: HMGLF) / (Frankfurt: AHG1) is the second most advanced Nevada (NV) lithium junior. The Company is advancing its Clayton Valley Project, one of very few brine-based lithium projects outside of South America. In my opinion, the dozen or more juniors owning, controlling, optioning or attempting to earn into prospective lithium-bearing prop...
It is good news for silver investors when significant nominal peaks of the Dow are formed. This is because significant nominal peaks in the price of silver tend to come after significant nominal peaks in the Dow. This has been the case for the last 90 years at least. The two most significant nominal peaks of the Dow were in 1929 and 1973. Silver made a significant peak in 1935, about six years after the Dow’s major peak in 1929. Again, in 1980, silver made a significant peak, about seven years after the Dow’s major peak in 1973. Below is a graphic to illustrate how the 1973 Dow peak was followed by a silver rally that eventually ended in ...