Despite good news for the retail sector and soaring equities markets, our BBY short continues to drop and it remains in a steady downtrend since its highs six years ago.
Excellent. We lower our stop to protect the position, which we'll cover in case of a close above $25.25
Gold and silver are plunging lately, and are lower than when
margin requirements were relaxed significantly a month ago. This is particularly interesting because for months now, if not years, gold and silver have moved in tandem with equities and of course equities have generally been going higher and higher since March 2009.
Maybe this means precious metals are finally becoming the "saftey trade" they've long been touted as, in which case movements opposite to equities would be expected. In truth, gold and silver are probably in the latter stages of a major speculative mania. Consider that
DGZ, a gold short ETN, is not far off from possibly breaking a 3.5-year downtrend.
The U.S. Dollar is rising again. Whereas in the past it moved counter to equities, lately it's been going up even as equities do. We of course remain long-term U.S. Dollar bulls and
holders of UUP since the exact lows in early May of last year.
Possibly the dollar is rising, and gold dropping, because interest rates are rising. We see this evidenced by
our position in TBT, which today is up over 5% while the DJIA is flat. Nothing like this has happened in a very, very long time, as TBT would normally pace equities.
A few days doesn't make a trend, so possibly these divergences will normalize in short order, however we do note that interest rates are now higher than when the U.S. Federal Reserve promised low rates into 2014 nearly two months ago, and higher than when the Fed announced "Operation Twist" in late September which was supposed to push down long-term rates.
Please know that when we say "interest rates" we mean as found in debt markets, which is where rates are truly set, not as dictated by the Fed or Central Banks which in fact have only a minor impact on actual rates. Historically it's evident that the Fed and Central Banks correlate, or even chase, rates rather than actually set them.
TBT is up against a downtrend begun in late June of last year :
Our long position in
Canadian-listed Sunridge Energy, SRG is encouraging. It hit a high today of $0.28 on unusually large volume. That's almost double the price it traded at shortly after our long entry last month, a great start for those who "bought low".
We're holding, expecting to "sell high(er)" as the stock's downtrend seems broken :
Our Apple short was stopped out for a loss of roughly 5%. The stock will plunge eventually, however something that's inevtiable may not necessarily be imminent.
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