Wednesday, May 19, 2010

Bought Paper Gold Today - Part 2

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Paper Gold went on a deeper discount today, so I bought more. I also partially covered stock market shorts today near the lows. Man, those triple levered ETFs can make or lose you a lot of money on their own - add in options and its like playing with napalm! If paper Gold goes lower over the next few days, I will buy more. I think we are setting up for a final short-term thrust higher before a multi-week correction is needed. This could take us to the $1275-$1400 range quickly and I hope to be fully invested in my trading account for the ride.

Just a quick short-term chart of the recent Gold price action with my thoughts:

If we dip a little lower, I will buy more paper Gold as a short-term trade. I think this Gold rally has one more good push in it before we need a longer term correction. I don't see a push of more than a few weeks higher once we bottom here on a short-term basis. Gold stocks aren't acting strong enough to suggest an imminent major move higher, but we could easily tack on $50-100/oz over and above the recent short-term highs by early-to-mid June.

Though I am still short the stock market with a smaller position, I will add to short positions if we get a decent bounce higher. I am very interested in re-shorting commercial real estate, but took partial profits today (letting the rest ride) due to this cute short-term chart pattern that looks ready to cause a move higher. This will present yet another juicy shorting opportunity if it happens. Below is a 2 month 60 minute intraday chart of the MSCI US REIT Index ($RMZ), which is the index behind the triple bullish DRN ETF (I have puts on this):

Long Gold, short the stock market. This is my current short-term trading theme for my speculative funds. I don't trade physical Gold, I own it. But I suspect that once the next short-term move higher in the Gold price is done, I am going to focus on going short the stock market more than anything else in my trading account. The stars are finally all lined up for a full-blown return of the general stock bear market in my opinion.

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