Portfolio Update – July 20

The NASDAQ (INDEXNASDAQ:.IXIC) has had a pretty good day today despite the S&P500 and Dow finishing slightly down for the day. I believe that’s where we will most probably put the rest of our capital to work for the remainder of this cyclical top in equities – either the tech sector or the biotech sector. The biotech sector probably holds more potential because it is still nowhere near it’s all time highs of 2015.

Nevertheless you have the whole regulation cloud continuing to hang over the sector so it is riskier. If you look at something like (NYSE:LABU) which is the triple Bull leverage biotech ETF, it has gone up by 100% over the last few months alone. There is serious potential in biotech but the safer place probably to stay is tech through the likes of the Q’s (NASDAQ:QQQ) and maybe (NASDAQ:TQQQ).

As we enter this bubble phase, cycles and sentiment are going to come far less useful so it’s just going to be a matter of getting in and holding on. I would warn traders that buying call options or trading on margin is very risky. Not too long ago, I was talking about this sector probably undergoing an intermediate decline which just didn’t happen. Now that doesn’t mean it’s never going to happen so we have to make sure that if we are long in this sector with a substantial position, we need to be able to weather a potential draw-down at any stage. Just keep this in mind when you are deciding on the size of your positions. Position sizing is so crucial so open any trade with the end in mind.

With respect to the other sectors, I wrote an article recently on whether gold has printed an intermediate low or not. There are some variables that are not answered such as volume not being there at the moment, such as miners still continuing to lag and sentiment not dropping to levels where it should have dropped. I don’t know yet if we have a daily low or an intermediate low in gold and silver. We will know fairly soon though because both gold and silver after recent market action, have their sentiment at optimistic levels on a short term basis. Their RSI levels are also overbought so if this isn’t the start of a brand new intermediate cycle, they should have no problem pushing through short term resistance. If not, they’re going to come back down fairly soon.

Source : Sentimentrader.com

We also got a few emails with relation to some of our energy positions Chevron (NYSE:CVX) and (NYSE:ERX), Long term, I think these positions are fine because oil rallied again today resulting in crude oil being above $46 a barrel so the probability that the intermediate low is in is very high. Crude oil has been forming a solid base now for a good few months & I think it’s only a matter of time before energy stocks catch up. Therefore we will hold our energy positions because I do see them coming good over time.

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