Intermediate Bottom In Gold To Coincide With Equity Correction




Our stance has not changed. We remain heavily long stocks although we have been expecting a trip down into an intermediate bottom. This is why we took profits on some equity positions recently – including our TQQQ position. I still maintain we will be able to buy this NASDAQ leveraged ETF at a cheaper price than our sale price. Yes we are up 41 handles on the NASDAQ futures this morning but considering the amount of capital we have in equities at present in our portfolio, it was best to take some risk off the table as this rally was getting long in the tooth.

Nasdaq Looks Like A Correction Is Coming

Nasdaq due a correction into intermediate bottom

Although only a few days to go to expiration, we may take profits on our Sanderson Farms (NYSE:SAFM) $100 put option today. We sold it for $2.54 and now its worth close to $0.60 although it should open much lower today if the share price remains steady due to time-decay really being in our favor.

Spontaneously we will take out these type of trades. Make no mistake about it though, to succeed in our method of trading, one needs to take the long game. If SAFM for example was trading at $95 at expiration this Friday, we would be taking possession of the shares at $100 with our cost basis being $97.46. We have researched Sanderson Farms and like both its fundamentals and current valuation. However, we should be able to pick it up cheaper over the next few weeks if our expected correction takes place.

Concerning our precious metals positions, we will continue to stand pat. This intermediate bottom has been very difficult to time. Again yesterday, the bears got control of the sector which drove Gold well below $1,300 an ounce.  Gold‘s long term sentiment readings are now on a par with the bear market bottom in December of 2015 which is unprecedented. We have made our play and will wait for sentiment to return to optimistic extremes and for the weekly slow stochastics to return to overbought conditions. Again we have no reason to believe that gold has entered a bear market. It has continued to make higher highs since the bear market bottom. We just need to hold on until it eventually does the same. We are at least now looking at a month to a 4 month trade until we see the next intermediate high.

Gold’s Technicals Are Heavily Oversold

Gold To Find Intermediate Bottom On Equity Top

Sentiment in Gold ultra pessimistic

Sentiment in Gold ultra pessimistic

Source : Sentimentrader.com

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