iBankCoin
The first hit is always on the house.
Joined Aug 2, 2009
1,843 Blog Posts

A PORTFOLIO FIXTURE THAT’S STARTING TO SHINE

Lately the trade(s) that we’ve centered conversation around these last couple weeks have been on my call for dollar strength. Here’s where it all started…

End of last year, this was the most crowded trade in financial markets. Long Dollars. If you attended my Boot Camps last year, this was my macro call for 2017…short the dollar. I bought Euros back in December.

The big breakout in the dollar in December quickly lost its momentum and has been spiraling lower all year. Now, it’s become the second most crowded short out there. My play this time around was to short Gold, which conversely got a little heavy last week. Thus far, this has been one of the most memorable bull-traps I’ve watched play out in quite some time.

I also took the opportunity to play a bond short via TBT at $33.23 and bought $WFC calls under $50 as well as some $BOFI calls at $25.

The response to this conversation in each instrument has been pretty solid. While the dollar hasn’t turned much at all yet, I suspect these instrument will catch fire quickly as the boat starts to capsize.

The market has taken on a much healthier rally than most of what we’ve seen this year. It’s been an insane week for the swing trades and with each day that passes, it seems that things look even better. I’m still in awe of how many set-ups are still out there. Slow indices and fast stocks still continues to be the market theme for the foreseeable future.

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THE BOAT HAS TAKEN ON MORE PASSENGERS

I suppose a congrats is in order. After years and years of downward spiraling sentiment, Intelligent Investors-R-US are now slowly starting to believe the market will be higher 6 months from now.

I specifically remember saying in 2015 that “regardless of your opinion of the state of this market, it is going to forcefully drag you higher until you have no choice but to change your opinions.” I’m surprised it’s now more than 2 years later and we’ve got our highest reading of bulls for the year.

Good timing, friends.

Also, this is the most bearish market development I’ve seen all year.

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KNOW YOUR OPPONENT

Aside from myself, a few well respected traders/technicians came out last week to discuss the price action in Gold.

To summarize, those opinions were similar to mine stating that the only folks buying last week were of the retail variety. When you sense this crowd, or can see their footprints in the market…prepare to take their money.

I’ve stated this about the overall market, and the same can be applied to any instrument….when the pain trade becomes ‘lower’ it is because the market has left people stranded above. We discussed this at length last year, referencing the island of longs in both Gold and Bonds around this time last year. Today, prices gapped beneath all prices printed last week. In other words, late longs are now trapped – as I suggested in the gruesome comment exchanges last week.

As discussed in After Hours with Option Addict last week, I used the enthusiasm of Gold bulls to also initiate a LT position in $TBT and a few trades in a few banks. The timing of last week I felt was significant – and was why I built these positions leading into last week.

I’m still a little underwater in my $DGLD, but that happens when you build a position into a breakout or breakdown. I like my chances here.

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GOLD GAPS HIGHER – THERE’S A SHISTORM BREWING

This morning I am humbled by this explosive move in Gold prices. As my alarm went off this morning, I knew I would have to face the music.

There would be feces cast about, comments made about family members and the size of genetalia….this I would have to endure being positioned against a highly sophisticated crowd of hamburger flippers, Walmart greeters, convenience store clerks and custodial arts workers.

Do your worst. Today I am prepared for all things.

lol.

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LAST TRANCHE OF $DGLD, PHIL’D

Despite the furious “Post-urbation” in my comments section over the weekend by a simple Silver-ton named Phil, I picked up my last tranche of DGLD, as planned, into this Gold breakout.

Doomed might I be, but I like the vocal opposition from the gifted’s POV.

Avg cost is in the $42’s.

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