First the bad news: Natural gas ran out of momentum last week and a slump in prices Friday triggered our recommended stop on ProShares Ultra Bloomberg Natural Gas (BOIL) at $7.89 to close the trade at a loss.
That stinks. But the good news is your other energy gains more than offset the decline in BOIL, with profits of 19% in ProShares Ultra Oil & Gas (DIG) and 8.5% in United States Oil (USO) last week.
More good news: Quite a few recent trades are posting growing open gains as trends in several key markets unfold right in sync with our E-Wave cycle forecasts:
First, gold, silver and mining stocks are moving higher again today, after the Philadelphia Gold and Silver Sector Index (XAU) gained nearly 3% last week alone!
The counter-trend rally in mining shares is unfolding just as expected, but it’s likely to be brief. Your ProShares Ultra Gold Miners (GDXX) position is posting growing open gains as a result. It makes sense to enter a protective stop now as shown below to help protect the gains.
Second, the dollar surged and bonds sold off at the end of last week after Friday’s stronger-than-expected jobs report. Sure, the “headline” number showed 33,000 jobs lost, weaker than forecast. But that was likely skewed by the recent hurricanes.
Much more important for markets was the unemployment rate falling to 4.2% – the lowest since 2001 AND average hourly earnings surging nearly 3% higher year-over-year – the biggest increase in over eight years!
That increased the odds of a Fed interest-rate hike by year-end, punishing Treasury bonds, and boosting the dollar in the process. In fact, the buck has now broken out of a long-term downtrend, as you can clearly see in the chart above.
That’s great news for your Direxion Daily 20+ Year Treasury Bear 3X ETF (TMV) and ProShares UltraShort Euro (EUO) positions. And, I expect even more gains ahead! Again, prudence dictates placing a protective stop to help lock-in gains of TMV as shown below.
Third, stocks buckled but didn’t break on the prospect for higher interest rates, at least not yet, but the cycle forecast for all three major U.S. stock indexes are now in total agreement … calling for a selloff.
Now, the latest update as of this morning (see above) plainly shows a sharp downtrend for the Dow in November and December, which should start at any time over the next few weeks.
That tells me we should be in store for an upside reversal for ProShares UltraShort Dow30 (DXD) and ProShares UltraShort S&P500 (SDS) to recover lost value and profit from the market decline. Stay tuned, because I may pull the trigger soon on new trades designed to profit from an overdue stock market correction. But wait for my signal.
Meanwhile, add these protective stops on GDXX and TMV right now …
Here’s what to do right away:
1. Place a good-till-canceled protective sell-stop on all your shares of ProShares Ultra Gold Miners (GDXX) at a limit-price of $42.25 or better. This order is good-till-canceled.
2. Place a good-till-canceled protective sell-stop on all your shares of Direxion Daily 20+ Year Treasury Bear 3X ETF (TMV) at a limit-price of $18.89 or better. This order is good-till-canceled.
In the meantime, continue to hold all open positions and associated protective stops, and I’ll be sure to alert you asap when it’s time to make your next move!
Good investing,
Mike
