GST Issue #210
Dear Member,
I pulled an all-nighter last night, precisely because I did not like yesterday’s action in gold. Yes, gold did not close above the $1,210 level I told you about in the previous issue. That’s the good news.
But the bad news is this: We could soon see gold stage a possible cycle inversion, meaning that it could indeed rally one more time, possibly as high as $1,300.
At the same time, the equity markets are looking very top heavy to me. All of my indicators continue to suggest that a pullback is the next big move. Testament to this is how the stock market performed yesterday, hardly rallying at all, in the face of amazing results coming out of Apple.
All this is further confirmed by my good friend and colleague, economist Martin Armstrong. In summary, he and I both agree that …
1. Stocks could be on the verge of a sharp, sudden correction heading into May/June.
2. Interest rates could suddenly decline more, as the bond market rallies due to the flight of capital out of stocks. And …
3. In turn, the above two forces could cause one more rally in gold.
Therefore, it’s time to make a strategy adjustment to take advantage of the above.
I now recommend the following:
A. Add to bearish positions on the U.S. equity markets. See the specifics below.
B. Take on a long position in a bond ETF to take advantage of a rally there.
C. Hold the existing gold ETF, but be on alert to exit it, and reverse to a long position, on a moment’s notice.
The first two are self-explanatory. I am not reversing to a long position yet in gold, as it is still possible that gold may not rally, and instead, slump with stocks, just as it did during the 2008/2009 stock market crisis.
In other words, it’s simply too soon to say on gold. That said, I will not hesitate to pull the trigger on the bearish gold ETF (DZZ, with a good-till- cancelled stop at $6.43) … exit it … and reverse to the long side of gold to catch one more rally. But please wait for my signals.
As to other open positions, hold ProShares UltraShort Dow30 (DXD), with a good-till-cancelled stop at $19.25.
Hold the PowerShares DB Agriculture July 2015 put options. These continue to look good with grains slumping more.
Also hold the iShares China Large-Cap May 2015 put options. These are underwater, but with stocks entering into a possible sharp correction, China will not escape it and these puts – even though they don’t have much time to go before they expire – could still soar.
Now, to the specifics of the trades I recommend today …
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For each $25,000 you are trading per this service: 1. Buy 200 shares of Direxion Daily S&P500 Bear 3X ETF, symbol SPXS, at the market. Place a good-till-cancelled protective sell stop at $15.15. I expect to tighten this stop quickly, but for now, please use this wider than normal stop. 2. Buy 100 shares of Direxion Daily 7-10 Year Treasury Bull 3x Shares ETF, symbol TYD, at a price of $48.70 or better, good till cancelled. When filled, place a good-till-cancelled protective sell stop at $42.49. |
Go ahead and get your orders in and stay tuned!
Best wishes,
Larry
