Update, Plus Two New Trades And An Important Note …

It’s time to pick up the pace. All around the globe, equity markets, foreign currencies, and sovereign debt markets are now starting to slide, right on target with the critical October time period I have been focusing on and telling you about.

The U.S. stock market remains weak at the knees, poised to slide into mid-October. Meanwhile, Europe’s equity markets are looking weaker and weaker, with Germany’s DAX about to start another leg down. More on this in a minute.

At the same time, the U.S dollar is consolidating nicely, ready to ramp higher while the euro currency is literally ready to implode again.

Gold meanwhile, is completing a very short-term cyclical correction and should soon rally into mid-October, before it starts to slide into what could be a final low in mid-November.

I will cover the most important markets in my live webinar tomorrow – plus your questions – so be sure to attend it.

But right now, it’s time to get two new trades on.

Specifically, I recommend buying …

1. ProShares UltraShort FTSE Europe (EPV) – a double inverse leveraged ETF on Europe’s 500 large- and mid-cap companies.

2. Call options on ProShares Ultrashort Euro (EUO), an inverse ETF that seeks to profit from a decline in the euro currency. With call options on EUO, you will get even more leverage on a decline in the euro, but with strictly limited, pre-determined risk.

Both European stocks and the euro currency, as noted above, look terrible, from a cyclical point of view as well as from my analysis of their chart patterns.

Here is the DAX. Notice how the DAX is now likely to close on a monthly basis below the bottom of the upwardly sloped median line (see red box on chart).

This indicates a high probability that the DAX will now slide to near the 8,000 level, the lower downward-sloped purple line, which I call a cycle line.

That would be a devastating 1,600 point decline in the DAX, nearly 20%.

Meanwhile, the euro currency is hovering just above a minor support level, boxed in on this second chart, the euro chart.

All my system models, however, indicate that the euro will soon plunge through that support level …

And begin a substantial new leg lower, ultimately reaching below 1.00 with the dollar, probably before year-end.

Order details for the above recommendations in a minute.

First, an important note: To make it easier for you to determine how many shares (or options) to purchase, and to accommodate members who are trading different amounts of capital, including those of you who are using less than the suggested $25,000 …

All new recommendations will be expressed in terms of the percentage of capital you should use to buy the recommended shares (or options).

For instance, in today’s new trades, I recommend using 5% of your trading capital for each position. Suppose then that you have $15,000 you are trading (total equity, including gains or losses on open positions).

Your first step would be to calculate the dollar amount you should allocate for the trade by multiplying 5% of $15,000. The result = $750.

Your second step would be to translate that into the number of shares you would want to buy of ProShares UltraShort FTSE Europe (EPV).

For now, let’s use Friday’s closing price of $62.61 as an example. You are going to allocate $750 to this trade. $750 divided by the $62.61 means you should purchase 11.97 shares.

Obviously, you cannot purchase 11.97 shares, so you round down (always round down) and purchase 11 shares. Your protective stop would be for the 11 shares as well.

For options, the calculation is the same. You calculate the percentage of capital I recommend deploying based on your total equity, then divide that figure by the recommended price I specify for the option (bearing in mind that the premium for each option should first be multiplied by 100, since equity options represent 100 shares of the underlying instrument).

The performance table will be updated shortly to reflect the new calculation method. If you have any questions at all, be sure to contact Customer Service, who will be more than happy to help you with this change.

A couple of additional items:

A: For the options on the inverse euro ETF (EUO), I recommend the January 2016 call options with a strike price of $25.00. They are inexpensive and give you plenty of time to take advantage of a decline in the euro, plus massive upside leverage coupled with strictly limited risk.

B: If you do not want to buy the call options, for whatever reason, you may purchase the underlying instrument, ProShares UltraShort Euro (EUO). Buy it at the market using the same allocation of funds recommended below and be sure to enter the below protective sell stop as well.

Now, let’s get moving!

Go ahead and act on these new recommendations as soon as possible.

Hold all other positions and stay tuned …

Best wishes,

Larry