Issue #125
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Recommendations: 1. Sell ALL of your shares in the Velocity Shares 3X Long Gas ETN (UGAZ) at the market and cancel your protective sell stop at $24.11 stop. 2. Buy 100 shares of the Velocity Shares 3X Long Silver ETN (USLV) at the market with a protective sell stop at $35.12, good till canceled. |
Dear Member,
Lots happening, so let me get right to it. But first, please act on the above alerts as soon as possible, exiting your shares in UGAZ and repurchasing the VS Shares Long Silver ETN.
Over the past several trading sessions the markets have been whipping around like crazy, buffeted by statements from Janet Yellen, from the European Central Bank, from the crisis in Russia … to a new round of rising tensions in the South China Sea.
Nevertheless, the major trends that are now in effect and that are forming in other areas have not changed. Let me now tell what I am seeing in each sector.
First, the precious metals: Gold and silver remain in a violent, wildly swinging bottoming formation. Though on the surface they appear weak, with recent rallies caving in, overall, my models are getting more and more bullish.
Two chief reasons: First, the ramping up of the war cycles. Fundamentally, as I have explained previously, this is causing cycle inversions in the short-term, which is why you are seeing rallies that give way to declines. That’s normal when there is a cycle inversion process going on, but extremely bullish overall for the precious metals.
Second are the trading patterns themselves. Sharp selloffs are not always a sign of weakness. To the contrary, they are often exactly the opposite: The market’s way of throwing most investors and traders off track, off the bucking bronco in a sense, so that it can simply stampede higher.
Hence, my alert above, where I recommend re-entering the long side of the VS Shares Long Silver ETN (USLV).
If the precious metals are truly bottoming, as I believe they are, then I will be looking to accumulate positions for what could prove to be a big move …
Up to $1,600 in gold, and better than $24 in silver, over the next few months. Hold your position in the VS Shares 3X Long Gold ETN (UGLD) and maintain your protective stop.
Be ready to add to these positions on a moment’s notice.
Second, the dollar:
Although the dollar has been hit of late, my models continue to show that it is bottoming against most major currencies, namely the euro, pound and Swiss franc.
That’s especially true given yesterday’s spike higher in the euro, then its collapse, as Mario Draghi stated that the European Central Bank will be forced to start printing euros to devalue the currency starting as early as June.
This will naturally bolster the U.S. dollar. Hold your position in the PowerShares DB US Dollar ETF (UUP) with your stop in place.
Third, the stock market: It’s still topping, believe it or not, in a wide-ranging distribution pattern. Keep in mind that the long-term remains very bullish for U.S equities — not based on the U.S economy but instead on international capital flight.
This means that the downdraft I expect in the short-term will be swift and sharp. My strategy here is to catch the downdraft with my existing short position and then reverse to a long position to capture the broad indices next leg(s) up.
Now, a note about crude oil: Crude oil’s patterns, like gold, are changing, due to the influence of the war cycles. I am seeing the potential for one more decline, then a sharp rally. I will be looking to recommend a position in crude oil on that decline, so stay tuned.
As to natural gas, the recent decline has violated some short-term support levels, so please exit your position in UGAZ this morning.
Best wishes and stay tuned …
Larry
