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Hey DF, My sentimentrader.com subscription is back on so here are some updates:
ROBO Put/Call Ratio: The small option traders are cockier than ever.
Gamma Exposure is climbing too.
Fear/Greed Index (on Nasdaq) is at highs not seen since 2000
Thanks to Sentimentrader.com
You know, Nate jokingly asked last week why should he sell his gold because there was nothing to buy. Gold and Silver are such a “no brainer” investment that I think the market will punish us for that at some point. So I’ve been stewing on the question….
So what is cheap?
- VIX calls are not cheap but they are getting cheaper.
- The USD is cheap, so maybe UUP (Invesco USD Bullish Fund) could become a play.
- DBA, the Invesco Agriculture Fund, still looks cheap to me but it is staring to turn up. This might be a great inflation hedge too, especially if gold goes south.
- XLF, the rotten banksters, looks relatively cheap.
- Maybe JETS, the airline ETF. It’s definitely cheap.
- Maybe XLE, energy, is relatively cheap too.
What am I missing folks? What is hated right now? Thanks for your input.
I’ve got an observation about why the miners are topping out: they are stocks.
If I remember correctly, the miners starting declining before the market crash in the Spring.
Once the S&P hits the all-time high, the few remaining bears will be washed out. Mr. Market should then provide a little deflationary whipsaw to leave the Robinhooders lost in the forest.
The VIX Term Structure hit a low yesterday that typically proceeds a spike in the VIX over the next few weeks. Although I have bought some VIX calls, I continue to wait for the VIX to fill that gap below 20 before I go “all in”. Maybe I shouldn’t wait any longer, it’s hard to tell.
I’m sure the FED would love another taste of market panic so they could justify buying equities. It would also force the hand on the politicians to send me another check. The last check I used to help pay my taxes. What a waste.
Nate: what on earth would you with the proceeds if you sold now?
Toilet paper, of course. I like the one with Trump’s face on it, but it does give me a rash.
Steve: Which call options are you buying?
These are the PM call options that I own:
- SLV Jan 21 2022 45 call
- GDX Jan 21 2022 55 call
- GDXJ Jan 21 2022 70 call
- SILJ Feb 19 2021 20 call (longest option available)
FD: Be careful taking investing advice from a lucky Texas dumb-ass.
What have you bought?
1) buy gold before its too late!
2) hold; gold’s time has finally arrived (Gold 2000 hats!)
3) sell gold now, and try to re-enter on the inevitable correction
4) sell gold now; this rally could vanish at any moment!
Emotionally, I am 4) all the way. Take the money and run! I am talking about my trading account, not my physical gold.
HOWEVER, with GLD and SLV trading at a premium to NAV, I’d be a fool to abandon ship now. Check out this chart to see what happened the last time these funds traded at such a premium to NAV:
If we can believe the historical precedent, this PM bull market is just beginning. Accordingly, I have moved all my call options out to 2022. That makes it easier to take short term pain and puts any gains in the long-term capital gains tax category (maybe).
So starting again with my data:
DF, I know I’m often critical of your covid/political analysis, but I really was agreeing with you this time. The Marcus Aurelius quote was just to say that we can’t trust what we see or hear, whether it comes from the news, the stock market, or the neighbor.
I do think you give way too much credit to the politicians, however. Whether it is TeamBlue or TeamOrange, they are all the same: self-serving idiots.
My favorite quote of 2020 applies: “everything that happens in an election year, regardless of how disconnected it might seem, is about the election.”
My favorite quote for 2020:
Everything we hear is an opinion, not a fact. Everything we see is a perspective, not the truth.
– Marcus Aurelius
I found this pretty cool inflation index called the Chapwood Index.
They use real world prices submitted by real people in various cities to track price inflation.
The highest years inflation rates seem to be in the big cities on the east and west coasts. If you live in these cities have to make 10-12%/year on your savings just to break even. Holy cow!
Thanks for the bond info DF.
I’m went full contrarian this morning and bought my first XLF call option. It’s a long contract (Jan 2022) and moderately out of the money.
I had to have a little exposure to equities and XLF call options are super cheap (for good reason). I figure eventually the tech stocks will falter and I hope some of those profits will rotate into bank stocks over the next year.
I know you just love the banksters so I had to share.
Edit: Fixed date
Good Monday morning to you DF, and thank you for another excellent report!
Looks like something has changed for natural gas. I have a couple of call options on UNG to offset inflation in my electricity bill and they are moving up significantly (35+%) today. The last few months they floundered around, only rising on days when the market was down.
Was there some news regarding natural gas?
DF, I have another one of my famous dumb questions for you: Are we overlooking the action in the bond market?
TLT is signaling strong deflation ahead while the dominant market narrative is all about inflation. Sure, it could just be the FED buying treasuries creating a false signal but what if it is not so simple?
What is that saying?
“It’s not what you don’t know that hurts you but what you think you know for sure that just ain’t so.”
The bond market is typically the smart money, maybe they are selling to the FED or maybe they are buying with the FED. What do you think?
Thanks for your time and brain cells.