I’m buying back the PCLN puts I sold for quadruples earlier this week. Using December $950s. And that’s it for the trading for me today.
Dollars, currency wars, volatility and gold. Lots to hit on here today and this will be one of the rare times you will see me sight the dollar action as a potential impetus for stock market direction. The dollar and other currencies have been in turmoil of late, with hard moves and some serious changes in direction over the last six months, especially.
It’s not the direction or the magnitude of currency movements that causes me sit up and take notice, it’s usually the velocity of currency movements. That is, extreme volatility can indicate something underlying that actually matters.
With Treasuries and with currencies, the trends can stay in place for a rather steady long time vs. say stocks and commodities. And so I rarely factor dollar/currency movements into my analysis and outlook for the stock markets and other markets we invest in. But when the dollar and/or a currency suddenly changes direction and/or puts on a big move in one direction over a small time frame (say measured in days instead of a slow turn or slow big move build up over months or years), then I start to dig a little more on what might be causing that movement with such velocity.
So what am I reading into the current velocity and volatility in the of the movements of the dollar vs the Euro $EURUSD vs the Yen vs gold ? Simply that there’s some serious banksters and traders out there that are flipping out about the debt resolution this week and/or something else. It’s obviously the “something else” and the simple fact that these ongoing currency wars keep escalating that has my spidey sense tingling. Something’s got the dollar and all these other currencies making big moves and sometimes wildly short-term contrarian moves to their recent trend.
Nothing to freak out about yet, but something to note, as I’d written earlier. The two best sites for following the currency wars, are two sites that I contribute to anyway, so I’m on them all the time. The MarketWatch.com Currencies Page and the Scutify.com Currencies Page.
As for my recent hedging and bubble-stock put buying binge and what I’m doing there today since the markets big rally here this morning — well, I don’t like the buying or the selling of much of anything right here right now. We will have plenty of future trading opportunities to both capture gains and to hedge our portfolios. I’d like to see the market rally towards its all-time highs in the very near-term and that would likely set us back up for a major sell-the-news-reaction when they “negotiate” a so-called budget agreement.
All that said, if you were stressing out about the big market pullback this week, you might want to consider just trimming back a little exposure and raising some cash so you can think straighter.
And in yesterday’s “trading updates” column, I neglected to mention a loser of mine I should update you on, even though the update is that there’s been no change in my position. That is, the GDX sure needs some sudden spiking if we’re gonna end up making money the remainder of our GDX calls left over from recent profits I’d noted taking on part. I am holding my GDX calls steady for now, but have lost some confidence in their ability to pay off for me by early next year. Lots can happen before then though, of course.
And as for my small SLV long, well, nothing’s changed there either. I’d rather have silver coins and bullion than the $SLV if you’re looking at the next few years. I don’t trust the SLV long-term, but I do think SLV will rise with silver over the next few months and into next year.