We have been following our trade in DUST (Long), the Gold Stock Short ETF. We are doing well in this trade so far -- up almost 11% at the moment. We are focusing on this trade to show the readers how the trading indicator, T.5 Simple, stairsteps up in a bull move, and stairsteps down in a bear move.
The Yellow indicator in the chart acts as a king of magnet that pulls prices up (or down). To sell, we want CGTS112 (yellow) to be at 7 and the stair-step indicator to break down -- which we will demonstrate as this occurs.
(Click charts to enlarge them.)
Before making this trade, we consulted the XAU, Gold Stock Index, for confirmation of gold stocks coming weakness.
We don't believe that bonds are in trouble, although they have been hammered of late. Look at the very serious bottoming of TBond Yields -- TBT, Ultrashort 20+ Year Bond ETF. But then look for a bottom in the monthly chart: no where in sight. This tells us that the short-term selling of TBond is overdone. No bottom-building in sight on the monthly-chart.
In truth, why would TBonds collapse? Only if foreign countries decided to forsake them. Clearly the strong Dollar makes TBonds the clear safe investors' choice. Traditionally, investors sell bonds when the recessions are ending. But the global recessions are getting worse, and will continue to get worse. Also, TBonds are collateral used in the derivatives market, where hundred of trillions of dollars are being bet on interest rates NOT rising. Why would the FED raise rates? 1) To support the US Dollar as the only currency choice in the world; 2) to keep insisting that gold is NOT a currency -- to keep investors from choosing gold instead. When all the world's currencies are destroyed and all the world's countries and banks have negative interest rates, then there will be no choice but gold. Would you rather buy gold that pays no interest, or deposit cash in a bank and have to pay the bank to hold your cash?
Oil is similar. The daily chart is making noise of a bottom; however the monthly chart is having none of it so far.
Trading Signals today: Long CVV, CVD Equipment, short-term trade; Short SGG, Sugar ETF.
Michael J. Clark, CGTS
Disclosure: The author is long DUST.