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TRADING IDEAS: SHORT-TERM TRADE (LONG) UGA; LONG-TERM CALL OPTION PURCHASES NEM, NOC And LMT

|Includes: LMT, Newmont Goldcorp Corporation (NEM), NOC, UGA

HAMSTRUNG FED MEANS RATE HIKES ON HOLD AGAIN

Jun 05 2:41 AM•NEM, UGA, BP, NOCComment!

Disclosure: I am/we are long NEM.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

GOLD AND SILVER stocks were (just) resting. All it took was a little cold air breathed on interest rate speculation (by the terrible jobs report) and pm stocks woke up with a fury. This is where we want to be for the next couple of years. Gold and Silver are bullish from 2001-2019. The FED tried to dampen this truth -- because the reverse side is that stocks are bearish from 2001-2019 -- and essentially 'borrowed' trillions from the future to buy stocks, commodities and housing TODAY to keep the truth from becoming obvious. My view is that we have been in a BEAR MARKET since 2001 but what appears like free money (but which in truth is MASSIVE DEBT) has been the "Great Cover-Up". We should have been reducing debt since 2001 (private debt especially, AND public debt) -- instead we have been trying to hide the debt, diminish its important. Zero interest rates are NOT normal -- and are badges of fear and surrender by our leadership which is terrified of the truth and unwilling to tell us the truth, for fear of losing the popularity contest, upon which our political professionalism insists. KEEP SMILING. Walk only on the Sunny Side of life.

The political destruction of fiat currencies is making gold and silver the darlings of the (fear) party. So that is where we want to be.

Are stocks weakening? Not as long as we have negative interest rates. NIRP is a short-term fix for a bankrupt economic vision -- and this benefits gold and silver. If and when the next Paul Volcker appears on the scene, then gold, silver, stocks, housing and health-care and higher-ed bubbles are in BIG trouble. "BIG to BOG" James Joyce wrote in Finnegans Wake, distilling the history of historical cycles into this sympol cipher of Day and Night, Ego Inflation followed always by Ego Destruction.

Anyway, stocks are hot: 75.33°; our BEAR RATIO (Ease of Movement Variable) is .3569 compared with 2.86 on May 18. What this means is that 63% of the (long-only) issues we follow are overbought, and only 22% oversold. If we had been tracking these numbers longer, we would have a better idea what this means in terms of trading. We have not; and so we don't.

Our short-term trading systems (VIX1 and VIX2) took a beating at the end of the week because of unwanted and unwarranted exposure to the anti-gold crowd. We warned again and again that gold was not topping; still we followed our system into the Waters of Convention. Not to worry. We have learned a lesson.

We learned another lesson. We learned through our AMSC trade that our original plan to use VIX trading systems only for volatile 3x ETFs might just make sense. We will unveil a new VIX system for trading the non-volatile issues we follow also. The trades listed below are from this new system, which is NOT as short-term as the VIX1 and more appropriate for non-volatile 3x ETFs.

This system received BUY SIGNALS are some stocks we LOVE. STZ, Constellation Brands, is #2 on our CGTS Relative Strength ranking. We also love NOC, SHW, LMT, and, of course, NEM, Newmont Mining. Our ranking of potential investment return, however, lists calls in UGA, BP, BRZU and NEM as the top choice of this group based on a combination of option cost and trading volatility.

TRADING     CGTS    
SYSTEM Issue/Option Close Perform % Proj Gain OPT
    Opt Price Points on $1000 inv RANK
LONG          
VIX SS UGA, US Gasoline ETF 28.13 100%    
  UGA JULY (15) 28 calls 1.65 6.31 3824.24 1
VIX SS STZ, Contellation Brands 153.4 98.26%    
  STZ July (15) 150 calls 7.2 5.6 777.78  
VIX SS SHW, Sherwin Williams 291 97.66%    
  SHW July (15) 290 calls 8.8 5.41 614.77  
VIX SS PXD, Pioneer Nat Res 159.75 96.56%    
  PXD July (15) 155 calls 9.7 6.52 672.16  
VIX SS NOC, Northrup Grumman 215.18 95.52%    
  NOC July (15) 210 calls 8 5 681.25  
VIX SS NEM, Newmont Mining 35.4 95.59%    
  NEM July (15) 35 calls 2.42 4.78 1975.21 4
VIX SS BRZU, Brazil Bullish 3x 78.97 85.71%    
  BRZU July (15) 78 calls 12.5 39.48 3158.40 3
VIX SS BP, British Petro 31.88 98.43%    
  BP July (15) 31 calls 1.66 5.43 3271.08 2
VIX SS LMT, Lockheed Martin 238.92 96.63%    
  LMT July (15) 235 calls 7.3 6.86 939.73  
VIX SS MCD, McDonalds 121.35 97.83%    
  MCD July (15) 120 calls 3.35 5.8 1731.34 5
           
SHORT          
VIX SS KWT, Solar ETF 45.684 95.25%    
  no options 45.684 18.89 413.49  
VIX SS NILE, Blue Nile 26.01 90.62%    
  NILE July (15) 30 PUTS 4.7 5.12 1089.36  
VIX SS TEVA, Teva Pharm 53.79 98.55%    
  TEVA July (15) 55 puts 2.53 2.71 1071.15  

When we look at the charts of some of these issues we will see pretty clearly that NEM is the best trade of the group technically, and NOC and LMT look like wonderful long-term buys for stocks to add to a long-term portfolio.

NEM is trying to get through the roof in the top-pane Trend Direction.

UGA is statistically the best risk/reward picture of this group.

BP is a strange chart at the moment because it gave a BUY SIGNAL, went flat, and is now giving a second buy signal. Note the Trend Direction of the uptrend line in the top pane: we would like that to be more vertical; it is merely reflecting the fact that BP has been stuttering a bit. Like it but not as much as the other two.

I already own BRZU -- and have been suffering with it. Volatile; will/could break your heart. If you are not allergic to risk, this one is a pretty good heart-attack machine.

NOTE, this VIX System requires that EMV (dark brown line, bottom pane) always be overbought to buy with PROP1 in the BUYZONE. Our SELL signal requires EMV overbought status (+1) and trend confirmation.

Love these two as charts -- hard to go wrong when the world is cratering and the military is getting restless. Instead of trading these two short-term I would recommend buying long-term calls on these two and adding them for the long haul.

Have a good weekend.

MJC, CGTS

Disclosure: I am/we are long NEM.