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Robert Edwards Trading Ideas For June 7, 2013

|Includes: Cleveland-Cliffs, Inc. (CLF), DUST, GDX, GLD

Australian Dollar

Buying all new lows in the Australian Dollar is the best commodity trading idea I have right now. When the June Australian Dollar contract dipped to the recent 95.15 low, I had said to buy 95.50. You could have banked a pop to 97.82 within a couple days. My next buy zone was 94.30 which barely caught the bottom Wednesday night, June 5, 2013, when we dipped to a new low of 94.29 and then reversed to hit 96.69 Thursday morning. I sold out completely at 96.15. However, I am now buying again last night and this morning as we dipped again to a low of 94.60. I like trading two accounts. I bought a contract in one account at 95.33 and a contract in the second account at 94.83. If we should drop to 94.33 when I would buy another contract in the first account again, a dollar lower than the first one. If we should drop to 93.83 then I would buy again in the second account. This way I am buying every 50 cents we drop, but by alternating the accounts, I am spacing the purchases a dollar apart. When I bought at 94.83 then I day traded that contract several times as we traded back and forth from the 94.80 area to 95.20. I remain extremely bullish due to the extremely high short interest level and oversold condition of this market. I am very bullish buying 94.50 to 95.00 for the next couple days and selling out 96.00 to 96.50. When we pop a couple dollars, it is time to get out and get ready to buy again on the next dip.

Gold, GLD, GDX, DUST, etc.

Like the Australian Dollar, gold has a very high short interest, which is keeping it from going down right now. I foresee the tight trading range continuing for awhile longer. For gold to fall from here, it must first rally a bit to force the shorts out, and get some bulls to buy so they can be whacked on the next upcoming dip. Right now, I like buying August Gold futures 1385 to 1410 and selling 1425 to 1450. I am not bullish the gold miners when GDX trades above 30, and feel 31.00 is formidable resistance. I feel one can go short the gold miners as well by buying the triple ETF DUST on all dips. When DUST fell to 75 recently, it was able to pop to 81.64 the following day. The next trading day DUST hit a low of 70.41, followed by a high of 78.86 the following day. Yesterday we hit a low of 71.00 I believe DUST is a buy on every $5 selloff, so if you buy 70 to 71, you can buy again 65 to 66, and again at 60 to 61 and so on.


This stock is basing at $18 and is due for a $3 rally to begin at any time, to $21. After we consolidate for a few days and fall back to maybe $19.50, I would then anticipate a move to $24 to $25, taking out the recent high of $23.75. As traders are starting to see iron ore prices base in the $100 to $110 area, CLF should likewise base in here and prepare again for a move higher out of extremely oversold lows. Slowly all the steel slowdown bad news is getting priced in and then some. I feel anything under $18.50 is a fabulous buy in CLF.

Naked Lean Hog Call Writing

Lean Hogs have rallied $5 to $6 in the past 3 weeks, aided by the news that China is buying Smithfield Foods. I live just a few miles away from the Smithfield, VA headquarters of the company. I enjoy eating ham and I love selling out of the money calls and puts in Lean Hogs, that are set to expire in the next 2 to 6 months. I am now watching for a spot to sell some out of the money August, October and December Lean Hog Calls trading at least $5 out of the money. I want to fade the current rally as I feel it is not sustainable due to the large pork supplies, presently trying to compete with ample poultry supplies.

Other Markets

I presently do not like the action in the stock market as I feel it is too treacherous trying to play either the long or short side right now. I presently have no conviction regarding market direction, and feel it is prudent to stay away. I can't remember a time when I was so repulsed by the high valuations of the momentum crowd darlings. Likewise, I am appalled by the absurdly low valuations of the hated stocks that just can't catch a bid. Very, very slowly the hot money should soon start to return to the hated, beaten down stocks so that the recent rally can be broadened out. If the laggards never get bought and catch up a little, don't be surprised to see the momentum darlings come crashing down this fall.

Disclosure: I am long CLF.