A Case for Oil vs Gold 52916

Which is stronger right now? Oil or Gold?

I have put some money in Oil. Not Gold. Looking at the charts, I see a down signal on GLD. Also Gold Miners ETF NUGT has taken a big hit lately dropping from over $100 to $70. Being a leveraged ETF it moves quickly, up or down.

The ETF I have purchased for oil is USL. Currently it has worked off a bottom and has slowly been on an incline upwards. See chart below on USL. Fundamentalists will provide the reasons why. We have both a major and minor signal pointing up. Summer months and more travel and higher oil consumption? If the market’s mood changes I will be quick to exit. I would rather see my account creep upwards at a slow pace than hold and pray over the next 5 years while it takes a beating. That is my conservative mind set.

OIL (USL) CHART

 GOLD (GLD) CHART

Additionally I have a buy signal on QQQ and DIA. That means a buy signal on the Nasdaq 100 ETF and the Dow Jones 30 ETF. My cautious play with that is to sell some QQQ vertical put spreads with a delta of around 40 and with a near month expiration. My plan is to hold it for a couple more weeks with the expectations that it will go sideways or up, and I would keep the credit premium. The max gain and loss on this transaction is capped. It is also a cautious play.

QQQ CHART

I am also seeing a buy signal on EEM (Emerging Markets ETF) and on IIF, the India Fund. Think I will put in for a small buy on the IIF. It can move up quite rapidly. But if it goes down, then I will follow the exit signal and take a small loss. It seems a safer play to buy IIF with a corresponding buy signal on EEM… no guarantees though!

401K Monthly Analysis – Sell in May and… 5/8/16

It is May again and the old proverb “Sell in May and Go Away” comes to mind. But will that be the right move?

When I did my monthly analysis on my previous employer’s 401K where I have funds in, the top choice was to stay in Fidelity Govt Income Fund. I am currently 20% invested in that and rest is money market. I am cautious on my investing and see no point in taking unnecessary risks right now. The market is pretty murky and one cannot clearly see the bottom. See my chart below on DIA (Dow Jones 30 ETF). It shows a divergence in price versus the indicator above it.  See the orange line sloping down off the indicator’s last two peaks while the green line off the price peaks is sloping upwards. That suggests that although price is rising, this is not a strong move.

The latest jobs report was tepid. To me that is actually good. I would rather see slow growth than a rapid one and us reaching full employment rapidly and interest rates rising. As it is we are at 5% unemployment which is historically a low number. It is certainly a lot lower than 7 years back when we had 10% unemployment and jobs were tanking. China showed lower exports and imports - shrinking. And my emerging markets chart (EEM) has fired off a down signal. See chart below.

The US dollar actually dropped below its support level. And what has been rising lately is Gold. See chart below on GLD. What has been rising very, very rapidly is the 3xleveraged Gold Miners ETF fund… NUGT. I will write about that in my next blog.

Meanwhile I will look at cautious trades such as selling vertical call spreads on market ETFs such as DIA..