Good day and hope you had a good long weekend everyone. I hope you
found some time to enjoy what you love to do most with the people you
love most. Last week’s horrific event over in Manchester clearly proves
life is precious – and can often be short – so we should always make the
most of it.
The markets are a bit mixed this morning, which is probably to be
expected since they’ve done nothing but rally sharply off of last week’s
lows. The rally for the most part has been pretty broad based – ex a
few sectors that have pretty much lagged all along. More on that in a
second.
First, we got the break down in oil yesterday we’ve been anticipating since last week, so all good there for those who picked up a bearish leveraged oil ETF following our short call. You’re likely not all that far in the money on the trade, however, based on yesterday’s sharp reversal, we do expect oil to continue lower from here – albeit not without some volatility.
At this point, it’s probably a pretty good idea to use yesterday’s high as a backstop. In other words, if for some reason oil reverses itself sharply back to the upside, and more importantly convincingly breaches $52 per barrel, you’ll probably have to post the loss. If, however, it continues to move lower from here, you can use either $45 and change, or better yet $42 and change as your end goal targets – with the latter making
Gold is surprisingly staging some strength this morning, something we really weren’t expecting. However, there’s no question on an extremely long-term basis the price of gold isn’t going to continue stick around the lows we’ve seen in recent years. It’s more a matter of how it behaves on a short-term basis, with a very clear bullish bias over the next few years.
We’re still convinced we’re in the early stages of a reflationary economy, one that should continue to create opportunities in commodities on a very long-term basis, hence all of our recent commentary regarding copper and other industrial based commodities. Even steel should do well, along with coal and any other high demand type commodities.
First, we got the break down in oil yesterday we’ve been anticipating since last week, so all good there for those who picked up a bearish leveraged oil ETF following our short call. You’re likely not all that far in the money on the trade, however, based on yesterday’s sharp reversal, we do expect oil to continue lower from here – albeit not without some volatility.
At this point, it’s probably a pretty good idea to use yesterday’s high as a backstop. In other words, if for some reason oil reverses itself sharply back to the upside, and more importantly convincingly breaches $52 per barrel, you’ll probably have to post the loss. If, however, it continues to move lower from here, you can use either $45 and change, or better yet $42 and change as your end goal targets – with the latter making
Gold is surprisingly staging some strength this morning, something we really weren’t expecting. However, there’s no question on an extremely long-term basis the price of gold isn’t going to continue stick around the lows we’ve seen in recent years. It’s more a matter of how it behaves on a short-term basis, with a very clear bullish bias over the next few years.
We’re still convinced we’re in the early stages of a reflationary economy, one that should continue to create opportunities in commodities on a very long-term basis, hence all of our recent commentary regarding copper and other industrial based commodities. Even steel should do well, along with coal and any other high demand type commodities.
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