September 14, 2011 – What's On the Menu?

Featured Trades: (WHAT'S ON THE MENU?) (FXE), (EURO), (UUP), (GLD)

 

4) What's On the Menu? I am posting these charts below from a variety of sources outlining some trades that I may execute in the near future. Call it my 'short watch list'.

Look at the two longer term charts for gold, which seems to be putting in a more convincing top by the day. The first one shows that gold is clearly stalling at the top of a three year up channel. The second shows the price action for this year, and could be interpreted as a ragged 'head and shoulders' top. Message: use price spikes to the upside to buy out of the money puts two months out.

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The next chart for the PowerShares DB US dollar index (UUP) is showing that we have seen a major sea change in the US dollar, breaking the recent downtrend and reversing a multiyear decline. You can witness further confirmation of this in the subsequent chart for the Euro, which has 'breakdown' written all over it. If you have any doubts, look at the third chart, which convincingly shows that we have been in a three year channel pointing south all along. Message: use rallies in the Euro to buy out of the money puts starting at the 50% retracement level for the recent move at $1.38, or buy the leveraged bearish Euro ETF (EUO).

Just thought you'd like to know what I was thinking.

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