Interest rates are rising again, and it seems like a good time to figure out the residual effects of this so I can find a profit source.
My go-to is of course TLT, the ETF tracking 20-year+ bonds, but that’s more of a signal than an entry point. But it’s important to check the charts and see what’s going on, so let’s start there:
As you can see, TLT continues to drift down toward recent lows after firming in March. Bond yields are no longer falling, and this is a good sign for investors in the US Dollar but a bad sign for things like Bitcoin, Gold, and Silver. When bond yields rise, there IS an alternative to the stock market. When bond yields fall toward 0% like they did through the whole Quantitative Easing process, people tend to buy into precious metals or dollar-alternatives. That’s not the case anymore. Perhaps the only thing holding these assets up is concern about the debt ceiling, and while we can never rule out a default, it seems unlikely that the government would let that happen given historical precedence.
Let’s look first at Bitcoin, here represented by the ETF BITO:
Secrets Revealed–Get The Tips That Help Market Makers Spot The Great Options Trades Others Don’t See–Click Here
Bitcoin is testing the 100-Day Moving Average and holding for now, but it’s clear we’re not in a major bull market. Now, if the 100-Day Moving Average does hold, we could see a repeat of the March move where consolidation and a pullback were replaced with a nice rally. So, this isn’t the spot that I want to make a bearish bet – it’s too uncertain with investment flows.
Let’s try Silver, represented here by the SLV ETF:
SLV has already dropped pretty aggressively. I could see a move back to $20, so there’s some leverage here still. But let’s just get to the point and look at GLD, the Gold ETF:
GLD hasn’t had a major fall the way TLT, BITO, and SLV have. Rather, GLD continues to hold, and is getting very close to an inflection point. The lows of the last 2 months could trigger stop-loss orders that cause liquidation of long positions. That’s a potential major market mover in the commodities space.
GLD looks like the winning place for me to place that bearish bet given the leverage, but I’m also looking at many of the gold miners given this recent move. These are names that are highly correlated to the movement in gold prices, so if gold does make the potential fall that I can see coming, they can also generate amazing returns. I’m looking ahead to my next Outlier Watch List to see if I can add a gold miner or two for subscribers to consider given the setup that’s happening right now. And that’s because if the market continues to let bond yields rise, I can find major options leverage for that move.
So please go to https://optionhotline.com to review how I traditionally apply technical signals, volatility analysis, and probability analysis to my options trades. As always, if you have any questions, never hesitate to reach out.
See Related Articles on TradeWinsDaily.com
Where The Money Is Going And How To Find A Trade
Chart of the Day: Checking on Albemarle (ALB)
Buy Zone Alert for Biogen Shares
What You May Not Realize About Indexes
Protecting Wins… Again
Auto-trading, or any broker or advisor-directed type of trading, is not supported or endorsed by TradeWins. For additional information on auto-trading, you may visit the SEC’s website: All About Auto-Trading, https://www.sec.gov/reportspubs/investor-publications/investorpubsautotradinghtm.html
TradeWins does not recommend or refer subscribers to broker-dealers. You should perform your own due diligence with respect to satisfactory broker-dealers and whether to open a brokerage account. You should always consult with your own professional advisers regarding equities and options on equities trading.
1. The information provided by the newsletters, trading, training and educational products related to various markets (collectively referred to as the “Services”) is not customized or personalized to any particular risk profile or tolerance. Nor is the information published by TradeWins Publishing (“TradeWins”) a customized or personalized recommendation to buy, sell, hold, or invest in particular financial products. The Services are intended to supplement your own research and analysis.
2. TradeWins’ Services are not a solicitation or offer to buy or sell any financial products, and the Services are not intended to provide money management advice or services.
3. Past performance is not necessarily indicative of future results. Trading and investing involve substantial risk. Trading on margin carries a high level of risk, and may not be suitable for all investors. Other than the refund policy detailed elsewhere, TradeWins does not make any guarantee or other promise as to any results that may be obtained from using the Services. No person subscribing for the Services (“Subscriber”) should make any investment decision without first consulting his or her own personal financial adviser, broker or consultant. TradeWins disclaims any and all liability in the event anything contained in the Services proves to be inaccurate, incomplete or unreliable, or results in any investment or other loss by a Subscriber.
4. You should trade or invest only “risk capital” money you can afford to lose. Trading stocks and stock options involves high risk and you can lose the entire principal amount invested or more.
5. All investments carry risk and all trading decisions made by a person remain the responsibility of that person. There is no guarantee that systems, indicators, or trading signals will result in profits or that they will not produce losses. Subscribers should fully understand all risks associated with any kind of trading or investing before engaging in such activities.
6. Some profit examples are based on hypothetical or simulated trading. This means the trades are not actual trades and instead are hypothetical trades based on real market prices at the time the recommendation is disseminated. No actual money is invested, nor are any trades executed. Hypothetical or simulated performance is not necessarily indicative of future results. Hypothetical performance results have many inherent limitations, some of which are described below. Also, the hypothetical results do not include the costs of subscriptions, commissions, or other fees. Because the trades underlying these examples have not actually been executed, the results may understate or overstate the impact of certain market factors, such as lack of liquidity. Simulated trading services in general are also designed with the benefit of hindsight, which may not be relevant to actual trading. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk of actual trading. TradeWins makes no representations or warranties that any account will or is likely to achieve profits similar to those shown.
7. No representation is being made that you will achieve profits or the same results as any person providing testimonial. No representation is being made that any person providing a testimonial is likely to continue to experience profitable trading after the date on which the testimonial was provided, and in fact the person providing the testimonial may have experienced losses.
8. The author experiences are not typical. The author is an experienced investor and your results will vary depending on risk tolerance, amount of risk capital utilized, size of trading position and other factors. Certain Subscribers may modify the author methods, or modify or ignore the rules or risk parameters, and any such actions are taken entirely at the Subscriber’s own election and for the Subscriber’s own risk.