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business newsGold, Dollar Index Set for Major Move
By
Fil Zucchi
Jan 23, 2009 11:00 am
Asset classes poised to break out.
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If you're one of the brave souls who stares at flickering screens for 12 hours (at least) per day, you're probably getting the funny feeling that one or more asset class is about to have a major move. Candidates on my radar include:
- Gold: the building of this triangle has taken months and has likely required the best efforts of the deflationistas (to keep prices down) and the currencies devaluation advocates (to push prices up). I seriously doubt the coming break-out will be mild.
Click to enlarge - The Dollar Index (DXY): Arguably the corollary to gold, the DXY has a working TD Perfected Sell Setup very close to DeMark, as well as conventional, resistence levels. This dovetails with my midget - and so far shaky - long position in the British pound.
Click to enlarge - Oil, using the United States Oil Fund (USO) as a proxy, which refuses to go down any further.
- Equities: How strong will the move be if the sacrosanct November lows come into doubt?
As for individual plays:
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With earnings out of the way, Schlumberger (SLB) is on a TD Buy Setup with support / risk levels pennies away.
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I can't get away from Minyan Doug Kass' idea that major consolidation among the money management firms is inevitable, and that as investors flee the Merrill's of the world, the former should be the natural beneficiaries: I'm involved in a basket of them including AllianceBernstein (AB), T.Rowe Price (TROW), SEI Investments (SEIC) and Lazard (LAZ).
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For all the acid reflux I've endured courtesy of the ProShares UltraShort Real Estate (SRS) it remains the least worst way to play the vortex which is sucking REITs down into very bad places. As I have repeated ad nauseam - I'm using the SRS as a trading vehicle. I am not treating it as an investment because it beyond argument that these leveraged ETF's have enough flaws in their structures to make nearly worthless their longer term correlation to the underlying indices.
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I am sniffing around the Smithfield Foods (SFD) 7% bonds of 8/2011 at a 17% annual yield.
Good luck today!
Positions in gold, BPound, USO, AB, TROW, SEIC, LAZ, SRS
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