Charts on Current Hedge Positions
My Red-Hot Canadian Small-Caps and Red-Hot Global Small-Caps are long commodities with a long-term outlook. But in the short-term you can't argue with the fact that commodities are headed lower. So, I recently added hedges -- positions that are short commodity stocks -- to these portfolios. Let's check on how three of them are doing ...
HGD is short TSX gold stocks. It went ballistic today. The good news is that the 50-day moving average is crossing above the 200-day moving average. This is usually seen as a technically bullish indicator. The bad news is the big move up is coming on declining volume, so it can't be trusted.
Prognosis: This is a good ETF to be in while we wait for Canadian gold stocks to bottom. The reversal, when it comes, could come quickly, so stay alert.
The DZZ, or double-short gold fund, was recommended as an alternative in RCS for people who couldn't buy the HGD, and was also a primary hedge position recommended in Red-Hot Global Small Caps. It is gapping higher, and it sure looks like it is breaking out of an inverse head-and-shoulders position. If true, this would indicate much lower prices on gold (I'd expect $750 an ounce or lower). Remember, that's a short-term target on gold -- longer-term, gold should go much higher. But the short-term swoon could be very profitable for DZZ.
Next, let's look at one of the positions in my Red-Hot Commodity ETF portfolio. This is a short-term portfolio, so it's currently all short.
The ProShares UltraShort Oil & Gas ETF (DUG) goes up as oil stocks go down. It rocketed higher on big volume today. Also, if this this continues we'll see the 50-day moving average cross above the 200-day moving average, another encouraging sign.
As I've been saying for awhile now, I fully expect oil to test $100. And recent bearishness shows that it could go lower than that for a bit. That lays out a higher path for DUG.
Check out my new gold and energy blog at MoneyAndMarkets.com