Red-Hot Resources

"Luck is not chance, it’s toil; fortune’s expensive smile is earned.”

Tuesday, January 13, 2009

Following Up on Some of Yesterday’s Trades

Yesterday I added some positions to play a potential rally in the U.S. dollar and short-term decline in gold. Let’s look at some of those trades …

UUP aims to track twice the daily movement in the U.S. dollar versus a basket of currencies. Yesterday was a good day to add it. It gapped higher today and should keep running.
Now, let’s look at the DRR, which tracks twice the INVERSE of the movement in the euro …
This one also gapped higher, naturally, because the euro has been acting like the “anti-dollar” lately. Notice how it went even higher this morning, then banged its head on its 50-day moving average and pulled back. It could take a few days to work through that 50-day MA, and I’ll keep an eye on it.
Now, let’s look at gold, as tracked by the GLD …

The GLD gapped lower yesterday. It tried to rally today, but that rally seems to be running out of steam. In the short-term, I expect it to go lower, and the 50-day moving average makes a good initial target.
Actually, gold is holding up pretty well considering the rally in the U.S. dollar. It just goes to show that nothing correlates perfectly in this market.
In one service, I also recommended getting short banks by buying the SKF. That is in slightly negative territory so far today, but I still think it’s a good bet.

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