Showing posts with label gold rally. Show all posts
Showing posts with label gold rally. Show all posts

ETF Concerns

Well, we are now returning back to business as usual...higher movements in indexes accompanied by low amounts of volume. I was beginning to think that maybe people were going to be dusting off their keyboards to start making some trades, but it lasted about 4 days. At least for now, it seems that investors have squelched the recent "fluke crash" and are pressing forward to try and get the Dow above 11,000 again. As for me, I was lucky to be able to exit some of my major positions before Monday, which resulted in a great week for me last week.

For now, I am returning back to bunker mode, which is maintaining very small positions of rather low risk positions. One opportunity that is flourishing right now is gold. Lately, it doesn't matter whether the the market is going up or down, gold goes up. Charts are showing very strong strength for gold and we could definitely see a nice pop here in the short term. I do still see deflation risk for gold in the future, but not short term.

Apple should see some strong moves back towards the $180 mark. Tech is maintaining their status as the rock among a lot of shaky industries. This has definitely not been near as bad of a recession for many tech industries. Japan's tech is currently performing very well, which could have a positive influence on the NASDAQ tomorrow.

After last Thursday's crash, there have been an increased concern about the ETFs. During Thursday's spiral, the NASDAQ cancelled sell orders for selected companies in order to try and minimize the damage. There are analysts who feel that during an longer, sustained crash, such imposed government regulations would be more strictly enforced, which in turn would cause problems for the ETFs. Considering that many of these ETFs are based on derivatives and essentially mirror an index, worries that when these bids are shut down, the mirrored index will too be shut down. There continues to be a lack of regulation for many of the ETFs, however they can still be instruments for quick, large gains (and vice versa).

For me, I'm no so convinced. I do believe the ETFs (especially highly leveraged) should be traded with caution, I find it hard to believe that one would be completely unable to exit a position during a market crash. Temporary holds may be put on place, however, I would have to think an exit opportunity would have to be available. Those are my thoughts.

I expect the market to continue to bounce back and forth. Until, I see some more definition in the charts, I am going to remain rather light for the time being. Don't get me wrong, strong movements could show up again as early as this week, however, from today's trading, I'm guessing that won't be the case. Happy Trading.

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