Sunday, April 13, 2014

Tapering is Deflationary

As has been my theme all along, the tapering is happening  because the only reason we are QE'ing is because the Fed is the only entity that will buy bonds at this price, and the government does not need them to buy since the cash flow into the Treasury is so strong, and will remain strong through June.

This means risk off, because the heroin flow is reduced, and the general downtrend in the broad indexes, and a strong downtrend in high beta will continue.  I will continue to hold SPXU, and watching for my target on BIS to reduce my size.

Regarding commodities, my signals are still telling me to short them, and I know oil and nat Gas has defied me, but I will continue to take shots at it.  The same with gold and the miners.  I bought DUST at 24.09, it promptly went red by 20% and now almost to break even again, in one week.  I see DUST in the mid to high 30's, and I see gold and silver rolling over this week, and see gold hit 115 by the end of May.  I hold May 1 125 puts.   I also am holding May GASL 37 puts.

Having said all that, this week is Easter week, tax day, and OPEX week, and we will get a rip your face off short covering rally.  I will cut my SPXU position in half, probably the same on BIS and will buy XIV, and offer a UVXY trade for my subscribers.  The following week the downtrend will continue.

The portfolio continues to perform very well, and superbly against the SPY benchmark.  I also posted yesterday on Real Estate, and First Trust Deed investing, why I do it, and whom I'd recommend you should work with if you are into real estate, and if you like a very smart diversification option.

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Please enjoy the charts and click on them to enlarge them.

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