In my opinion, the 1475 breakout is totally
baseless. It needs
to be corrected or digested. We also discussed the technical importance
of 1530 level in multiple posts. We talked through 1600 break out in
Being and Nothingness discussion. What's next?
That said, I am NOT betting heavy on it. This is the GOV
market anyway. What’s the plan?
Short term: I don’t think it’s the time to close all
positions. It’s better to hedge.
- Sell calls if the quality of the stock is not too bad.
- Buy puts if you are not sure about the future of the position.
- Portfolio level hedge by using ETFs.
- VIX products. (If you have no idea what I am talking about, then just forget it.)
- Metals. Yes I mean gold and silver and the miners. Gold and silver are considered classic hedges to traders and money manager portfolios, even though in the Anti-fragile discussion I mentioned gold may not act the way. Now with the massive pullback in silver and gold prices, the play could be back as we wonder what the hell is going to happen to stocks. The entire sector is very oversold. This week silver prices hit a new bottom not seen since 2010. We have reached the highest silver to gold ratio in about 33 months. I believe we are finally near the bottom for these precious metals.
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