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Stocks are staring at the 2200 SPX level and blinking. Since there is no real impetus to drive things higher buyers are content to sit where they are and wait. For some reason the Yellen at Jackson Hole speech is starting to take on meaning. With a market lacking meaning anything is a reason to move us. Gold and gold related names like the miners are getting hit hardest.
The Gold Miners are getting hit the worst after a crazy outperformance in 2016. They made some lows in early January and never looked back. Why the sudden hate for the miners? Over bought, maybe? But this is a huge relative move in them and seems abnormal. We looked at DUST today (inverse 3x Gold Miner ETF) and the near term strangles did look attractive. Whatever was happening in the miners seems like it is pointing to Friday at least for some clarity. What that is I don’t know.
DUST reverse splits this week so it put the strangle idea out of range. GLD might make a good proxy for the gold action since it is supposed to be a ‘flight to safety” product and it has been going down with the market lately so that is not quite working. A lot of the move in GLD and the gold miners took place after Brexit on potential currency issues. For now those don’t seem to be panning out and there could be a bigger run to the exits.
Owning GLD short term put time spreads look very interesting. Somewhere around the $123 level and hedge with an OTM calls if you think it is necessary.
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