This ratio gives very timely signals as to when to more optimally switch between risk on or risk off biases. It's clear that we can long gold, bonds and yen now, I'd be careful with equities, at least not going long indexes, or looking for shorts in weaker securities would be my favored approach.
I have booked profits on a few profitable long trades, and reentered gold and bond longs. Waiting for an optimal entry to long Yen again. I did short it after the BOJ news, but I have covered for now since we found support at the previous lows. Check my other publication for the suggested long entry and stop locations for gold longs.
If interested in my trading signals, or in personal tuition, contact me privately. I'm offering a considerable discount on a packaged course which includes access to my private trading signals list for a year.
Cheers,
Ivan Labrie.
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Surging...
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This ratio has excellent predictive power.
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Very clear theme going on, risk off. This ratio chart is a great indicator of sentiment.
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This ratio now indicates that sentiment hasn't fully shifted away from risk on. Not a good time to long gold, specially not if we fall under the horizontal level below, that could signify a considerable decline in it is coming. The speedline held, even though the trendline broke initially, there wasn't enough follow through to carry gold (and thus risk off sentiment) accross previous monthly resistance.
It'd be more profitable and lower risk to sell options while buying undervalued stock, also the levered ETFs aren't a good idea.
For example, right now you can sell AAPL at the money puts, long stock and write covered calls with minimal risk, while holding TLT and GLD longs.
The low volatility enviroment is suitable for this strategy, as volatility increases, your strikes are unlikely to get hit and you'll be able to collect premiums safely.
dingying85
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A lot of stocks break down, even the gold miner stocks, I think time to own DUST. I am bearish on the market.
IvanLabrie
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Go long UAL instead, sell puts at the money for 6 months...same is valid for AAPL. Buy/write covered calls+UAL or AAPL, sell puts at the money.
That should be easy money.
You can short the canadian dollar via FXC, or short OIL, short EEM, many things to do.
The market is correcting but I wouldn't short gold or miners personally.
Wait to go long gold lower.
Join the chatroom I linked in my latest publications and we can give you some more orientation. :)
robtrading
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Very interesting analysis, Ivan. That's what I want to learn. Go on, Sir! ;-)
IvanLabrie
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Thanks. Feel free to stop by the chatroom linked here.