Weekly Update: August 5, 2015

| August 5, 2015

Weekly Update: August 5, 2015

 

Big Picture Outlook:

Folks, the commodity market downturn of 2015 is still in full swing…

Over the past week, WTI crude has traded down to multi-month lows near $45 a barrel.  At the same time, gold is stuck near multi-year lows at $1,085.

With the US Dollar index approaching multi-year highs near 100 for the first time since April, commodity investors are wary of establishing any bullish positions.

The extreme lack of bullish sentiment is allowing bears to have their way with the market.

Is there any chance of a commodity rally in the near future?

We must see the US Dollar turn substantially lower in order for a sustained commodity rally to take hold.  Until that happens, we’ll have to either stay bearish (buy puts) or look for quick rallies (buy calls) in specific assets.

No doubt about it, being a commodity bull is tough business right now.  Thankfully, our option strategy allows us to profit on both sides of the market!

Let’s get to a few of our open positions…

 

Portfolio Highlights:

Editor’s Note: I won’t update every open position in every update.  I focus on the positions with significant news or price movement.

. . . . SPDR Gold Trust $GLD September 18, 2015 $107 puts

With gold hovering around $1,085 an ounce for the past few days, $GLD is still trading just above $104.  However, given the fact we’ve yet to see any sort of relief rally for gold after its big drop last month, the odds are growing quickly of another swift downturn in the metal.

Keep holding your remaining $GLD $107 puts for additional downside in gold.

Remember, our first profit target at $104 was triggered on July 24th, and again on July 30th.  As a result, conservative investors should have already taken profits of at least 100% off the table.

If you’re aggressive, keep holding these puts for further downside in gold!

. . . . Market Vectors Junior Gold Miners $GDXJ September 18, 2015 $18 puts

The junior gold miners ETF has essentially traded sideways the past week.  However, with gold unable to rally from multi-year lows, it’s looking very prone to additional downside.  Of course, that means gold miners will likely follow suit!

Keep holding your puts for additional downside in $GDXJ.  And remember, our risk control line is at $22.10 while our profit targets are at $15 and $13.

. . . . Southwestern Energy $SWN September 18, 2015 $21 calls

Just when you thought it couldn’t get any worse for oil and gas stocks- it does.  In fact, both the Energy Select Sector SPDR $XLE and the SPDR Oil & Gas Exploration & Production $XOP are carving out new yearly lows in today’s session.

The extremely poor sentiment towards the oil industry has $SWN on the defensive again.  Unfortunately, the energy producer sank below our risk control line at $17.23 in yesterday’s session.  As a result, conservative investors may want to exit this position to conserve capital.  If you’re aggressive, you can hang on to your calls for a potential snapback rally.

 

Category: Commodity Trading

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