Weekly Update: July 29, 2015

| July 29, 2015

Weekly Update: July 29, 2015


Big Picture Outlook:

Commodity investors got hit with a lot of information today…

First of all, the EIA announced US oil inventory data this morning that was much more bullish than expected.  For the week of July 24th, crude in storage dropped by 4.2 million barrels.

Thanks to the surprising data, WTI crude rose above $49 a barrel for the first time since July 23rd.

Secondly, the Federal Reserve announced their latest stance on interest rates in their regularly scheduled FOMC meeting this afternoon.  Chairman Janet Yellen gave investors no new information as to when interest rates would start marching higher.

As a result, investors reacted bullishly to the meeting.

Since Ms. Yellen didn’t give any new details beyond what she gave in last month’s announcement, a rate raise is likely farther off than the market is anticipating.

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 Oil & Gas Exploration & Production ETF $XOP September 18, 2015 $48 puts

$XOP plummeted to yet another new yearly low the past few days…

In fact, on July 27th, the oil and gas ETF plunged to $37.29, which sent our $48 September puts up to $10.50 a contract- that’s a 303% return on our entry price of $2.60.

If you’re still holding a portion of this position, I suggest you exit it now.  Not only have we achieved a remarkable gain, but it’s looking like oil and gas stocks are trying to put in a bottom.

Congratulations on a great trade!

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

While gold didn’t make any new lows since we last spoke, it didn’t make any stunning bullish reversals either.  The yellow metal is still trading below $1,100 an ounce, which leaves it open for further downside.

But more importantly, $GLD hit our first profit target at $104 on July 24th.  As a result, conservative investors should have collected profits of at least 100% on this trade.

If you’re aggressive, keep some put contracts for the good possibility of further downside in gold!

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

The junior gold miners ETF has yet to budge from our entry point late last week.  While I wouldn’t be surprised to see a bit of a relief rally for gold and the companies producing it in the near term, the odds still sharply favor further downside for both in the long run.

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.


Category: Commodity Trading