Tuesday, September 20, 2011

Sold DZZ @ $4.41

I am not at all sure how tomorrow will play out with the Fed meeting. My hunch is that one side is going to be rather happy and the other side very disappointed. Personally, as I don't feel that I want to be on either side this trend line break on the daily TSI (7,4) DB Gold Double Short ETN (DZZ) was just enough encouragement for me to sell my position and sit on the sidelines for the moment.

My TSI trading record has been updated.


  1. No one has a crystal ball . . . but:

    1) 3 of the FOMC members are already pushing for increasing interest rates.

    2) China is aggressively pursuing replacing the dollar with the remnibi as the global reserve currency, starting with the Pacific Rim - a weaker dollar will only aggravate that situation, and it is hard to imagine that the FED isn't acutely aware of this (though as stupid as they are, I suppose it is possible).

    3) Going in to an election year, what would a "died in the wool" Keynesian (who is favored by the populist party in power) pick: lower gas prices . . . or a rising stock market?

    4) Weakening the dollar hasn't turned the economy around at all, and we've had what . . . three strikes?

    Tomorrow will tell of course . . . but if I were "betting" (Ok, yes . . . I am).

    Something in all this has to be exciting . . this just might do it.

  2. To paraphrase Richard Fisher, President of the Dallas FED, further "easing" (i.e. printing more money), will not do anything that hasn't already been done, to wit:

    "I have posited both within the FOMC and publicly for some time that there is abundant liquidity available to finance economic expansion and job creation in America. The banking system is awash with liquidity. . . they have on deposit at the 12 Federal Reserve banks some $1.6 trillion in excess reserves, earning a mere 25 basis points―a quarter of 1 percent per anum―rather than earning significantly higher interest rates from making loans to operating businesses. These excess bank reserves are waiting on the sidelines to be lent to businesses. Nondepository financial firms—private equity funds and the like―have substantial amounts of investable cash at their disposal. U.S. corporations are sitting on an abundance of cash―some estimate excess working capital on publicly traded corporations’ books exceeds $1 trillion―well above their working capital needs."

    Printing more money now would be idiotic . . . we need less regulation (can you say "Obamacare?") and government interference in our economy to encourage people to start spending what we already have available. This is a policy issue . . . not a liquidity issue.

  3. Amen, slate cleaned, back in trading business

  4. Looks like today keeps on track for your 1979-1980 comparison.

  5. John, perhaps your initial hunch that this could be potentially as '08 or worse for metals could be right. Gold silver ratio is breaking out higher targeting high 50's. If gold bottoms out at 1500-1600 than silver will be in 25-30 area again.

  6. John -

    I'm not bragging to make you feel worse - I respect you too much for that . . . but gold broke through support at $1705 last night. There is STILL very likely to be gains in both DZZ and ZSL. The bottom of this is very likely to approach $1400-$1500.

    And I don't need to tell you that the technical indicators on these two positions are about as solid as they can be for the moment at least. I will be watching the TSI for signs of exit, but I have moved my stops up appropriatly.