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TLT is Dynamite

Posted November 14, 2016 at 8:15PM

The current market is run as a Keynesian beauty contest. Fundamentals don't matter, future trends don't matter, earnings are downgraded, and stocks go up.

It's all fickle market darlings, robot traders, and short covering.

Right now, we are experiencing the massive gyration caused when a “sure thing” doesn't happen. Hillary lost despite Goldman Sachs paying her millions and betting accordingly. Now, Wall Street has to lurch to the other side, blowing out shorts along the way.

Here is the 2x VIX Short Term ETN (NASDAQ: TVIX). It aims to replicate twice the daily performance of the S&P 500 VIX Short-Term Futures Index. It is my favorite short-term trading vehicle because it moves more than any other stock, index, or ETF.

It also moves up when the market moves down.


At the end of November, it went on a record nine-day uptrend. Now it is back down to $14.65 as the S&P is within 30 points of all-time highs.

It is almost impossible to speculate where the market is going right now. I'd guess this is overbought at this point. The trailing P/E ratio is 20.22. Net earnings revisions were down 17.8%. But in 2016, nothing would surprise me.

That said, I'm long TVIX heading into the December 13 Fed meeting. If you remember, last year the market sold off strong before the 0.25% rate hike.

In other areas, the S&P 500 is hitting resistance.


The Russell 2000 Index just launched. These are the small-cap stocks. It just broke through the 1,306 mark, hitting an all-time high.


Here is the five-year OIL ETN (NYSE: OIL). It tracks West Texas Intermediary. This chart shows a bottom pattern. If it breaks down below the low, I'd be a seller, but it is too soon to call here. Trump may go after Iran and re-impose sanctions, driving oil prices higher, but the market is discounting this possibility.


TLT is Dynamite

Here is the real twist in the market: Bonds are getting killed. The MACD shows there is more downside. This is TLT's biggest weekly decline ever.

The idea moving bonds is that Trump will cut taxes and spend $1 trillion on shovel-ready infrastructure and thus create inflation where nine years of central bank money printing has not.

Ignore the fact that nothing in this country has been “shovel ready” since the EPA was created. It took over 10 years to rebuild the World Trade Center, for Pete's sake.

Someone is Wrong

Well, some big betting machine on Wall Street has to be wrong. Because the dollar index just cleared 100. And gold is now at a nine-month low.

You can expect a few more market gyrations before Trump takes office in two months, which will be beneficial to TVIX. I like GLD on the dips, as history tells us it goes up after rate hikes. I also like Bitcoin on the idea of falling global currencies, and rhodium (LSE: XRH0) because it is grossly undervalued. I wrote about rhodium a few weeks ago — it just hit $815/oz, which is a new, one-year high.

All the best,

Christian DeHaemer Signature

Christian DeHaemer

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Since 1995, Christian DeHaemer has specialized in frontier market opportunities. He has traveled extensively and invested in places as varied as Cuba, Mongolia, and Kenya. Chris believes the best way to make money is to get there first with the most. Christian is the founder of Crisis & Opportunity and Managing Director of Wealth Daily. He is also a contributor for Energy & Capital. For more on Christian, see his editor's page.


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