“We should all fear Oilmageddon!” 

That’s the word from CitiBank, who are SUPPOSED to be the voice of reason in these markets.  When Banksters tell us to get out of something – it’s usually time to get in and, this morning, I put out a Trade Alert to our Members (and tweeted here) to take a long on Oil Futures(/CL) at the $30 line (with tight stops below) as well as lines on various indexes I detailed in the Alert.  

Of course, we warned you last week that the market would likely turn back down and I detailed our hedges on the Ultra-Short S&P ETF (SDS) at $22.50 and I mentioned we were long on Gold (/YG Futures) at $1,155 and Silver (/SI Futures) at $14.90 and Natural Gas (/NGK6 May Futures) at $2.15 on Thursday.  This morning they are at:

  • SDS $23.70 – up 5.3%
  • Gold $1,180 – up $8,000 per contract 
  • Silver $15 – up $1,250 per contract 
  • Natural Gas $2.27 – up $1,200 per contract
  • Our one loser (so far) was Copper (/HG Futures), which dropped from $2.12 to $2.075 for a loss of $1,125 per contract.  Of course stopping out your losers is important with Futures and we’d be happy to get back in either over $2.10 or off the $2.05 line (with tight stops below).

    In Friday morning’s post we detailed two major hedges for the S&P (SDS) and the Nasdaq (SQQQ) using the Ultra-Shorts and, of course, those are both paying off like gangbusters as Friday was already a bad day and the markets are following through this morning. We also detailed a trade idea for Barrick Gold (ABX) to leverage the run in gold – also doing fantastically, thank you!  We’re hoping for a bounce but really we’re using our bullish future bets, pre-market to lock in the tremendous gains of our index hedges at what we THINK might be the bottom again at 1,850 on the S&P.  

    Nattering Naybob had a very good summary of the weeks events, reminding our Members yesterday afternoon ofmy Wednesday warning that we were simply in a “dead cat bounce” and likely to fall even further this morning, saying:

    Some are connecting the dots so the 1859 to 1940 SP500 rally, could be the dead cat bounce we alluded to as the overall trend reasserts itself.  I said ES could test 1930 and to wake me up when it got there, where it was rejected in a big way. I have a funny feeling this Super Bowl, Monday and week could all be ugly.

    And ugly it is this morning but I’ll be on Money Talk on BNN Wednesday night, explaining to Canada why the collapse of oil does NOT mean the Global Economy is collapsing and I’ll write it down here so you can get ahead of the game and, as Buffett advises: “Be greedy while others are fearful.”  

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