The markets have been in risk on / risk off mode for several years now all moving together against the U.S. Dollar. Last year Gold and Silver outperformed the stock market futures but this year it’s the other way around. With Ben Bernanke’s latest testimony (along with Apple’s blow out earnings report) it appears that risk is back on. The dollar made a new multi-week low today and both Gold and the Nasdaq closed back above their 10 day moving averages on the daily charts.
I’m already long gold as of 4am this morning and will be buying the silver etf (slv) tomorrow if it rallies above today’s high (it’s 10 day moving average). That will complete my “risk on” basket of futures. My favorite markets to trade are the Nasdaq 100 futures, gold and silver. I have found the best trades in silver are when gold breaks out ahead of time and then silver has to play catch-up. Those trades can be very dramatic and fun to participate in. Silver has been the dog of the two in the past year ever since it had it’s big blow off top last year. I’m thinking it’s time for at least a rally back to $40 but some think we will see $75 silver in the coming months…. I’m not holding my breath on that one.
The Nasdaq 100
I’m also long the Nasdaq 100 futures as that rallied above both it’s 10 and 20 day moving averages today. Strong results from Amazon after the close followed a blow out quarter from Apple Tuesday night so that should keep some support under tech stocks here. Large cap tech stocks remain pretty inexpensive in this environment so I think investors will be pleasantly surprised over what can happen the next couple years.
Jeremy Siegel was on CNBC yesterday talking about how the market can go much higher over the next 2-3 years based on the fact that stocks are historically cheap when compared to interest rates. You would have to go back to 1980 to find the ratio as compelling as it is today. Looks like we could once again have some significant gains, but I’m a little leery of things getting choppy this summer like they did last year. I will be keeping sell stops in below the 10 day moving average, I’m not going to get married to anything on the long side this time of year. Have a profitable week in the markets!