What a choppy week in the markets overall, making it difficult to establish long term core positions. The "FOMO" trade appears to be on both sides in multiple asset classes, everything from Bitcoin, Energies, Grains, Meats, Metals, and U.S. Equities. There are two ways to identify when a market is going through a transitional change. The first is to watch the volatility index on the underlying asset. For example, when U.S. Equities have a volatility index below 20, trading appears to be "easy" as long as you trade with the trend. When we get a market like what we see right now, the volatility is bouncing between 21 and 29, giving traders the feeling of "Comfort" one-day "Panic" the next. The second way to Identify how traders perceive the market is to look at implied volatility premiums on options. When implied volatility is high and rising on minor corrections, traders immediately liquidate and/or panic buy protection.
Gold continues to face the same emotional roller coaster with a massive selloff down to $1800/oz followed by a "rip-roaring" rally on Wednesday. We have been structuring trades in the Gold market through calculated risk call spreads geared for the back half of 2021. At that point, we would anticipate 10-year yields will have eased off, and the anticipation of the recovery cycle will have peaked, leaving the Fed to search for new creative ideas to support the economy. The best chance for a near term upside momentum move would be Wednesday in the post-meeting press conference where Jerome Powell could indicate support for additional accommodative fiscal measures.
The long-term technical view on silver has created a "bull flag" over the past six months, and the strategy we have used is similar to that of gold. We are positioning for an anticipated "Breakout" above $29/oz sometime this year using calculated risk call spreads. We are not aggressively playing the futures because the trading range is from $22/oz-$28.50/oz. and other opportunities are available in Crude Oil and Bitcoin. Whether you have Bitcoin, have been in Bitcoin before, or thinking of investing in Bitcoin, we created a free "Revisiting Bitcoin as an investment booklet," You can request yours here: Revisiting Bitcoin as an Investment.
One way to get your 2021 on track is to register for a free two-week trial of our Morning Express. Here, we provide actionable technicals, fundamentals, market bias, and our proprietary levels for the most actively traded futures and commodity markets, including gold and silver. You can register here: The Blue Line Express Two-Week Free Trial Sign up.
Good luck and good trading, Phillip Streible Chief Market Strategist 312-858-7303 Phil@Bluelinefutures.com Follow us on Twitter: @BlueLineFutures Follow us on Facebook: Blue Line Futures Facebook page Subscribe to our YouTube channel: Blue Line Futures YouTube channel If you have any questions about markets, trading, or opening an account, please let us know! You can email us at info@BlueLineFutures.com or call 312-278-0500 BlueLineFutures.com
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