Posted by: jhamon | October 15, 2009

MysteryHedgie: No Surprise Gold Calls Timeout

MysteryHedgie is not surprised that gold has called “timeout”…

Gold’s pause for a second day isn’t surprising. Throughout the last year of this 10 year bull market, Relative Strength readings over 70 (see below chart) have marked temporary peaks.  Different is that it is occurring while the US$ is generally weak and equities retain their bid.  This divergence has caused a subtle shift in our Desk order flow;  we see  option/protection buying across a broad macro spectrum, FXA (Aussie $ ETF), DBA (Agriculture ETF), TLT (bond ETF), and SHY (1-3 year US rate ETF).  Takeaways:  Options represent value  across a broad spectrum of assets; rotation in an otherwise firm tape (note the buying of laggard large cap Drug stocks) is  possible, and managers can expect to see performance from both longs and shorts in the days ahead….                         

Gold Calls Timeout

Gold Calls Timeout

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