Nightly Briefing 5/7/20

We are lightening up our exposure to equity markets going into next week. Limited upside remains. The SPX will make a run at 2970, its 200 daily moving average. The NDX is there already. The Dow has a tiny chance of hitting the 200 DMA.

A new 6 year high in GDX today. We warned 2 days ago in our briefing of large swings and we got them. Expect more upside into our May 12-14th target.  Targets of $37-39 are in play.

Natural Gas bottomed today. This will resolve to the upside into May 19th before a pause. Ultimately, our top in early June will come. We added leverage in BOIL today which will track Natural Gas in a more levered way. We will look to sell into May 19th but will most likely hold UNG through a small pullback after our next target is struck.

We are aware a lot of investors use short term options, which are highly risky, to gain leverage. We all seek to create wealth quickly. However, if you press too hard you will achieve the opposite effect. Please refer to our Leverage section in our Money Management Guide. Let us point out that if you trade ETF’s, leveraged and un-leveraged 3-4x a month with stop loss orders, you can’t get knocked out of the game, unlike options. Options are most of the time an all-or-nothing bet. Consider solely making 3-4 gains per month of 20-40% in ETF’s and doubling your capital, potentially monthly. Does one need more than that? Major cyclical lows are a good time for options. We will continue to point these out in various asset classes as they occur.


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