9 March – Bad week for Gold and Oil.

I did not do any trades during the week cause I was having a difficulty of seeing the full picture. After the long rally in gold finally gold slipped to 1200$ level. I closed my positions the last week which would have been a huge blow to my performance if I had kept them. Upcoming FED rate hike was a catalyst for lower gold prices. My long term stance on gold is still bullish but getting back on the train again will require time and the right opportunity. 1200 level seems to be held for now but Monday and Tuesday trading will determine where gold might move from there. I will be waiting on sidelines watching the tide.

Oil was the worse and went below 50$. Now again we are on the verge of reality. Markets came to realize that the market was oversupplied and US oil inventories were much higher than expected which took oil down. As these 2 commodities were falling I stayed away from trading till I get the better view of where we are heading. There is no doubt that the market is oversupplied and lower prices are not in the best interest of US shale producers either but I do not think in a capitalist country they will try to stop production to pump up prices like OPEC does. US companies are competing to get the last nickel out of barrel prices, so in any rise, they will jump on producing more because none of their rivals will have the same mentality so no reason to reduce the production. Long positions were at all time highs and falling oil prices pushed many to close which took oil down more and that might continue. It is not a good time to have either long or short positions in either gold or oil. It is better to watch and jump when your conviction is high.

Now March rate hike is over 99% probability which took bonds prices sharply lower. If I had stuck with my shorted bonds I would have made a decent profit. It seems Market reacted more to FED rate hike than demand for US treasuries. I should have expected that and stayed short because rate hike is always a major news no matter what demand and supply are at the moment.

Depending on how the market moves on bonds on Monday trading I might jump into the arena but right now I am not sure what position to take. The same might apply to gold and oil unless I feel confident on the new trend that might be established on those commodities.

Currencies again have stayed outside of my spotlight for a consecutive couple of weeks. As my exam for CFA approaches I can not find time to analyze the currency markets but overall major currencies fell against the dollar. Friday was remembered by more than expected nonfarm payrolls ( 235k vs 230K) which gave a boost to the stock market. For some time, I kept thinking the stock market is going to burst as it is in a bubble but burst might come later than I expect. As long as White House keeps promising better economy and we get positive data, it seems stocks still have got room to go.

 

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