Yesterday's action generated some sell signals for two of my positions. Per my system, I sold them today at the open.
- I exited the second half of Guggenheim Solar (TAN) at $36.81. That's a 22% gain on that half of the position, and an even bigger gain on the whole thing. What a great run for TAN!
- I also exited all of my PowerShares DB Agriculture (DBA) at $25.32, a 1.4% loss. It's a shame, but the breakdown became apparent yesterday.
What About Gold?
Gold gave back its gains yesterday, which is worrisome. It didn't generate any sell signals on my positions yet. And of my six precious metals positions, only one is in the red. I'm watching to see if gold rallies after the Fed meeting this week. Many Fed watchers are now saying the Fed will start tapering is QE program on March 14. Sure, sure it will. You do know we're going to have another budget battle in Washington between now and then, don't you?
Certainly the sentiment in the mainstream media remains profoundly bearish on gold.For example, if you follow that link, you'll see that the Wall Street Journal reports that Thompson-Reuters GFMS says that "Central banks are on track to cut back their gold-buying by 34% in 2013." At first glance, that looks bad. But GFMS really means that Central Banks are still forecasted to buy gold, just at a lower pace.
In fact, Central-bank purchases may total 350 tons in 2013, the World Gold Council predicts, after they added 534.6 tons last year, the most since 1964.
Now, doesn't that sound more honest than what the Wall Street Journal wrote? And anyway, these are predictions about what the Central Banks will do. The proof will be in the pudding.
It would be paranoid (probably) to think that the Wall Street Journal is deliberately misleading readers. Instead, I believe that the mainstream media has settled on a negative narrative for gold, and they report facts in a way that suits that narrative.
One significant bearish fact remains: Holdings in exchange-traded products (ETPs) have contracted every month this year, sending assets down 29%, according to data compiled by Bloomberg. However, it is also true that the selling seems to have ebbed. We will see what November brings.
Despite the fact that Congress seems to be doing its best to wreck the economy, I'm still bullish on stocks for the rest of the year. Pullbacks should be bought. Here are three I like.
Let's start with solar. On September 5, I explained why I liked solar in my post, "If I Had to Bet on One Resource Right Now." Since then, the leading solar ETF, Guggenheim Solar (TAN), has marched higher by 27% ...
(Updated chart)
My initial target on TAN is $44. It may go higher, but we'll see.
I also like the PowerShares DB Agriculture (DBA) ...
(updated chart)
I like this despite the fact that the USDA forecasts a significant global grain surplus for the current year. Not everyone is as fortunate as America; we are the OPEC of grain.
As a result, U.S. exports of major grains, wheat, corn, soybeans, etc., will rise in the 2013-14 crop year by more than 700 million tons, or more than 20%. U.S. agricultural exports in 2013 are estimated by the USDA to have been a record $140 billion.
Also, there's the fact that despite the log-jam in Washington, Democrats and Republicans can both agree on farm subsidies and oil & gas subsidies (most of the time).
Wall Street money is rotating into DBA. As they say on the street, "follow the money."
Finally, I like water, in the form of the PowerShares Global Water Portfolio (PIO).
(Updated chart)
PIO invests its assets in companies in the global water industry that create products designed to conserve and purify water for homes, businesses and industries. The demand for water is only getting more dire, and old water systems are being replaced with new, more expensive versions. That points to long-term profits for the companies tracked by PIO.
If it can break out through overhead resistance, I see a quick move to $24. We'll see what happens then.
I mention these three because natural resource investors seem fixated on gold. I have made a strong case for gold trending lower in the short term. Therefore, you might want to look elsewhere, if you like natural resources.
If you have a broader investing scope, the strongest index right now is the Nasdaq-100, tracked by the Powershares QQQ Trust (QQQ). Make of that what you will.
Opportunities abound, even in markets as weird as this one. When the markets pull back, have some buying targets in mind.
I'm not your investment adviser. These are not official recommendations. Do your own due diligence before buying anything.
