Comments on: Fade the reflation trade http://sovereignspeculator.com/2009/05/28/fade-the-reflation-trade/ Thoughts on the markets and the decline of the west Mon, 20 Dec 2010 13:39:17 +0000 http://wordpress.org/?v=2.6 By: Leo http://sovereignspeculator.com/2009/05/28/fade-the-reflation-trade/#comment-3278 Leo Fri, 29 May 2009 15:30:50 +0000 http://sovereignspeculator.com/?p=2378#comment-3278 By being long the dollar are you short gold then? As USD denominated gold will lose value. Some think that Gold is in a n upside down head and shoulders with neck line around $1k. There seems to be consensus that Europe is 6months behind us in terms of the full effects of the recession, which supports your thesis that relative to the Euro and Pound there is room for USD to strengthen. Also if global equities start heading lower a return to the dollar is also likely. In my opinion OIL could have a bit of room to go until it meets resistance in the high 80s (bottom of late '07/early '08 consolidation). With some retailers surprising the market with better results (J Crew 34c vs expected 11c), the thinking may be that the consumer can accept higher prices for the time being. When everyone realizes that with 10-11% unemployment people can't go out and actually afford to buy much the market will have to do some soul searching to find a bottom. Long GLD KGC GDX TLT and X (short term) otherwise in Cash By being long the dollar are you short gold then? As USD denominated gold will lose value. Some think that Gold is in a n upside down head and shoulders with neck line around $1k. There seems to be consensus that Europe is 6months behind us in terms of the full effects of the recession, which supports your thesis that relative to the Euro and Pound there is room for USD to strengthen. Also if global equities start heading lower a return to the dollar is also likely.

In my opinion OIL could have a bit of room to go until it meets resistance in the high 80s (bottom of late ‘07/early ‘08 consolidation). With some retailers surprising the market with better results (J Crew 34c vs expected 11c), the thinking may be that the consumer can accept higher prices for the time being. When everyone realizes that with 10-11% unemployment people can’t go out and actually afford to buy much the market will have to do some soul searching to find a bottom.

Long GLD KGC GDX TLT and X (short term) otherwise in Cash

]]> By: Mike http://sovereignspeculator.com/2009/05/28/fade-the-reflation-trade/#comment-3265 Mike Fri, 29 May 2009 02:41:13 +0000 http://sovereignspeculator.com/?p=2378#comment-3265 Hard to say in advance -- I'm not necessarily looking for new lows or highs. When to close all depends on what the rest of the market is doing. Hard to say in advance — I’m not necessarily looking for new lows or highs. When to close all depends on what the rest of the market is doing.

]]> By: Aki_Izayoi http://sovereignspeculator.com/2009/05/28/fade-the-reflation-trade/#comment-3261 Aki_Izayoi Fri, 29 May 2009 00:24:55 +0000 http://sovereignspeculator.com/?p=2378#comment-3261 The reflation trades are overcrowded and very popular... just go to Seeking Alpha. I hate the NZD more than the AUD. I hate the pound as a long term and short term trade too. Euro is overvalued and I expect a correction in European equities (like DAX). Oil and copper might sell-off, but I am not that confident. Oil, of course, is popular because of peak oil and reflation. But I think it is priced-in due to the contango. With these trades, how will you close them? Will you be extremely defensive and pocket a short term profit by closing them when the RSI crosses 50, or you do expect them to go to an RSI of 35 and close it then? The reflation trades are overcrowded and very popular… just go to Seeking Alpha.

I hate the NZD more than the AUD.

I hate the pound as a long term and short term trade too. Euro is overvalued and I expect a correction in European equities (like DAX).

Oil and copper might sell-off, but I am not that confident. Oil, of course, is popular because of peak oil and reflation. But I think it is priced-in due to the contango.

With these trades, how will you close them? Will you be extremely defensive and pocket a short term profit by closing them when the RSI crosses 50, or you do expect them to go to an RSI of 35 and close it then?

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