Special Report: Taking Profits (PREMIUM-UNLOCKED)
The following post was initially issued to TLS members on October 2, 2019.
Time to take profits in these assets.
Following yesterday’s disastrous ISM Manufacturing number, the stock market pulled a 180 and has essentially nose-dived for the past 24 hours (not good news). On the flip side, the good news is that our safe haven assets, e.g., bonds, gold, silver, miners, etc., are jumping. As you know, we are still bullish on these assets in the intermediate-term. However, they still need to be risk-managed along the way. Accordingly, the present bounce is affording a favorable opportunity, in our view, to take profits on bonds and precious metals — for different reasons.
As you’ll recall, we issued a “Buy The Dip” recommendation on these assets about 3 weeks ago. Each of them responded by immediately bouncing sharply. At this point, we are booking some gains on portions of the positions bought at that time.
In the case of bonds, we are seeing prices retrace 61.8% of their preceding early-September dip (and corresponding spike in yields). Therefore, we are taking some bond profits in the vicinity of these levels:
- 10-Year Yield (support): 1.60
- 30-Year Yield (support): 2.08
- TLT: 144.20
- IEF: 112.96
In terms of precious metals, they had already retraced the 61.8% of their September dips back on September 24th, at which point we took some small profits. These assets proceeded to drop thereafter, eventually breaking through near-term support this past Monday. In our view, that break of near-term support opened the downside for lower near-term lows, eventually. Thankfully, we did not panic but waited for a bounce back up, ideally, to test the broken former support/now potential resistance.
We are getting that test now which is prompting more profit-taking on our part at these approximate levels:
- GLD: 140.40-141.27
- SLV: 16.35-16.50
- GDX: 27.50-28.40
As far as stocks go, we have not gotten the near-term bounce that we’ve been playing for. Fortunately, our safe haven positions have off-set much of those losses. However, we will continue to assess the equity situation via our Risk Model, the charts and other helpful data. You can be assured that A) we will not panic and B) we will not hesitate to advise a defensive stance again should conditions warrant.
Stay tuned to Daily Strategy Sessions as developments evolve.
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Disclaimer: JLFMI’s actual investment decisions are based on our proprietary models. The conclusions based on the study in this letter may or may not be consistent with JLFMI’s actual investment posture at any given time. Additionally, the commentary provided here is for informational purposes only and should not be taken as a recommendation to invest in any specific securities or according to any specific methodologies. Proper due diligence should be performed before investing in any investment vehicle. There is a risk of loss involved in all investments.