(click to enlarge)Comments: After a period of prolonged low volatility, a big move appears to be in progress. The Amex Gold Bugs Index (HUI) has now definitely broken out, touching as high as 366. Gold is testing its downtrend at around $636. With the HUI penetrating deep into the upper Bollinger, it appears to be oversold in the short term, though some further gains can't be entirely discounted.
I sold off some calls in NEM and GLG for some nifty profits today--they were all September and October expirations so too leveraged not to take some quick profits. I also rejuggled my trading portfolio, eliminating PAL and VGZ which appear to be getting very over bought (VGZ appears to be going parabolic) while adding LIHRY on the breakout past $48.00 and doubling down on TRE and adding a small USGL position.
TRE remains a mystery with its continuing underperformance and today's sell off on very heavy volume. It seems some people still believe it is overbought after its recent spectacular runup which saw it gain over 900% in less than a year. For a company with no revenues, that is a large gain. Still, I believe at some point the buyers should show up.
On one hand, the gold stocks are generally overbought in the short term. On the other hand, it is not impossible that they could still go to further overbought. Accordingly, I think my current 60% exposure is appropriate, with the rest ready for reentry in case we get a pullback.
Current PM Portfolio Exposure: 60% + a handful of TRE Calls.
Sentiment: Bullish but will wait for a pause before adding any more.
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