Pixelscared

Photo from a Wired editorial about FEAR being contagious.

Hyper Inflation

Hyper Inflation Fears spread throughout Wall Street last week.  Early Last week Investors411 turned the list of recommended ETF’s into longer term holdings. Many of these ETF’s were recommended because they are hedges against inflation.
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Investors readers have followed the Fed’s liquidity dump (quantitative easing) and its relationship to possible future inflation. Now along comes a single factor that makes inflation transparent. One photo tells it all.
For investors those hedges against inflation are UCO (2X long oil), SLV (silver) AGQ (2X long silver) GLD, (gold) DGP (2X long gold) and TMV (3X long 20+ year Treasury yields) All these ETF’s exploded higher last week. Example GLD up +3.6%

Other recommend ETF’s flattened like pan cakes at the end of the week because of their vulnerability to inflation REMX (rare earth metals), UWM (small cap stocks) & EEM (emerging markets)

As Paul accurately points out in the comments section many of these are way overbought and may be in climax runs. In the past, the Fed’s guarantee of liquidity has distorted traditional technical analysis and added to inflation fears.  Truckloads of Fed money have a way of doing that.

However if a stock is too far above its 17 day moving average (see chart) wait for a dip to buy. If you’re a short term trader it becomes a time to sell. You can be sure there are lots of investors waiting to buy, so the dip may not be too sever.

The CautionIf KA DAFFY is nailed then oil prices and inflation fears will temporarily fall (could be a big hit) So will the related ETF’s that are on fire now. However in the long term inflation is being driven by the Fed and gas prices just add to those fears.

  • Also its good to be long some issues like YSL #4, and/or UWM to hedge a reversal in inflation expectations.
  • UUP (ETF for dollar is ) is what to watchGetting very nervous because the dollar fell a significant -0.96% on Friday.
  • Back to a more standard format tomorrow.

NB – If the dollar drops again today/tomorrow like last Friday the fear could to turn to inflation PANIC.

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Your Stock List results are in.

As of last week it was up +3.51% to the S&P’s +1.55% Paul has created an excellent  a detailed analysis of all 15 stocks stocks HERE

Look for Paul R’s always enlightening remarks on stocks and sectors in the comments section of the blog. See POSITION section of blog (at top of

page) for lists of potential stocks & ETF’s including “YOUR Stock List.


Longer Term Outlook - CAUTIOUSLY BULLISH

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING


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