With turbulence striking the global markets investors are scrambling to find safer arena’s to invest their monies. The credit crisis both home and abroad is claiming both long time Financial Institutions as well as
the average home owner. Many Investors felt that the recent $40.00+ drop in Crude Oil was the “Light at the end of the tunnel” for the ailing U.S. Dollar.
In my opinion I felt the Crude Oil was way over bought and a long time correction was due. The economic numbers the past year have told us several things such as unemployment has risen, foreclosures are at record levels, and histories Financial Institutions are not exempt from bankruptcy
just to name a few.
It is certainly time to step back and re-exam our trading strategies.
T he recent roller-coaster ride in the Stock market, Energy markets, and Metals has tested the financial savvy of the best traders. I believe traders should position themselves in fully hedged long term position until markets flow into calmer waters.
The recent Gold market has traded in $20+ ranges on a daily basis making day trading extremely volatile. I believe Gold and Crude Oil are both “ANTI DOLLAR” however there appears to be some separation lately. This tells me two things (1) The speculators certainly over bought the Crude Oil and
(2) Investors world wide have seen the recent sell-off in the Gold market as a buying opportunity.
I believe the Crude Oil market has become the World Stock Market.
However the Crude Oil and Energy sector are subject to many more news driven markets including weather related (Hurricanes,Cold,etc.).
I believe using BULL and BEAR spreads are the way to trade these very volatile and choppy Gold markets. If you have done your research and have formed an educated opinion I believe the best “BANG” for your Buck is trading totally hedged “spreads”.
This strategy helps a trader with stand huge market “moves” risking minimal Dollars
while offering the potential opportunity to take advantage of movement in your favor.