GDX – The Way to Play Gold in 2015

Gold’s great fall of the past two years has been well-documented, and many experts see good enough reason for it to continue a while longer. However, I see the dynamics around the price of gold shifting. Given the greater swing lower of gold miners versus the price of gold, they may be priced right to benefit in a greater way from a turn in trend. Many of the miners are small and some are over-levered and vulnerable to further decline in the price of the commodity. So for the wherewithal to survive any further downswing while still availing capital to benefit from an upward move in gold, I suggest investors consider the Market Vectors Gold Miners ETF (NYSE: GDX) here. I think that it’s one of the best ways to play for a turn in gold. See the full report on the Market Vectors Gold Miners ETF here. Also interests the Market Vectors Junior Miners (NYSE: GDXJ).

Sell the OIL ETF - $50 Crude Soon

I anticipate crude oil prices could retest long-term support levels around $50 in the near-term. That is a bold forecast, but I see some clear near-term catalysts which could make it so. The first of those issues played out last Wednesday afternoon, the second came on last Thursday and the third hopefully will never come, but I suspect could impact oil prices at any moment. See our report on oil prices and the United States Oil ETF (NYSE: OIL) here.

ISIS Terrorism Risk this Weekend – Hedge It

As we enter the seminal American holiday of Thanksgiving, with the busiest travel day of the year Wednesday; major football games all weekend and the Macy’s (NYSE: M) Thanksgiving Day Parade receiving national attention Thursday; and then Black Friday filling U.S. malls, the media and the market are almost ignorant of terrorism risk. Yet, this is perhaps the most vulnerable time of the year for America. So, I suggest investors take risk off temporarily through the holiday weekend or hedge against the heightened temporary risk to stocks.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

Security	YTD	TTM
SPDR S&P 500 (NYSE: SPY)	+12.3%	+14.7%
SPDR Dow Jones (NYSE: DIA)	+7.6%	+10.9%
PowerShares QQQ (Nasdaq: QQQ)	+19.4%	+24.1%
iShares Russell 2000 (NYSE: IWM)	+2.2%	+4.5%
Vanguard Total Market (NYSE: VTI)	+11.4%	+14.0%

It has been a decent year, with the SPDR S&P 500 (NYSE: SPY) up 12.3% and the Vanguard Total Market ETF (NYSE: VTI) up 11.4% showing broad market rise. It probably will end up being an even better year, with the Santa Claus rally looking like its readying to roar. But, there is a risk of disruption to this story this weekend that should not be ignored. There is no reason to bear that risk.

Extensive threats have been made by the Islamic State and its supporters both home and abroad, and I think we agree this is a different sort of evil than even al Qaeda presented to us. Anything is possible and probable as this group of killers somehow finds sympathy among outsiders and psychopaths here at home. Where al Qaeda sought the catastrophic attack target, ISIS representatives have told their supporters to strike anyway, anywhere, anytime and anyhow. It’s a different sort of threat, more easily accomplished by lone wolf types and potentially just as impactful in terrorizing Americans.

The events I mentioned in my opening are high profile and will gather significant attention across the nation and affect almost every American either today or in their actions tomorrow should they be disrupted. Obviously, this group of terrorists is better informed about how Americans live and what they do, and capable of harming our confidence and our way of life. With today being the busiest travel day of the year, terrorists could strike planes, trains, buses and cause panic. With 50 million Americans watching the Macy’s (NYSE: M) parade tomorrow, any sort of attack would garner that many eyeballs and more as CNN and all American media outlets rushed to the story. And any sort of attack on a mall or two or three could affect the American economy in a dramatic fashion, and even put some ailing retailers like Sears (Nasdaq: SHLD), which employs tens of thousands of Americans, out of business. Increasingly, terrorists are gaining an understanding of these things, and so the likelihood of their striking at symbols decreases while the likelihood of their striking panic increases.

For this reason, just for this weekend, I suggest investors take risk off. I would sell the SPDR S&P 500 and other market instruments and individual securities. If for tax reasons this does not make so much sense, which will be the case for most investors, you can hedge your market risk by buying new and temporary stakes in various other securities. The table below offers some suggestions, but I would not hold them past Monday’s open, unless an event occurs, in which case I would only hold them for a day or two longer before looking to buy value in stocks driven down by any event.

Hedge Security	11-26-14 10:17 AM	YTD	TTM
iPath S&P VIX ST Futures (NYSE: VXX)	-0.7%	-36.7%	-39.9%
ProShares Short S&P 500 (NYSE: SH)	+0.1%	-13.7%	-16.1%
SPDR Gold Trust (NYSE: GLD)	-0.1%	-0.8%	-3.8%
ProShares Ultra Short S&P 500 (NYSE: SDS)	+0.1%	-25.6%	-29.8%
ProShares Ultra VIX ST Futures (NYSE: UVXY)	-1.5%	-70.7%	-73.9%
Direxion Daily Gold Miners Bull 3X (NYSE: NUGT)	-2.1%	-40.5%	-45.9%

The last three securities in this table here are levered instruments and will lose value over the holding period in the event that nothing happens, so be advised. You will note in the year-to-date and trailing twelve month performances that these levered instruments are only good as hedging tools for short-term holding periods, as they destroy value over the long-term. All of the instruments should appreciate in value if an attack occurs on America, though gold and the GLD may initially sell off before rising if an indiscriminate rush to cash occurs. These should offer some protection to portfolios without the cost of taking tax gains here at the end of the year before buying back stocks to enjoy the rally I anticipate into the end of the year.

You earned your performance this year, so why leave it at risk over this vulnerable weekend? Those managers hedging risk here might see a minor cost to performance if nothing happens, but will definitely see a beneficial divergence versus benchmarks and peers if something does occur. Stocks and the market are at risk this weekend, but no matter whether anything happens or not, America will persevere and stocks would rise again. God bless America and happy, healthy and safe Thanksgiving to you all. I cover the market regularly, so readers may find value in following my column or my blog.

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

NUGT ETF Down 44% in 3 Days Since I Predicted its Downfall

The drop in the shares of the Direxion Daily Gold Miners Bull 3X ETF (NYSE: NUGT) had already been precipitous since August, but 3 trading days ago I said buying it (even here) could be akin to catching a falling knife. The Direxion Daily Gold Miners Bull 3X ETF (NYSE: NUGT) was down 61% since August 12, on a somewhat steady drop to the close of $19.35 for the levered ETF the day before I published. But I presciently wrote that it would fall further. In the 3 days since, it collapsed 44%. I said that based on my outlook for gold, buying it now could be akin to catching a falling knife. In my also prescient and profitable report, Gold Breakdown, I estimated the SPDR Gold Trust (NYSE: GLD) and gold prices could slip 11% or more to a target of $105 to $95. See my report on the NUGT ETF here.

Why I’m Conflicted About the Dow Dog Pack

I presciently got investors out of small caps and the iShares Russell 2000 ETF (NYSE: IWM) in August and warned about the higher risk in the Nasdaq-100 a few weeks before that. I was preparing to move followers into the Dow, as the dogged performance of the SPDR Dow Jones (NYSE: DIA) ETF illustrates what seems to be opportunity for “Dog of the Dow” theorists. The DIA seems to be calling out for acquisition given the underperformance of the Dow in recent times versus the S&P 500 and the Nasdaq. However, I’m conflicted about the purchase today, due to the international economic exposure of Dow dogs and apparent relative risk being priced in immediately. So, do we buy the DIA or not? See the full report about the Dow stocks here.

Yellen is Right - Sell Biotech Stocks Now

Despite their high times of late, I agree with Janet Yellen’s Fed and see risk in the extended biotech sector today. Biotechnology stocks have outperformed the broader market this year, as the high risk, high-beta issues have remained en vogue. However, for two very important reasons, I would sell biotechnology today. So I’m suggesting holders of the popular iShares NASDAQ Biotechnology (Nasdaq: IBB) security divest positions. For those believers in specific biotech ideas, like say Gilead (Nasdaq: GILD) for instance, who want to hold on for the longer term, I suggest hedging industry risk by writing calls or holding puts in the IBB security if enough liquidity exists in the options market. Otherwise, you might use unlevered short industry ETFs if possible, or pare trade your name against another. See the full report here: I Agree with Yellen, Sell Biotech Right Now.

How to Play Stocks Around the Fed Today

Last week I published an article entitled Buy this Trough as the Latest Fed Scare is Unfounded. I continue to expect the Federal Reserve’s FOMC monetary policy decision and press conference to reflect the mild message conveyed by Janet Yellen in her Jackson Hole speech and for stocks to move higher. However, the Fed Forecasts, which will be published today, have sunk stocks in the past and continue to threaten, though perhaps to a lesser extent now that they are better understood. Passive investors in the broader market ETF, the SPDR S&P 500 (NYSE: SPY) might want to hedge bets a bit. This article discusses tools for hedging event risk. Rather than placing a long or short bet on the SPY today, I suggest investors hold both call and put options to bet on volatility in the security, whether it move higher or lower. Your risk comes with the lack of a move in the SPY, but if the ETF rises or falls significantly, you should overcome option costs for profit today in my view. Of course, this trade offers lower upside than a naked long or short position. See the full report here.

How to Hedge Event Risk Around 911

It’s advisable to take some money off the table around this year’s 9-11 anniversary. Well over a decade has passed since the horrific events of 2001, and we have decimated al Qaeda since. However, in light of the many new enemies that have risen up who wish our ill-will, it’s advisable to take risk off around the anniversary that inspires them. You can come back to the table at a later date. For those who would like to hedge in an efficient manner to minimize tax consequences, there are some ETF instruments which could prove useful. Take a look at the ProShares Short S&P 500 (NYSE: SSO), ProShares Ultra Short S&P (NYSE: SDS), ProShares Short Dow 30 (NYSE: DOG), ProShares UltraShort QQQ (NYSE: QID), iPath S&P 500 VIX ST Futures (NYSE: VXX) and Velocity Shares Daily 2X VIX (NYSE: TVIX). See the full report ISIS & September 11: Why and How to Efficiently Hedge Risk.

5 ETFs to Avoid

The nascent market downturn has picked up steam of late, leading me to begin to think about ETFs to avoid for the near-term. While some will say the issues offer buying opportunity on already marked decline, I suggest not attempting to catch the falling knife just yet. There remain longer term questions to be answered about the global economy and recent signs of underlying weakness.

Avoid Oil Complex Trackers

The United States Oil ETF (NYSE: USO) and the iPath S&P Crude Oil Total Return ETF (NYSE: OIL) are two of those atop my list today, for various reasons.

1-Year Chart at Yahoo Finance

The one-year chart presents what seems like stability for the securities here. The USO and OIL are well off their highs of last year now, when the economy was making marked improvement and it seemed global demand was building again. However, since then, questions have surfaced about oil supply and pricing given American reserve discovery and development. Obviously, recent weather has eaten into natural gas reserves, but that is a seasonal issue that I believe commodity traders are not yet ready to call the new normal. As a result, it’s not a serious long-term driver currently.

The oil market securities began to recover from late 2013 lows, but have this year been struck again by weak U.S. economic data found in the monthly Employment Situation Report nonfarm payroll shortfall. Add to that, weakness seen in economies globally, especially in China recently, and the oil outlook comes into question. Emerging markets are suddenly seeing crisis as well, so oil has a great weight against it, and as a result, investors will want to avoid the OIL and USO.

Emerging Market Weakness

Don’t try to catch the falling knife in the emerging markets today. While the one-year chart of the iShares MSCI Emerging Markets ETF (NYSE: EEM) seems to offer a buying opportunity, it’s too early to add to risk today.

1-Year Chart at Yahoo Finance

Turkey is in the midst of a crisis and other markets are likely to feel the heat near-term before things settle. Last week, all of Europe was deeply red and most of Asia. In Sao Paulo, the Bovespa was off 2.8% last week and is down 7.2% on the year through Friday. In Moscow, the RTS is down 5.5% year-to-date and fell 2.3% last week. India’s Sensex is only off fractionally on the year, but the Hang Seng is down 3.7%. Greek stocks were down 7.1% last week. We can see, then, that risk is definitely off. It’s not for the brave to buy now, it’s for the fearless. Therefore, investors will want to avoid the emerging market trackers including the iShares MSCI Emerging Markets ETF (NYSE: EEM).

Avoid Consumer Sensitive Issues

The retailers contributed greatly to this year’s selloff. Despite solid recent retail sales data, too many individual retailers are reporting on a thrifty U.S. consumer. Retailers Best Buy (NYSE: BBY) and Sears (Nasdaq: SHLD) had some extremely sour news to report this quarter and struggling J.C. Penney (NYSE: JCP) announced some store closures. We’re dealing with an oversaturated retail environment that cannot support current capacity in my view. While some names might still do well on individual drivers, the group on the whole is out of favor, in my opinion.

Chart at Yahoo Finance

The softness is clearly seen in the tail end of the chart here for the Consumer Discretionary Select Sector SPDR (NYSE: XLY) and the SPDR S&P Retail ETF (NYSE: XRT). Today’s Consumer Confidence Index improvement was contrary to recent trend, and offered lift for these two issues today. However, I think investors should not look past other indicators which have reflected problems recently. Weekly same-store sales data have been weak; while some of that is on weather, it’s coinciding with a failing weekly measure of consumer comfort published by Bloomberg and the Reuters/University of Michigan measure of sentiment.

While in the line of fire, these ETFs are dangerous to buy today, and so I suggest continuing to avoid them here. The factors that have come against the broad reaching issues are longer term in nature and so questions about the global and U.S. economies need to be answered before sustainable change occurs. While we may see improvement on a day-to-day basis, until employment trends are repaired and the China question is answered, I cannot see good reason to approach these five issues today. Avoid them for now.

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.