• When Two Fools Met: This little commodities move, Treasury decline and equity rally smells like a “Sucker’s Bounce”. Much of the move looks related to a little rally in the Euro after several ugly sessions – much on the headline suggesting further ECB rate hikes. Some key indicators, EUR and Copper among them, are trading below their 200 day moving averages. With health-care leading the move this year, the “risk” trade will continue to come off.
• How can a long and short ETF both be down? With Silver, anything is possible. ZSL (2x short) and AGQ (2x long) are both down on the day. Silver itself is off 2%. How can this be? The answer lies in the timing of the daily rebalance of the ETFs. Both use the 7 am Fixing as their rebalance benchmark. Today at 7 am, Silver was it the absolute lows, so both the long and the short fund had to sell on those lows. Since that print, Silver is up 7.5%. That should mean that both funds will have to buy silver into the 7 am fix tomorrow. If you can, buy some SIA futures now and feed the ducks starting at 6:50 am tomorrow morning. It’s just the overnight risk you need to deal with (no big deal, right??!!). Maybe short some gold to hedge.
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