6 COUNTER-TREND TRADES
Bonds - One more move down in the markets should cause the long bond to have a final gasp to the upside. It should be shorted. Safety assets will be sold over the coming weeks and months in favor of adding risk into the first half of the 4th quarter.
EUR/USD - Sell the rips...do not buy the dips. I expect to see the Dollar return to its lesser of all evils reserve currency status over the coming months. The Euro is too young to facing the problems that it is currently. It won't survive in its current form. Uncertainty kills.
Gold/Silver - A new uptrend in the US Dollar knocks a major leg out from underneath support of the rally in precious metals. It wouldn't be a big deal if gold was undergoing a standard bull market. However, given the price action of the past few months, the engine that is driving gold needs to function perfectly. When the engine begins to sputter, as it is now, the specter of downside volatility becomes too much to pass up for opportunistic investors.
European Equities - Um, no. The world doesn't need anymore heroes.
US Equities - A substantial buying opportunity is fast approaching. Next week at the latest.
Crude Oil - Oil futures should see some significant selling if the panic and fear trade comes back over the next few trading days. I see $84 as a substantial long-term support area for crude oil. On a fundamental basis, it seems that the emerging economies are still hungry enough to support a premium in energy prices. A story on Bloomberg a few days ago regarding the strength in the Chinese economy emphasized this point.
There is also the issue of crude seeing some substantial relative strength over the past few weeks. It is sitting near an approx. two month high currently.
A dip below $85 should be bought.
