A surprise?
Surprise Flash: Close all Rydex Long Positions today!
by David Nichols, Editor
I'm recommending a complete exit of our bullish Rydex positions at the close of trading today.
We've been long the leveraged Rydex Titan Fund (RYTNX) and the Rydex Velocity Fund (RYVYX) since the close on July 23rd, with a further buy point on a confirming signal four trading days later. We've enjoyed a sharp move up off the bottom since July 24th.
I've also been writing lately about the surprisingly bullish undertones to the fundamental economic and corporate numbers that I'm seeing. So this unexpected sell recommendation undoubtedly comes as a surprise. It is a surprise to me as well.
Technically, the markets still look good, although clearly the easy snapback gains have already been made. The odds still favor a further extension of this trend to the upside over the next week or two.
But the risk/reward equation just went sharply out-of-kilter from my perspective after I got the latest intelligence report from DEBKA-Net-Weekly, whose reports are available every week on our Web Site. Whatever gains may be coming over the next few weeks can't possibly counter-balance the potentially mind-bending risks developing quickly overseas, if even just a fraction of Debka's latest report is true.
After you read their report, I have little doubt that you too will be in agreement with me, and you'll have no problem taking your profits and going to cash. I've reprinted the most alarming part of Debka's report below, so you can see for yourself what has me so concerned. I want you to have the opportunity to weigh the situation yourself.
My fervent prayer is that I am just being hysterical here, and publicly and embarrassingly violating my own rule to not let any "noise" affect my market analysis.
But this time I don't care. I hope I end up looking like a fool on this one. And truthfully, I don't think this information qualifies as market noise -- after all, this is not Art Cashin telling me from the floor that "traders are nervous ahead of the big number, Bob".
This is a detailed and credible report that Saddam Hussein has a large nuclear stockpile, and he's now decided that a pre-emptive strike is the only way he's going to get to use it effectively.
I just want to play it safe here. We've already grabbed the easy part of the rebound off the bottom. Let's take these profits, and our capital, and get it out of harm's way. This is a singularly combustible moment in world history, and we just don't need to be pushing the envelope right here.
I'll have the details on the performance numbers for this latest Rydex trade on Monday morning, after we see what today's closing NAV is on these two Rydex Funds.
Note for options subscribers: we're much more willing to let the technical picture hold sway with options positions, as we've already strictly defined our risk. Right now, the technical picture still looks strong, although be on the lookout for possible adjustments in options positions over the next few trading days. |
