Discount Rate Increase!

The Fed has increased the discount rate from .5% to .75%. This explains recent dollar strength and Euro weakness. I believe that markets move in advance of some events. Our Euro signal captured that and is our best position of the year. One other thing, in my 30 years of investing, I have seen discount rate increases result in drops in the stock markets. Mind you, rates weren't this low, and we weren't in the middle of the "Great Recession." Note also that we are long the Russell 2000 Stock Index and profitable at this point.

There are three new signals for Monday: buy Platinum, buy Copper, and buy Heating Oil. Both Platinum and Copper are industrial metals. Therefore, I am astonded that years and years of data and my computer programs picked them to buy on the same day. Does it say something about the future of the economy? I hope so. Also, Platinum is a precious metal, so it is like a gold play as well.

The historical records and symbols are as follows:

Platinum: 32 wins out of 36 trades for 89%; average days in the market were 29.
Copper: 102 wins out of 153 trades for 67%; average days in the marekt were 3.
Heating Oil: 58 wins out of 72 trades for 81%; average days in the market were 5.

Symbols for Platinum ETF PTM or PGM and future PLJ10, symbols for copper ETF JJC and future is HGK10, finally Heating Oil is ETF UHN and future is HOJ10.

Based upon the average days in the market and profit ratio, Platinum is probably the best bet for ETF investors. However, the funds are thinly traded so beware of the spread between the bid and the ask prices.

Open Positions Symbol Entry Stop Close Profit
Short Euro EUH10 144.97 137.00 136.07
Short Euro EOU 18.49 20.78 20.64 11.6%
Long Cotton CTH10 69.82 72.72 78.98
Long Cotton BAL 34.02 35.00 38.01 11.7%
Long Russell TFH10 611.00 614.50 630.10
Long Russell IWM 61.66 61.50 63.06 2.3%
Long British Pound BPH10 1.5682 1.5370 1.5470
Long British Pound FXB 155.53 153.00 154.00 -1.0%

Closed Positions Symbol Entry Out Profit Days
Long Canadian CDH10 94.10 95.01 910.00 8
Long Canadian FXC 94.09 95.24 1.2% 8
Sorry for the error on the Canadian ETF. The ETF stop in the last BLOG was incorrect.


Any views expressed herein are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest.

The quotes and symbols used in the BLOG are believed to be reliable, but no guarantees are made with regard to the accuracy.