If you look at our holdings, it’s obvious we have absolutely no idea what to expect from the Federal Reserve press conference this afternoon. If the good doctor downplays Fed tapering and promotes easy money for the foreseeable future, expect commodity plays like our CNX to have a very good day. Also keep an eye on the triple bull NUGT and the junior miners ETF GDXJ. If, however the very idea of tapering is not completely disavowed, brace yourself for a very difficult market. Our TZA hedge may finally earn it’s keep. Either way, our 60% cash position will enable us to take advantage of the opportunities to come.
The most likely outcome of today’s press conference is a continuation of the $85 billion per month bond buying spree with a promise to scale back in the future. Of course this scenario will frustrate the most traders and leave us without resolution in the near term.
It is worth noting that the bull scenario requires rotation into new sectors. Josh Brown writes this morning that we should keep an eye on tech and industrial sectors (XLK and XLI). It is worth putting in your work on these sectors to be ready for another leg higher. Summer trading is not for wimps.