I did sell off some of my HFC (reluctantly) and OXY since both well up so much today. This was the most strange OIL day I had yet seen.
I was very tempted to add more at around 91 also but just had too much money in it already. Wait and see what happened Monday. For it to drop 15% today was totally absurd, IMHO. How I wish I have another 100k or more to buy it. Well, my wish would come true soon since I am moving more money from my 403b to my IRA account soon. They will give a $200 cash bonus plus free trades for 60 days, sweet.
I left about 45 minutes before the market closed to pick up my grandson. The Dow was down 140 points then, then oil spiked 8% and DOW closed down 250 points? What happened?
There was a rumor that Isis would attack Iraq and WTI spike up 8% and SCO down 15%. Never see anything like it. It was brutal but this rise would not last.
That explains why some time gold and US dollars would rise together but other time they would go opposite of each other.
So I did some researches and found this:
"There is an intrinsic co-relation between gold prices and the US dollar. When the demand for the US dollar falls, banks as well as investors around the world invest more in gold. This measure helps them protect their money and hedge against uncertainties. The demand, and consequently the value of gold hence increases."
" Similarly, when the US dollar appreciates, an increasing number of investors shift their investments from gold to the US dollar. This fall in demand causes the value of gold to depreciate. This behavior of investors creates an inverse relationship between gold and the US dollar.
However, it would not be appropriate to conclude that the price of gold and the US dollar always move in opposite directions, mainly because other external factors also impact the prices of these two instruments. Some people, for instance, might invest heavily in gold during a recession, whereas others might consider the US dollar to be a safer investment. In such a situation, the value of both these options might go up."
Recently I saw US dollars continued to rise while oil prices continued to tank. To me, that made sense since oil is priced in petro dollars. But I also saw gold and US dollars both went up together and that puzzled me because if US dollars became stronger, gold priced in US dollars should drop. Until yesterday, previous metals appeared to go in opposite direction of oil, what is the relationship between the two? Are there any relationships among the three - US dollars, oil and gold?
This has been a very weird day because both SCO and most of oils (except OXY and HFC) tanking together. Bought SCO four times. Now have 50k in them.
HFC has been trending higher whether WTI was up or down, that by itself was quite impressive. It is possible its earnings may suffer short-term but like I had said the Gulf Coast 3-2-1 spread had just risen sharply in this quarter from last quarter, indicating the short-term profitability of HFS was improved. Therefore, if it would not reduce its future dividend and would maintain its special dividend, it will be flying over 40 in no time. Of course, my timing was never perfect. But I did follow my advice any bought some CVX at 99.35 today because I realize that at price under 100, CVX is very attractive. It was now traded at 100.91 and if it would tank another 2-3%, I would be adding. All my other major oils had become steady. I also added more SCO today as insurance. Either way, I am not afraid to add oil. I now started selling off many of my ETFs especially those have to do with bonds or fixed incomes and would use the proceeds to add more BDCs. There are just so much upside potentials with many BDCs right now, just like in 2008. My smart friend said he just saw somebody in CNBC recommended BDCs as investments yesterday. He said that was the first time he heard such a recommendation. When buyers started flooding to buy BDCs, it would be time to start selling. Same will apply to Oils. I really believe oil will start rising rapidly between June-Sept 2015 barring a global recession.
Just added more CVX at 99.35. Remember stocks that were right below 100 took no time for them to rise above 100? Should have bought a lot of GILD when it dropped to around 93, it was traded at 104.25 today, chance may come again. IMHO, CVX would be way above 100 by the end of this year. Its previous 12-mo high was 135.10 on 7/24/14. It just declared a 1.07 dividend, unchanged, equates a 4.28% yield (ex-div date 2/12/15). Following my motto: Buy first, regret later, on good stocks.