Sell Silver Stocks

With the Dow getting close to 12,800 we are at an intermediate stock market top, and institutions will soon be taking profits. The European debt situation will also jump to the news headlines in the next two months, and this will send the stock market down again. Another factor in selling silver stocks now is the chart of silver futures at Barchart.com on the futures performance page.

I am planning to sell the leveraged silver ETF, AGQ, on Monday morning. I will be banking a profit of around 17% for being in the stock for less than two weeks. If you can make 17% every two weeks, you could be rich in a short amount of time. Unfortunately, it is not that easy. You are not always able to buy low, and everyone also makes losing trades sometimes.

I believe the long term trend for silver is up, but it will go down whenever the general stock market declines. I plan to buy AGQ again when it drops to $46 per share.

Going back to the futures chart at Barchart.com, this is a great website to monitor whether you should be in or out of commodities or VIX (volatility) stocks. Silver is still positive in the charts, but it has dropped some. It needs to be sold while it is still positive. If you will notice VIX at the bottom of the futures chart page, it has gotten less negative just since Friday. This is the time to buy TVIX, a volatility ETN which tries to leverage whatever VIX is doing on CBOE. I believe that volatility will be rising again soon, and TVIX will be a winner probably during the next month or longer.

Buy Cheniere Energy

You could have made almost 100% in capital gains if you had bought Cheniere Energy (ticker symbol CQP) a year ago. On top of that, you would have made 8% in dividend payments. I am one of the people who has owned Cheniere in the past, but I did not hold on this past year to reap the big monetary gain.

Conditions at Cheniere changed tremendously in the fall of 2011. They picked up three big contracts worth billions of dollars. They can easily stay in business and do great now. I am buying the company again the next time the stock market opens. The company price may not immediately rise higher, but you will be paid over 8% to wait. I also think that Cheniere could double in price in the next two to three years. This will be a lot more than you can make in a stock market that is only drifting slowly higher.

The Great Crash Ahead

Harry S. Dent has written a fascinating book on the economy and the stock market entitled The Great Crash Ahead. The book contains numerous charts and tables to explain why the stock market is heading down in the years ahead. The era of easy money is over, and society will never go that way again.

The stimulus plans have failed. On page 239 of the book, the author suggests that the Dow could fall to 5600 by 2014. This is a bitter pill to swallow, but it is more realistic than you might initially think. The baby boomers are retiring, and they will not be putting additional money on the line in a dubious stock market. They will also be selling their investments and using the cash for their retirements. In addition to individual cash-outs, the U.S. government will have plenty of financial problems along with the European nations. These factors will lead to many down days in the stock market. The best way to play this scenario is to buy a volatility index like TVIX for around $15 and sell it at $22. This pattern will also be repeatable for years to come.