This message is going to be short, as time is a factor here.
I am going to short PM stocks, GS, RTP and FCX stocks after I send this message.
The situation is similar to the one I described a month ago: http://sunshineprofits.com/?q=premium_commentary/01-apr
USD Index is now just at the support level, general market, gold, and corresponding stocks have rallied today, but the rally took place on a very small volume. Leaders in the PM sector are lagging, while laggards are catching up. General stock market is reaching resistance levels.
Naturally, we may rally from here (although I believe the odds favor a decline right now) and this alert regards your speculative capital only. We are still in a bull market in the precious metals and corresponding equities, but I believe risk/reward is favorable enough to open speculative short positions.
I am therefore purchasing put options on:
GDX, GS, RTP, FCX I don't recommend using more than 15% of your speculative capital for this trade: 7% for GDX, 3% GS, 3% RTP, 2% FCX
As far as strike prices are concerned, use out of the money options that are closest to the price of the stock price at the moment of purchase. At the moment of writing these words GDX is at $34.71, so the strike price that I'm going to use is $34.
Expiration date: I would prefer to use 2/3 of the capital to buy June puts and 1/3 to buy May puts.
I belive that gold and silver also may go lower from here, so if you want to hedge your positions or bet on falling prices of PMs, this day seems to offer a relatively favorable risk/reward ratio.
If you are not using options you will need to adjust the postion sizes accordingly, but under no circumstances use more capital that you can afford to lose on this particular moment.