Palladium ETF Still Top Performer For 2010

Despite the strong rally in silver recently the Palladium ETF remains the top performer since it's inception last January. Up over 60% it has been trading in lock step with SLV lately but still maintains a 10% lead in overall performance this year.



The Platinum ETF remains the weakest of the metal complex barely showing a gain at all since it's inception on the same day as palladium. Platinum was apparently over priced in relation to the other metals and those who have been buying the weakest precious metal hoping for a catch up rally have been disappointed thus far. If this precious metal rally continues from here however, there is little doubt that Platinum should participate going forward.

Another Big Day For Silver ETFs

The Silver ETF - SLV closed up 89 cents (3.35%) after being up over $1 earlier in the day. In the past few days SLV had retested the 20 day simple moving average and again found support at that level. These $1+ moves are something that metals traders haven't seen in many years but are becoming increasingly common as this bull market wears on.



Junior Gold Stocks - GDXJ was the second strongest non-leveraged ETF up 2.72%

The Silver Miners - SIL was up 1.95% on the day

The Gold ETF - GLD was up 1.42% while the Gold Mining ETF - GDX was up only 1.07%

The Double Silver ETF - AGQ was once again the superstar up a whopping 6.65% today and nearly 120% since the rally began the 3rd week of August.

Junior Gold ETF Continues To Outperform

Ever since the break out in late August the Junior Gold ETF - GDXJ has been strongly outperforming the Gold ETF - GLD. Since inception GDXJ is up about 62% versus a 25% rise in gold over the same period of time (since Nov 2009).

Junior gold stocks tend to perform best after a well established uptrend has already taken place in physical gold prices so many are looking for this out performance to continue for some time. They are extremely volatile however so even though they tend to outperform on the upside they normally under-perform when the market turns south so caution is in order. Since individual companies tend to be risky this explains why the Junior Mining ETF has been so popular, it's an easy way to diversify. Average daily volume has been running in excess of 2.2 million shares so that's incredibly strong for a Gold Mining ETF that's only a year old. It wasn't too long ago that investors would laugh when you mentioned mining stocks.

Here is the price chart for GDXJ since inception:

Oil ETFs Rally

This week the Crude Oil complex has been testing support similar to the way gold and silver tested support last week. Crude Oil found support at the 50 day simple moving average the way that gold did and is moving up sharply today.

There are several different ways to play a rise in crude oil prices. You can choose an unleveraged oil etf such as USO, USL or DBO. You can also choose the double oil etf UCO which has traded over 6.5 million shares today.

Yet another way to play is through by using an oil stock etf such as XLE or OIH. Of course the oil stocks also have their versions of Leveraged ETFs as well with the double leveraged - DIG (based on the DJ Oil and Gas Index and the triple leveraged ERX which is based on the Russell 1000 energy index.

So as you can see there are several investment alternatives across the entire risk spectrum for those who want to play a rise in crude oil prices.

Silver ETFs Explode Higher

Silver ETFs exploded higher today after holding support on a closing basis at the 20 day simple moving average. SLV, the most active Silver ETF has not closed below this level since the uptrend began in late August. Today on the news that Ireland would be bailed out all the precious metals (especially silver) blasted higher with SLV closing $1.35 higher (5.4%) and the Double Silver ETF AGQ up more than 10%. That is a tremendous move and it shows just how volatile the markets have become.

According to the last commitment of traders report, a couple large commercial banks are still holding enormous short positions. Whether or not they are eventually forced to cover those positions is probably the biggest unknown variable in this market. It will be fascinating to watch this unfold.

Update On Silver Mania 2

A few weeks ago I wrote a couple different pieces talking about the potential for another Silver Mania occurring. Silver had blasted up by 33% without the slightest hesitation along the way, something I hadn't witnessed in my 22 year trading career. Since then we formed a double top in the $25 area and tried to set back yesterday falling to just under $24 before Bernanke started talking.

Once again, Bernanke threw fuel on the fire and today all the gold and silver etfs are going through the roof. Let's face it, Bernanke is trying to use "trickle down" monetary policy to stimulate the job market the same way republicans used fiscal stimulus in the 80s. Whether or not that works one thing is for certain, it is fueling the fire in an already revved up precious metals market.

One thing I'm going to be watching is the latest release of the Commitment of Traders report, specifically the "Bank Participation Report" to see how much of the HUGE short position has been covered. In my opinion that has been the oxygen to go along with the Fed Fuel. The two combined have created an explosive combination.

Here is a reminder of what happened 30 years ago!

Precious Metals and Emerging Markets ETFs Hit New Highs

Luckily I was smart enough to use the $1 break in silver yesterday to take profits out of ZSL and I actually bought the Global X Silver Miners - SIL . I bought the miners this time instead of silver itself because in the later stages of precious metals rallies it's usually the mining stocks that go crazy. That doesn't mean this time can't be different but history is usually a pretty good guide. So far in this bull market the mining stocks have underperformed the precious metals.

Another area blasting to new highs "Post Bernanke" is the Emerging Markets ETF category. Whether you look at large cap or small caps most are hitting new highs today. The 3x leveraged etf EDC was up over 5% earlier today, quite a move!

Palladium ETF Continues To Outperform

Gold has been in the spotlight for several years and recently attention has turned to silver, but the real superstar of 2010 is actually Palladium.

As of the high yesterday at $65 the Palladium ETF (PALL) was up 50% year to date far out-pacing Gold which was up about 18% and even Silver which was up approximately 33%. The primary driver for this outperformance is the fact that industrial applications have been switching from Platinum to Palladium due to the fact that it's much cheaper.

If you are looking for market direction in the precious metals, keep an eye on palladium since it has been the market leader all year.

Double Top In Silver ETFs

Both of the most active silver etfs SLV and SIVR made a double top today. The high on SLV was 24.42 which was exactly the all time high, same with SIVR which reached 24.88 which was the all time high set a couple weeks ago.

The futures actually went to a new contract high early this morning before failing. When a contract goes to a new all time high and then fails I always called this the "Kiss Of Death Trade" because it is deadly accurate. Paul Tudor Jones used to love this trade where the professionals would push to new contract highs, triggering all the "Buy Stops" and then use that volume to establish short positions.

The way to trade this is to go short with a stop above today's high. If the market takes out the high today, odds are the trade is no good. I'm choosing to use the Short Silver ETF ZSL instead with a sell stop below today's low.

The beauty of the Kiss Of Death type trade is that the risk is normally quite small and if the trade turns out the gains are normally HUGE!