As I mentioned on yesterday's post, the data for existing home sales today showed further meltdown in the housing market. However, the drop in sales was small compared to expectations and forecasts. The market took this to mean some sort of stabilization in housing sales and real estate stocks rallied hard. But I do not buy this rally. We took this opportunity to build up our short position in PHM (Pulte Homes, Inc). Furthermore, we decided to hedge our long gold futures position by shorting a basket of gold stocks (NEM, AU, ABX). This hedge is supported further by a potential head and shoulders forming in gold stocks.
BIDU will be releasing its earnings tomorrow after the market closes, and I expect it to test the completion of a potential descending triangle. Today AMZN took a big hit due to poor earnings and I don't think the outlook for BIDU looks any brighter.
Disclosure: Long Gold Futures/Short NEM, AU, ABX; Long NatGas Futures/Short Crude Futures; Short BIDU
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