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Sucker Punched!
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Sucker Punched!

by The MoleApril 3, 2009

UPDATE 2:38pm EDT: This morning I was saying this about Gold:

Gold is being difficult – as usual. But before you throw in the towel let me point out the game plan. See, in boxing you’ve got something like a 1-2 combination – throw a jab and than follow up with a nice upper cut or a hook right into your opponent’s smacker. We threw the jab by punching through that ‘fucking diagonal’ – the hook for Gold will be a breach of (and close below) that coveted 900 line. As you can see that line served as resistance back in December and it now has turned into massive support. I think it’ll be taken out soon – when exactly I’m not sure. But when it happens we’ll see a big drop to the downside.

Well, lo and behold, Gold actually gave up all its early gains and the ‘big contract’ – the one trading in the pits at the COMEX already closed below 900 today!

Loving it!!! This is very significant and with some luck we’ll get a big slide to the downside here soon – after of course the obligatory retest – yaaawwnnnn…..

Nice present for a Friday afternoon :-)

UPDATE 3:40pm EDT: I’m doing the daily Zero wrap up a few minutes earlier because I have to run off right at the closing bell:

The PZI got whipsawed today – down – up – and now down again. It’s a trend trading tool and doesn’t like that kind of tape. Fortunately the Zero Lite came to the rescue with solid signals – stayed below the zero mark while we dropped – then it pushed and stayed above while we rallied – finally it warned breached the zero mark again as we rolled over. As I’m typing this the Zero Lite signal is actually touching the zero mark again and we’re getting some long candles – damn, I’m going to have to redo my chart… &@%!$!~

Okay, if I was holding short positions I would probably start thinking about taking profits here. That’s pretty much it for today – I’ll be posting ‘Fujisan’s Naughty Spreads’ on Saturday and then follow up with my weekly forecast on Sunday afternoon.

Enjoy your weekend rats!

Cheers,

Mole


About The Author
The Mole
Mole created Evil Speculator amidst the chaos of the financial crisis in early August of 2008. His vision for Evil Speculator is a refuge of reason, hands-on trading knowledge, and inspiration for traders of all ages and stripes. You can follow him and his nefarious schemes at various social media waterholes below.
  • http://evilspeculator.com molecool

    Well – let’s see what happens.

  • DoubleNaughtSpy

    Just to maybe add a little clarity (or confusion for some of you 😛 ) to the FAS and FAZ trading that seems to be so popular, I don’t look at XLF most of the time. FAS and FAZ are based on the $RIFIN, so this is the chart I look at generally when trying to make a trade in either of these. I don’t really look at the ETF charts as they seem to be rather distorted compared to the actual index. Anyone else doing the same things or maybe have a better suggestion?

  • ptthaas71

    I did, just bought GLD puts 20Contracts

  • thunda72

    Yeah… I put my stop nice and wide this morning and almost got taken out on my way to work. UGLY!

  • C.C. Rider

    Loaded up on FAZ calls across the board May’s, and NDX puts 1300.

  • icdoc

    Same here. I don’t understand the weakness today, $djusre is not down that much.

  • http://acetraders.blogspot.com Nandu Konat

    Thats the last disgtribution push on IYR to 29.00.. its over

  • anthem

    With gold sliding, are you attributing that to more inflows for equities or because of the USD ?

  • DoubleNaughtSpy

    I just got a little FAZ at 16.30. Thanks to the Zero. This is going to be a short term trade only. I gotta be able to sleep. 😉

  • Osso

    Failure of XLF taking out 9.70….will it be the surprise at the close…???? I see GS in the 120.35 before the up move ends….

  • Osso

    Gold Comex June is what we have to see……imo…

  • http://www.triathlontrading.com TriathlonTrader

    when did the zero tell you to buy FAZ? Were you watching the Zero Lite?

  • catracho

    Looks like key level to break is 890, then a retest…900 purely psychological…

    but hey it´s close….(remember a week ago it also looked like breaking and then we had the 70 $ move up….)..

  • DoubleNaughtSpy

    Mole,
    Just curious, but what was the rest of your subscriber email going to say? You wrote “remember it's a”………

    Thanks,
    DNS

  • http://www.fit-start.com Trouser_Silo

    Just give it a chance :). Though this is the fourth time. If it doesn't get through, I'm out of FAS.

  • DoubleNaughtSpy

    Well I used the Zero Lite to confirm what I saw on TOS. That big ole peak on the Lite turned right as I was looking at a chart. I couldn't pass it up. It was too clean. Of course with this market, it can turn on a dime so I'm playing very small.

  • gatortrader2k2

    Nice call Mole. You've been all over this!

  • Osso

    IYR….28.91…resistance….previous low in January….

  • http://tradingsigns.blogspot.com/ T. Waffle

    If we don't break 832 on ES we will set new high.

  • Trader Jose

    Well done, 00!

  • molecool

    Hey, can you guys spread the love a little? It's been thin today and Mrs. Evil wants a new fur coat.

  • molecool

    Mmmwuuuhhaaaahaaaa!!! Doesn't that drive you crazy?

    LOL

    I got interrupted in between – doing 10,000 things. Just wanted to say that it's a trend trading tool, that's all. Not good for swing trading – that's what the Lite is for.

  • molecool

    You wankers are making money while I'm busy coding. Spread the love a little, will ya? I'm working my butt off here… but do it gradually 😛

  • moneyfarm

    Anyone adding to gold shorts at this level?

  • http://www.triathlontrading.com TriathlonTrader

    boom. you got your wish. now can we take out the LOD?

  • molecool

    I just look at charts, anthem – I'm not a macro economic/fundamental trader – too lazy. Price is the ultimate indicator.

  • thunda72

    Be careful…. MMs could be playing games. I'm holding my SPY puts a bit longer…

  • Squidman

    Not so fast. Just sweeping up.

  • Keirsten

    Done deal. She told me she'd rather have a new Birkin bag. :-)

  • anthem

    If I didnt make my trailing stops a bit wider here the MM would have taken all my positions out today. They took several, but still riding a few but yes, this movement is pretty ugly.

  • Squidman

    I don't think there is any question about the game playing. What possible motive would they have for letting this go now. They need more bulltards–guess I'm one of them.

  • anthem

    And just as I say that, that big long candle that swung both directions just took out 75% of my position. brilliant. Maybe a blessing in disguise – we'll see.

  • Squidman

    So far I've gotten a wall map and some stupid trading system. Woohoo!

  • BigHouse(Aka Mr Vix)

    XLF headed for the HOD again

  • http://tradingsigns.blogspot.com/ T. Waffle

    For new LOD we need to break 828

  • thunda72

    Yeah… I put my stop nice and wide this morning and almost got taken out on my way to work. UGLY!

  • indusequities

    IYR tarer almost hit.. 29.10.. Buying SRS again.. averaging

  • nummy

    im going long on physical gold here … i don't think it will drop below 850-900 range … ever again

  • nummy

    i'm also in SRS .. got in at 46 and holding on ….shoulda averaged in though :(

    lets hope next week treats us better

  • Keirsten

    ROFL

  • Trader Jose

    Doing exactly the same thing … $RIFIN. And, when trading DIG, DUG, etc. the index to use is $DJUSEN.

  • MyLifeMyTrade

    If you aren't short CRE .. now is when you can do it IMO.. I was in a bit early.. so hurting right now.. but look at VNO and SPG go vertical … this is not sustainable.. in the background these folks are defaulting on big dollar loans.. not only have they put lipstick on the pig.. they are also trying to show us that this pig can fly.

  • Osso

    IYR HOD 28.90….. .01 below the posted tgt…..but its very strong…..i guess its going further up….

  • Osso

    yes…its correcting down….GLD tgts. : 85.60…. if broken…….then….83.80

  • MyLifeMyTrade

    IYR should “CRATER” next week…

  • Squidman

    Looks like we are done sweeping now.

  • anthem

    This is f'ing ridiculous. You can't work when these whipsaws are moving 3 points back and forth in a minutes time.

    I'm out early. It's the weekend and I'm on vacation next week. Everyone have a good weekend and good luck next week,

  • http://www.oxyinvestor.com oxyinvestor

    Sold all my RIMM calls. Opened up V calls.

    http://www.oxyinvestor.com/2009/04/friday-updat

  • icdoc

    I bought some EEV today as well, its actually behaving better than SRS.

  • Osso

    any technicals…????? .i see the bull run still has legs….

  • BigHouse(Aka Mr Vix)

    FAS over $7 now

  • ptthaas71

    I agree Osso, Thanx!
    Cool avatar!

  • Keirsten

    I've got 83.98 on the .618 FIB here from Jan. high. Interesting close.

  • divergence

    Was a little early on the SRS entry @ 42.26, lucky that it was only a 1/4 position, so I will be holding over the weekend with more powder left.

  • BigHouse(Aka Mr Vix)

    The Peronas are attacking the upper end of the range in XLF

  • molecool

    Hehe – Zero Lite called the close – love it :-)

    Gotta run – l8er rats!

  • Nibbler7

    Damn SRS got ANAL-IZED! Wise to stay away from these cause the slippage is huge.

  • slartybardfast

    Hey Mole, Zero Lite was deelicious today, thanks.

  • Squidman

    I'm fickle, cheap and I lie. Sold FAS HOD and made the mortgage sitting on my ass all day. Have a great weekend all. Did you really think they weren't going to gun for over 8,000? Thank you everyone for all your sharing this week.

  • BigHouse(Aka Mr Vix)

    look for more gains in FAS next week :)

  • Squidman

    Pretty good ramp at the close eh? 7.10 to 7.2 in 2 minutes!

  • BigHouse(Aka Mr Vix)

    Indeed .

  • Squidman

    I suspect you are correct (if I may call you Nandu). I am inside commercial RE and they cannot keep the lid on the devastation much longer IMO. However, I will stick to day trading it near term.

  • Squidman

    Kudos Waffle, did not bust 828 and ES HOD. Hope your new job is going well!

  • http://tradingsigns.blogspot.com/ T. Waffle

    New job is going good. Can't complain

    I am still not accepting this bullshit rally. I am still holding my/ NQ short @ 1266 and my stop is 1328

  • drjain

    I think that IYR has a little more room to go to the upside. That being said, I bought a little SRS at the close in case it decides to turn right here.

    http://www.screencast.com/t/a35HzNFN

    target 29.9

  • DMS425

    Close, it is 29.85. I buy SRS when IYR buts over 30 Monday….. Just MHO. That is why I like SRS in the mid 30s. Posted it yesterday.

  • DMS425

    One more note, if TALF is used to refi CRE it will go higher and SRS will look like the FAZ!

  • DMS425

    Why, if TALF is used to refi CRE you are going to get killed. Just be careful. I think it will be expanded to CRE very very soon.

  • justpaper

    XLF break through 9.7 – your thoughts, rats?

  • richnyc

    Wow, what a day… Loaded up on FAZ and SRS near its lows for the next week;) Watched this video over @ INO.com. You might find it interesting:

    http://broadcast.ino.com/education/what_now_sp5

  • drjain

    Another reason why Monday may be a down day…

    http://www.screencast.com/t/L3OOpr6u

  • ColonelKurtz

    Opinions on possible inverted H$S on ESS.

    http://www.screencast.com/users/Morpheus1/folde

  • rose2797

    Mole, what exactly is zero lite and how does it work. I need to use it for buying and selling the stocks. Can u send me some info at rose2797@hotmail.com

  • J-So

    Or a gap up open puts that trendline in the rearview mirror for some time.

  • DoubleNaughtSpy

    Dang having a day job sucks sometimes (except the whole getting a paycheck thing)!!! How's a guy supposed to make a good trade with work getting in the way? I missed the close and now my good trade turned bad (but not too bad). Oh well, I guess I'll hold FAZ over the weekend. I'm sure glad I'm playing this one small.

  • http://www.aggressivelyuninformed.com nepharis

    Holy balls, thinkscript is awesome. I'm working on getting a TOS account up and running for futures trading, and started coding the indicator I've been planning to do for like a month now. It's pretty simple — I'm looking at the (%K – %D) divergences on multiple time scales (it'll take some more fiddling around, but right now I like 10m,20m,30m) — but was a breeze to code up in thinkscript and have running. I've been test driving all afternoon (instead of working… *cough*), and can't wait to actually get going with the trading. /ES, here I come!

  • itsgold

    I urge caution to those that keep calling highs and lows on the market. I use to swing trade a few months back, but it has become unsustainable because of the abrupt 2-3% changes in the indexes. People have been saying we've been overbought for weeks now [..and it use to be days btw]. Also those who are short, might want to consider that the zero indicator gave a long signal – both a confirmation and a PTA afterwards, bullish – especially for a Friday.

    Good luck all.

  • roncofooddehydrator

    After talking about how disappointed I was in FAS yesterday, today it made up for it. Incidentally, for people trading the 3x ETFs, the CCI(18) indicator on the 2 hour chart appears to be a decent measure for buying. It flashed a buy signal at 5.90 for FAS the other day, and here we are. The sell signals come later than I would like, so I'm looking at other indicators for that. PSAR looks promising, I'll post more about it tonight.

  • slartybardfast

    Rose, it's all explained in detail right here, on this very blog. Crazy! Just look for the link at the top titled “Zero”.

    There is a detailed tutorial, complete with video demonstrations and FAQs. Just click and read!

  • http://www.triathlontrading.com TriathlonTrader

    FWIW,

    Regarding the ISEE Index.

    Since September the All Equities reading has registered <100 only 24 times.

    Today it registered 93.

    All of the <100 readings were followed up by sell-offs within days.

    The lowest reading in 52 weeks was 66 (by far the lowest reading during this time frame) Friday 9/19. The SPX was 1255.

    Monday 9/22 the SPX closed at 1207. Within 7 days of that reading the SPX lost 149 points.

    the index opened this morning at 75 with heavy put action but ended at 93.

    the highest readings are harbingers of huge upside. i.e. 3/9 reading was 220. The next day the SPX opened at 679 and closed at 719.

  • http://www.triathlontrading.com TriathlonTrader

    The Zero also gave short signals today too.

  • itsgold

    Good stuff. I noticed the ISE closed slightly below yesterday at 119 and below the 50 day MA. However, we're not in either of the extreme ranges you described yet. I don't think we'll see below 100 until August-October. I could be very wrong [very wrong] though, especially with all that interest on the April 72 Spy puts.

  • itsgold

    Yea I know. I thought we would retrace the gap from 810-820 for sure, but no dice today. People are calling for a sell off because of earnings. Myself, I just play it how I see it day to day.

  • http://www.triathlontrading.com TriathlonTrader

    The index closed at 93 today. It opened at 75. The index is becoming increasingly bearish.

  • http://zstock7.com/ zstock

    SRS should be back to 86 = 200 day–before JULY or sooner–$38 was a gift price–in my opinion—I loaded up!!!

  • http://zstock7.com/ zstock

    What about 84.7 = 200 day–That's where I'm going long GLD–using a 3% stop

  • itsgold

    You're right. I thought the historical chart above had been updated with today's latest value. 119 was yesterday.

  • http://www.triathlontrading.com TriathlonTrader

    I think we are reaching extreme levels. one or two more closes <100 will greatly increase the likelyhood of a sell off if history is a tell.

  • bostonwealth

    Evening market makers, traders, speculators, bears, bulls, day traders.. hey my calls have been rather prescient when studying volume that needs confirmation for a stock that has not been previosly broken. Take a look at my call on ANN..

    If you notice what ANN did, it went up & broke the volume confirm at 6.58 by 1 cent that I highlighted! amazing !
    I like to look at unconfirmed volumes that need repeating to confirm a trend! Up 30% on three days because I was looking for volume confirm.

    Been doing rather well picking up winners than losers including my call to short the hell out of BHI which I milked for 20%..

    Follow me here http://www.oilservicestocks.blogspot.com/

    and on Twitter: https://twitter.com/BostonWealthMan

    I subcribe to the notion of Value of Perfect Information: http://tinyurl.com/cde7el

  • http://zstock7.com/ zstock

    GS reports 4-14, Can someone stop by my site and remind me to buy Cheap OTM $200 puts on GS April 13th, the day before—I think the puts will go from $200 to $600.
    Thanks in Advance.
    zee

  • http://zstock7.com/ zstock

    Hi boston,
    I added you to my Disqus favorites–Thanks for the links!
    zee

  • http://www.ryanbarr.com Covered (kzhat)

    if you're serious, just enter a conditional order in tos to be submitted at the appropriate time to buy the puts at the MARK 😉

  • Peasant

    I just don't get the shorting gold trade. If you are shorting gold then you are betting that the U.S. dollar will remain strong even though the U.S. govt is issuing dept as much as it possibly can. You are also betting that the bond market will remain in a bubble. Eventually the U.S. dollar and bond market will collapse. I'd rather be long gold and silver instead

    Mole, MLMT, S&P and others laid out the perfect roadmap for primary wave 2 in the last 2 weeks and yet it seems every bear on this forum keeps trying to short it on every move up. Don't trade like an economist. Don't trade based on fundamentals. The market has been ignoring fundamentals since March 6th. Good luck to all.

  • Susannah

    I thought traditionally it was a contrary indicator, you're saying, don't look at it that way, that it actually works better just to follow what it's saying people are doing. Funny.

    I had noticed it wasn't working very well as a contrarian indicator, I've just seen others mention it, haven't used it too much myself.

  • TomOfTheNorth

    I've been thinking a little about going <yikes!> long GS lately- which is unusual as I'm mostly short & an ETF kinda guy. What got me thinking was this article I posted here the other day:

    http://zerohedge.blogspot.com/2009/03/is-gs-tem

    If GS are the smartest guys in the room (and that's a reach these days, no doubt) then it seems to me that their current risk profile suggests they 'know' something that their peers don't. If nothing else, it might suggest to me a pair trade – say short one of the others. FWIW

  • http://goldversuspaper.blogspot.com/ Downandout

    Mole-

    The other side of your short gold trade presents a counter-argument:

    http://goldversuspaper.blogspot.com/2009/04/foo

    Cheers!

  • JohnyWalker

    I would point out that the argument you make for not shorting gold is the one an economist would make.

  • BigHouse(Aka Mr Vix)

    When Primary Wave 3 starts later in the year or sooner this video is going to haunt this idiot. Save this clip.

    http://www.msnbc.msn.com/id/22425001/vp/3001820

  • http://zstock7.com/ zstock

    That's hot–I'll look into conditional orders this week-end! If GS comes into earnings date at these current levels—Heck yeah—I'm shorting GS.

  • roncofooddehydrator

    Hmmm… backtesting the PSAR for an earlier sell signal worked better for FAS, but not for FAZ (too many false exit signals). Oh well, back to the drawing board…

  • http://www.ryanbarr.com Covered (kzhat)

    It is really simple in TOS and really powerful. You can set it to go in at a certain time and set it based on the bid, ask, mark, and a million other things. You can even make it conditional on the price of GS (at or above/at or below a level).

    You can setup your order to basically drop in right before the close and only trigger of GS is above/below the price you feel is appropriate.

    Good luck :)

  • ZigZag

    Save this picture too..

    http://tinyurl.com/dxsmhy

  • Fujisan

    It's nice to see you still hang out in here. Do you still hold on to your shorts?

  • bostonwealth

    My successful recommendations this week:
    1. ANN on Tuesday night recommended resulting in 3 day gain of 30%
    2. SKS recommended on Sat. March 28 resulting in 5 day gain of 40%
    3. BHI recommended to go short resulted in one week gain of 25% as I got out of puts at the right time. Posted live all trades on Twitter!

    http://www.oilservicestocks.blogspot.com/

    I blew:
    1. Said to go short SPG

  • molecool

    Thanks mate – I also hope the messages I shoot out to you guys help interpreting the signals properly. It's really not that complicated once you watch it for a while – just like many other trend indicators. The pros usually get it right away – the noobs seem need a bit more help.

  • molecool

    Jeezzes guys – why are you buying puts on a dip? Haven't I addressed this ad nauseum in the past?

  • TomOfTheNorth

    With both hands!

    lol

    I'm here every day – just haven't had a whole lot to offer. That should change pretty soon though. Can't see this heading sideways.

    But for now, we're still in the channel. So I'm sticking with the plan, but it HAS been painful.

     

    ________________________________

  • moneyfarm

    Curious about your response to this. I'm short from about 925 and did not add to the position. I just put the question out there to see what people were thinking. What would be wrong with pyramiding short at this point?

  • Macrawn

    Wow that was a sweet slap on Bush at the end there.

  • Skates

    I am looking to start dabbling in some real estate properties and converting them into rentals…anyone have any recommendations on finding foreclosed properties? Are sites like realtytrac.com worth it? I would love to hear someone's experience in finding foreclosed properties! TIA

  • bhagman

    Mole,
    i'm new to your site and grateful it. I have a possible EW count that I haven't seen you consider and would like to hear your take on it. What if the March low of 666 was the bottom of wave 3 of primary 1. And we are currently reaching the top of wave 4 and awaiting wave 5 down which will breach the March low of 666 and take us to new lows somewhere between 500-600. what's your take ??

  • TomOfTheNorth

    This might be too simplistic but, regardless of it being condo, single or multi family, I would recommend you stick with an area that you know well (and ideally live near) and/or if you're looking at buying a 'vacation rental' type of property, that you buy one that you'd be happy to own (merely for your own vacations) in the event it doesn't rent. In either case, if the economy improves you can expand (scale in). If things don't you'll be less likely to end up in foreclosure yourself. With respect to foreclosed properties, local real estate agents, real estate attorneys, lenders & the county tax agency will have an abundance of info. As the debt on a property moves farther afield and is possibly sliced & diced, it becomes increasingly difficult to secure clear title – and that is something you should not compromise on. I have not used the pay sites. I use a local network. That said, prices here haven't come down sufficiently (IMO) to make for a compelling buy at this time. I'm expecting a tsunami of foreclosures still to come.

  • Jigsaw

    I thought about buying some puts but even though it may be a terible earnings report, they may spin it as the worst being over thanks to the new rules on M to M. Which could cause it to run higher, too risky for my tastes. BTW, max pain for April is $100 which would bode well for shorts

  • Peasant

    I bought a 1 month subscription to realty-trac last year to check out some foreclosed properties in my area. What I found was that it was not up to date as they advertise. Foreclosed properties that they were showing as still on the market had already been auctioned off and sold.

    The one nice thing about Realty-trac was they showed the mortgage amount that had been defaulted on. Theoretically that would be your starting point in determining a proper bid for reo homes. Keep in mind that it costs banks 10's of thousands of dollars to take a home off the market and put it through the foreclosure process so you can underbid them even more for what they have in it.

    There is an article in NYT about banks that are starting to walk away from bad mortgages. If the underlying property is worth less than what it costs the bank to foreclose on it. pretty interesting stuff.

  • Peasant

    lol. You are right!!! I thought the same thing after I made the post. Looking at the chart for gold, it does look like it broke to the downside out of its channel the last 2 days but it has done this before. I think I will just stay away.

  • Fujisan

    I hear you. I will change my assessment once it breaks above 850 for SPX.

  • TomOfTheNorth

    As will I once we make a new low ;->

  • GMunni

    Actually, shorting gold would be an inflation trade and long gold would be a deflation trade. In the Great Depression, during the periods when inflation appeared to be coming back gold prices fell. Gold is a better deflationary hedge than an inflationary one. Why? Because when stuff is going up in price why would you want to hold a useless lump of metal. As to the relationship to the US dollar, there is correlation but that doesn't impute causation – at least until proven otherwise.

  • rhae

    *IF* Gold gets a Knock Out Punch… GLD a very bearish projection…

    http://screencast.com/t/QEly2Eejny

  • salvadorveiga

    yes he has thought of it ! but only if we dangerously close to 700's he will think of it… so far nothing indicates that…

  • C's & 3's

    The wave three scenario lacks proportionality to wave 1. However, the thought that this is an irregular flat wave 4 is still valid.

    My preferred count is wave B of 2. It is also an irregular flat. My thoughts are based on the theory this rally will be an all Summer affair. If this is already wave 3, we are blowing through this affair much too quickly.

    Fortunately or not, both of these counts coincide with adding some puts around 860ish. I am largely in cash until then.

  • trojanhorse

    Here are some weekend charts to chew on –

    Since it looks like many are closely watching VIX –
    http://img211.imageshack.us/img211/6869/vixdail

    SPX daily now showing resolve, check out RSI and 50 MA –
    http://img211.imageshack.us/img211/9916/spxdail

    SPX weekly view identifies vulnerabilities with a potential top next week at 850-860.
    http://img211.imageshack.us/img211/7347/spxweek

    I think we get a nice pullback to tease that 50 MA, mabe even drop below. But at the moment I do not have conviction that we drop below March low before going to higher highs.

  • MikeT

    Fujisan and Tom,
    When do you forsee see any decent correction/pullback happening? Not being a day trader and more of a swing, I really have missed this rally purely because Ive been waiting for a decent pullback to go long, but really feel that hasnt happened or EVER will :) Thx

  • GMunni

    Or a lot more to run…

    http://tinyurl.com/c5rmb4

  • itsgold

    links are not working

  • Peasant

    IYR breaking out of its descending triangle:
    http://www.screencast.com/users/peasant/folders

  • drjain

    Yeah, if we have two closes above that lower trendline, I'm out. But
    given the extreme move we've had so far, there is no way I could go
    long without some consolidation.

    –Ajay

    Sent from my 3G

  • Peasant
  • slartybardfast

    Hi GMuni, other way around I think, if I understand your comment correctly.

    Inflation means more money in circulation. That means that the dollars that are already out there, are becoming less valuable, because there are more of them.

    Deflation means less money in circulation. So the dollars under your mattress are gaining in their purchasing power, because there are less dollars out there, and prices are dropping, people are getting laid off, loans are defaulted on, and the vicious cycle continues. It is very hard to break this cycle.

    When stuff is going up in price (a side effect of inflation), you certainly don't want to be sitting on a lot of cash, that's when your gold would be increasing in value (purchasing power) and your cash will be decreasing in value (purchasing power).

    In deflationary times, cash is king, you want to be long on cold hard cash. Everything else decreases in value relative to the dollar.

    In inflationary times however, your cash is becoming worth less by the day, you do not want cash, that's when you want the hunk of metal, that's when you go long on gold.

    In my opinion the reason for shorting gold now, aside from the EW outlook that calls for a correction to the downside, is that we are in a period of massive overwhelming deflation. Yes, the fed is trying to fight it, and they are printing money like crazy. They are (rightfully) afraid of deflation and their solution is to try and cause inflation, hence they're printing money and Congress issues huge 'stimulus' bills.

    I believe right now we are experiencing massive deflation, and one side effect is prices are decreasing (e.g. houses, cars, just about everything) but ultimately, one day, inflation will be the dominating force. I have no idea when that will be, maybe a couple of years away, who knows? It's a big question.

    Robert Prechter wrote a lot about all of this in a great book called “Conquer The Crash” which I highly recommend (Amazon link for this book: http://tinyurl.com/c559jv).

  • rhae

    I suppose open to interpetation, desc. T ,fine… …falling wegde ?

  • TomOfTheNorth

    Hi Fujisan –

    I just wanted to tell you that your options tutorial was terrific!

    Best,

    TOTN

  • GMunni

    slarty, what you say is certainly the conventional wisedom but often the conventional wisdom is incorrect. If you check any accounts of how gold reacted during the GD, it reacted as I've outlined and in the opposite fashion to that wisedom.

    If you think about it this makes sense. Gold is a store of wealth. In a deflationary environment you need a store of wealth and normal assets won't provide that. In an inflationary environment, you want to own those things that are going up in price i.e. oils, grains, steel, land, frozen concentrated OJ. Gold would be at best a dirty hedge and at worst a commodity that is stuck going no where as the ones you are trying to protect against rising run away from you.

    In this current cycle, the same applies as during the GD. If you had gone long gold and short pretty much every other commodity, you would have a made a mint. From when grains and oil bottom, they have outperformed gold. Take a look at stockcharts.com with the symbol $CCI:GLD to see what I mean. If gold behaved in conventional wisdom fashion, that graph should have a very flat profile.

    I have read Conquer the Crash but not in a couple years.

  • Fujisan

    Thanks, Tom. I remember that you were the first one to say nice thing about me!

  • TomOfTheNorth

    I'm always ahead of the pack!
    LOL
    http://www.searchingwolf.com/howl.wav

    ________________________________

  • nummy

    hey ZigZag … just wondering what technical analysis software you use … and i see you use a mac? i have a mac too and i have been looking for something good for the mac platform but there doesn't seem to many good ones out there.

  • ZigZag

    Hi Nummy,

    I'm running parallels on the Mac for all the windoze stuff…I use elliottician, stockcharts and vectorvest for all my TA. I can't stand windoze, I wish it was all Mac.

  • ZigZag

    Hi Nummy,

    I'm running parallels on the Mac for all the windoze stuff…I use elliottician, stockcharts and vectorvest for all my TA. I can't stand windoze, I wish it was all Mac.