Tuesday, July 07, 2009

Bevy of Sells

VIX - Daily

DIA - Weekly

SPY - Weekly

DJIA - Weekly


*VIX triggered a Buy Tuesday, which is a SELL for equity markets;

*All weekly charts require weekly closes below their respective Sell triggers, so these shown above will not be confirmed until Friday's close;

*The evidence is bordering on compelling that the next leg down has begun.


Eighteen months of Weekly Gold price movement above, even with my tools, I haven't a clue.



Michael Lomker said...

I've never understood the appeal of gold as an investment. It seems to be sold to less sophisticated investors as a hedge against inflation because they don't understand that gold's price is affected by many other things...making it a lousy hedge.

Sandy said...

So true Mike, gold seems to be the mystical one...

Edwardo said...

Well, Mr. Lomker, now that you've insulted those of us who had the good sense to buy gold when it was selling for less than a third of its present value in dollars, allow me to say that you appear to not have a clue why gold is a fantastic investment.

More to the point, you clearly have no knowledge of the history of fiat currencies. They tend to have shelf lives of about thirty to forty years before they default and are relegated to the dustbin of history. Well, here we are, almost forty years after Richard Nixon closed the gold window. Got Gold!

If you are betting against gold then you are betting on the dollar. I can't think of a more ill advised
bet to make. I suggest you read the work of Antal Fekete before it's too late.

Anonymous said...

Allan, I appreciate your honesty on gold. I agree, all my indicators are neutral. I've noticed that for years Robert Prechter and James Sinclair (http://jsmineset.com/) have usually been directly opposite on predicting the price of gold. Usually Sinclair is right, and he got rich trading not predicting.

Ironically a few years ago, I developed a mechanical Renko-based trading system that I paper traded for over a year. It worked superbly on gold and silver, but nothing else. Go figure.

Anonymous said...

The elusive Gold bus will suddenly leave the station just as soon as most riders jump off for lack of patience. Those would be riders will be able to get back on the Gold bus at the next stop, near $1,500 per OZ. At $1,500 per OZ, Gold will still be cheap compared to freshly printed paper dollars backed by nothing more than a big smile. The paper currency fires already smolder in California and will rapidly spread to other less prosperous states. Paper IOU's, paper dollars, no discernable difference. Warm regards from NYC/joe

Anonymous said...

deflation is the name of the game, and therefore gold together with other ommodities will have the same direction as eqities... cash will be (perhaps already is) the king...

The Sound Center said...

Thanks again, Allan. I appreciate it.

The three miners I follow are puzzling.

RGLD - in the dumper.
SA - quien sabe?
WGW - a local mine, just keeps chugging away.

I've been scaling into at-the-money SPY puts, at least 45 days out, since June 16th. I close these positions once a 20% profit is realized.

So far, so good.

The Sound Center said...

Just read your previous post.

June 16 - July 7 would be like er,um... 3 weeks, I guess.

Darn snappy that Blue Wave contraption.

I've been taking the signals from $NYSI.

Anonymous said...

Once again I'll say for the record that Commercial Commodity brokers are shorting Gold 3:1.

They are also shorting the S$P 2:1

Don't know what all that means but I've always been reluctant to bet against those guys.

Michael Lomker said...

>when it was selling for less than a third of its present value in dollars

If you are a sophisticated investor then you weren't included in my last post. I consider gold a risky investment for Mom & Pop's retirement account.

I have a graduate school business education, by the way. I just don't agree with you.

Anonymous said...


I don't believe that gold has been a good investment in the past, but I do believe you can make a lot of money trading it. So I'm not disagreeing with Edwardo per se, I'm just not going to buy into any long range position right now because I can lose a lot of money while still being right.

Now if you are going to TRADE gold, then you have to answer me why trading that is any more profitable than trading another commodity like, for example, copper. Other commodities are not subject to the types of manipulation that gold experiences both from private money and the central banks. If you are still unconvinced, can you explain to me while gold hasn't already taken off considering the fundamentals of the economy? (fundamentals don't work)

If on the other hand, you are hording gold due to a doomsday scenario, that could take decades to develop even if you are right. Better to wait for the actual collapse to begin, and then hide under your bed, than to repeat the mistakes of the bears who sat out the 1990s. Read Ravi Batra's book, Surviving The Great Depression of 1990, for an example of what can happen to your finances when your mind gets wrapped up in the fundamentals.

As for the deflation vs. inflation scenario, I don't see why we can't have our cake and eat it too. Why not both in succession? Deleveraging is inherently deflationary and we are seeing the effects of that now. The government has many options to keep inflation at bay for a while, but I agree it's comming. But, I don't agree we will return to the interest rates of Volker anytime soon. The economy is not going to experience any substantial growth for some time, reducing our leeway to raise rates, and our exploding government debt, which we cannot afford to service now, is all in short term debt. What do you think would happen to the budget if service on that debt jumped ten fold? The Treasury and Fed are playing a dangerous game as they play for time.

Hey, maybe I'm wrong, but this is a trader's blog so I don't care. I don't care about what or why, I only care about when.


Anonymous said...

No one is questioning anyone's intelligence or calling gold investors conspiracy kooks. All I am saying is that your argument for holding gold assumes that it has to respond to the fundamentals.

The current argument for gold hasn't changed since 2008, and yet, if you held it between March and November, you got killed. If your argument didn't protect you then, how can you trust it to protect you now?

The government has consolidated the power of the financial industry and made it beholden to government. That's why TARP was mandatory. It was setting the stage for unprecedented government manipulation of the markets. Rolling Stone missed the point, GS is doing exactly as it has been told (By former GS employees of course, so which is the tail and which is the dog?)

Anything which makes it look like we are in free fall must be suppressed. That's why the job numbers are so laughable. Many economists track the historic price of gold vis a vis the DOW. The administration can't allow a gold rally to panick the markets. A mass exodus into precious metals would collapse "the recovery" they are trying to spin.

The whip saws will continue and everyone will wonder why. All you have to do to figure it out this chaos is ask yourself who wins if the price of gold is suppressed. Your argument for gold assumes that the market has to reflect the fundamentals. It doesn't.

(Now, how's that for a conspiracy theory?)


Anonymous said...

LOL about Ravi Batra.

Let's not forget those who sat out the 80's thanks to goldbug Howard Ruff. Maybe someone should read his 1979 book "How to Survive in the Coming Bad Times" which tells you to stay out of equities, buy gold bars, and stock up on canned food. If you like that try his 1975 book "Survival And Famine In America" which predicted massive famine.

I think a lot of the people who currently cover the gold market are using fear tactics on their subscribers.

Mike said...

no wonder we're in sell mode...

buyers are in Idaho.


Anonymous said...

I hope I am wrong, I hope Gold goes back to $250 per OZ. The world will be a much better place.
I will have a loss but I will still have my gold and I sleep well at night. If however I am right and we might be nearing a global paper currency panic, then woe to those who lost patience. I am not a Gold bug at all, but Gold will capture the imagination of the herd as soon or as long as it takes to break out. BTW those who trade Gold miss the point of simply keeping some, just in case.

Anonymous said...

Nothing wrong with keeping part of your portfolio in something that can't go to zero. I can't argue with that.