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Monday and The Doctor Is In

Big Al
April 7, 2014

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Discussion
18 Comments
    Apr 07, 2014 07:32 PM

    Gold is a buy right now. I suspect it will rise through the end of this week, Doc. The flip side of that is I have a suspicion equity markets will have another down day tomorrow so there might be the appearance of a shift to metals. Maybe looking for gold to get as high as 1330 by weeks end. By the way, I share your concerns for US stock markets. We could indeed be on the cusp (or already entering) a deeper than usual decline. Not a crash scenario perhaps but better than a 5% haircut.

      Apr 07, 2014 07:29 PM

      Bird, I personally agree with both you and Doc

    Apr 07, 2014 07:36 PM

    Offhand Doc….when you say you think this could get a little ugly over time are you suggesting that maybe the markets will just start to ratchet down and gradually become a bear? I had a similar thought if that was your idea. With the supports that exist to keep stocks propped it strikes me as entirely possible we don’t see a steep decline at all. Just a long drawn out withering that wears traders down and eats away at their past gains day after day without setting off any alarm bells or sending the pack running for cover.

      Apr 07, 2014 07:57 PM

      Bird, I would favor that scenario. You might also look at the dow/gold ratio chart. That also looks to me like we’re finally starting the next leg down. As with the stock market it’ll take place over years not months. Furthermore, I feel that the commodity market/resource market is finally starting to perk up—-the dollar looks toppy and by late spring we could see it break lower.

        Apr 07, 2014 07:17 PM

        I will take a look Richard. Been awhile since I visited the Dow/gold charts. I must be getting less nimble or my typing fingers are lazier because I find I ignore more than I pay attention too lately. Maybe we just use less information sometimes and can still arrive at good conclusions though. I would prefer that assessment to one that says maybe my brain is withering!

          Apr 07, 2014 07:30 PM

          If your brain is withering Bird, I would hate to see mine!

        Apr 08, 2014 08:34 AM

        About the dollar Doc…..take a look at the weekly and you will notice that it has been seeing good strong resistance at the 79 level. Five attempts since mid 2012 have not succeeded in penetrating below so I feel pretty confident calling for the dollar to rise as US QE winds down and ECB QE gets more public coverage and discussion. The dollar wants to rise at this stage. Right now this week it is shaping up a relative double bottom and I think it will be trending up beginning next Monday or Tuesday. The Euro meanwhile will again touch 1.40 this week in my view before beginning a new path lower towards 1.27…..there has been indecision on the Euro chart since last December. Favorable statements by the Bundesbank or Mario Draghi and others this week should end any confusion that might be taking place and get the trend reversing where we start to see the Euro fall and dollar rise. That’s my call anyway based on policy messages, chart language and timing so I will be watching for the statements that could come by Friday. Gold is moving with the Euro right now, by the way. I think the correlation will strengthen this spring……..it won’t be long to find out if my hypothesis is correct. Five trading days maximum.

          Apr 08, 2014 08:24 AM

          One of the biggest problems most people have with trading is that they behave reactively to chart actions. That is, they trade after the moves have already been made and the money and opportunity have been missed. Above, I outlined how I anticipate the market to move before it is a fact. This can be dangerous and I don’t recommend it for anybody who does not have the time to watch what is happening closely. But if I want a trade in my favor I need to front-run the rest of the market and I can only do that if I build a fairly strong case that gives me some confidence the probabilities will go in my direction. What drives me nuts is that all the big news comes on the weekend. Few are prepared and even fewer can get trades initiated once they are sure of the directional change. So we get this big gaps up or down Monday mornings that leave most people feeling like they just can’t catch a break. My bet….short gold and long dollars for next week. It could be wrong of course. I just don’t think it will be.

            Apr 08, 2014 08:48 AM

            Note for above….I should have said the Euro would be heading towards 1.40 this week….not actually hitting it which would be pretty doubtful. If we got to 1.39 that would more than suffice. Apologies to anyone who reads these comments of mine. I wrote the earlier post rather hastily. Nonetheless, my theory does look to be playing out already judging by the action so far. The Euro has again risen above 1.38 fairly robustly so another cent higher is more than plausible by Friday or the following Monday. Gold is also cooperating so far having spiked up rather nicely overnight while the dollar lost half a cent strengthening the gold/dollar correlation. The rest of the day awaits.

    Apr 07, 2014 07:51 PM

    Doc,
    You are sanity…in midst of market insanity…need I say more!!!?

    b
    Apr 07, 2014 07:02 PM

    So what happened to shorting gold?

      Apr 07, 2014 07:12 PM

      Don’t get mixed up by the message B. We are talking a difference between overall trends versus short term trades. Nothing goes straight up or straight down naturally. So while I contend gold is going to get squashed it does not mean it will not both rise and fall somewhat predictably in the interim. In this case I strongly suspect gold will rise leading towards the weekend and hit a snag early next week. Where the short fits in is more a personal trading preference and related to timing by the hour that we don’t normally discuss here.

        Apr 07, 2014 07:31 PM

        At least I don’t Bird. Thank God for that!

        b
        Apr 07, 2014 07:42 PM

        actually figured that’s what it was you were talking about, I (as a horrible trader) decided not to attempt to catch the “bounce”, Maybe Im wrong, but I kinda think if we get in around June,(not sure in the least of course) profits should make a person not care one way or the other about catching bounces.
        Whats the saying? “be right sit tight?”
        My only challenge should be to choose a good time to get in.

          Apr 08, 2014 08:51 AM

          Gold is rising nicely this morning B. Fairly predictably too which I like. I sure don’t watch it minute by minute though. The guys who strap on depends and glue themselves to the computer screen during trading hours are all crazy you know. If an obvious shape appears each week that’s usually good enough for me. So far we are up 10 bucks which was a near vertical move if you check the five minute chart. Should keep climbing all week. There is always a rise before the fall!

        Apr 08, 2014 08:43 AM

        Day traders are like honey bees …..gathering a free lunch for a hungry bear….
        Uncle wally……….1988

    Apr 07, 2014 07:42 PM

    i like what is going on in the conventional market

    gold can catch a bid

    Apr 07, 2014 07:49 PM

    after watching stocks rise to the sky for no other reason than the fed wanted to levitate the stock market to create a wealth effect i am very glad at what is happening in the stock market.

    i want to see it crash and burn.

    people dont like that, too bad.

    All Ben Bernanke ever had was his econ 101 textbook, the chapter on keynesian economics and creating a wealth effect and getting people to spend now as opposed to later.

    it was a simplistic plan from someone who never really had a real job, like so many of the elites in dc

    i say let justice finally be served.

    i dont understand some people. theyve watched gold get literally clobbered for 3 years, when it shouls have been sky rocketing, but was not, because of outright manipulation, both in keeping gold down, and the stock market up.

    now we should be concerned because stocks have gone down a little

    give me a break

    take it all down!

    crush this race!