This was an exciting week all around. I know many are questioning how much farther this rally can go. There are so many potentially ominous signs: weak volume, rising wedges, gold breaking out, the extent of the rally, etc. But over and over again, I am learning that it doesn't usually make since to lean against the trend, and so far, the uptrend in the stock indexes has not been violated.
I do expect that next week will continue to be volatile. Past history suggests that the probability that Tuesday will be a big up day is around 80%, but this past September 1 was down against the odds, so perhaps Tuesday will be too. In any case, whether the trend continues to weaken or reasserts itself, I continue to believe that the top will be in October not September.
Today, a number of leading stocks advanced nicely. As long as that continues I will stay with the trend. Given this I may add one or two more positions next week before putting on the brakes. Of course these will have closer targets than earlier positions.
I am looking for a chance to add to my long gold position, but so far it hasn't appeared. Conversely, I am short oil again with the DTO and looking to add to that position. I am looking for a retest of the July low and an opportunity to go long again on the back of gold's advance.
This has been a long week for me - several 16 hour days to finish a project, so my next post will be Tuesday evening. Have a great labor day weekend.
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4 comments:
I know that the intermediate-term trend in gold is up, but there were some ugly Marubozu candles today in GDX & ABX; need to trade sideways a couple of days & regroup for another assault.
The one thing that concerns me about the rally in gold is that the dollar appears to wedging down with perhaps only waves 4 and 5 to go. This could put a cap on the upside. On the other hand, gold could de-couple from the dollar.
I do think we need a couple of days of consolidation before 1000 can be taken out successfully.
http://www.google.com/hostednews/ap/article/ALeqM5j_NKNyiEFoq1K9LXbFoGdbrf6LbQD9AJE7BO0
http://www.bloomberg.com/apps/news?pid=20601087&sid=a_Rt2xgQeWvY (hope this link works. Sometimes Bloomberg links don't translate)
"Sept. 8 (Bloomberg) -- Barrick Gold Corp., the world’s largest gold producer, plans to record $5.6 billion in third- quarter costs to eliminate fixed-price contracts as the company bets that prices for the precious metal will climb."
Trouble is, i can put both a negative & positive spin on that story.
The ABX offering, which was announced in Monday's aftermkt may have been the reason for the ugly Marubozu candle.
I was eagerly looking forward to this & was very heartened over the weekend when it was published. http://www.marketwatch.com/story/contrarians-see-hope-for-gold-breakthrough-2009-09-04?siteid=
Let's remember poor sentiment when something is low is mostly fear. Poor sentiment when something is rising is skepticism. I love to be long when sentiment doesn't match the direction.
Here's the negative spin that i could put on the Barrick development http://bespokeinvest.typepad.com/bespoke/2009/09/did-barrick-just-jinx-gold-again.html
It's not a matter of a jinx. Although mining companies may be great about getting the stuff out of the ground they may not be the best indicators of future price direction.
And as i wrote earlier, i am heartened by the skepticism in Hulbert's sentiment findings as long as it does NOT match (upward) price direction. OTOH, price softness & skepticism makes me wary as well as not holding above price breakouts & mining shares underperforming bullion as yesterday (Weds).
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