Jeff, yes I see the setup, makes perfect sense in this crazy post bubble market.
You said, "how long can they delay the inevitable"
That observation reminds me of late 1998, with another derivative induced financial crisis, LTCM(along with the collapse of Asian Tigers and Russian Bond Default)
Greenspan and the Fed induced the big boyz to bail out LTCM, and the Houses had to pony up serious money to avoid some collapses. In exchange, the quid pro quo, they got a heads up on that instant mid-day interest rate cut, and futures spike, and it was 'off to the races'
That reversal/prop job continued and was exacerbated by the Y2K pumping, and 18 months later, March 2000 we have what John Templeton called 'the biggest bubble in history' with Nasdaq at 5100.
This gold/nazdaq situation now reminds me of the 'financial engineering' coordinated by the Fed and boyz in 1998.
But, as many have noted, how many 'bullets' does the Fed have left, nothing like those they have used with 13 rate cuts and massive dollar printing.
How long can they delay the inevitable, with a relatively small market like gold, it appears they can move it around at will, but the bigger market will continue to retrace.
It is, as you say, a high risk situation wrt gold, so I'll use that potential inverted H+S as a near term guide, use my stops and be on guard for a double bottom, as well.
Thanks for your thorough analysis. I'm more inclined to hold commodity based investments as we continue to correct, and a lot of cash, and not try for a home run on any bear market rallies.
In this big bad Bear, I'd prefer to short, and the 'recovery' is a long long way off, IMHO.
James |
