John, i believe gold is close to at least providing a short term opportunity. commercials have the biggest net long position since shortly before the Sept. 99 price explosion, and while they are often early, the position looks constructive for three weeks in a row already. more importantly, the non-reportable category (small speculators) has one of the biggest net short positions ever (about 3000 contracts, which isn't much in absolute terms, but it's significant as they are almost always net long as a rule) and the black box funds have not managed to push the price below recent lows just above 260 in spite of heavy selling on their part.
it's also significant imo that the gold stocks have held up remarkably well lately...NEM e.g. ending with a slight gain today in spite of being downgraded. the major South African producers all reported a RECORD quarter, as they managed to pare costs and profited from a weakening Rand.
of course i must add that it's been a long wait...the false starts from the ever longer falling wedge are legion by now. and yet, the LT formation promises a price explosion eventually if it resolves to the norm.
as for the Nikkei, that one could easily fall out of bed. apart from the obvious threat of breaking to fresh 11 year lows (underneath which there is ZERO support) , there are fundamental developments suggesting a final wash-out may be building in Japan. first of all, the dreaded March 31 fiscal year end, when many banks will likely not have adequate equity capital anymore unless the Nikkei stages a big recovery (this leads to forced selling on the part of the banks ahead of the deadline) as well as the arrival of mark-to-market rules, which should bankrupt several financial entities on the spot.
that said, Japan has been a decade ahead of the US in terms of market developments since early in the 20th century, so the end of the bear is probably close in time, if not yet in price. for GE's market cap you can for instance buy the entire Japanese electronics industry. worth keeping a close eye on...if the Nikkei were to break to, or below 10K, i'd definitely be a buyer, as this would bring on unheard of negative sentiment extremes imo. |
