Instituted my JJ Walker "Good Times" HUI Stops here...
"Good Times" as in the 70's comedy theme song that began with - "moving on up"...as in moving/raising stops up tight behind today's move (vbg)...not taking any more profits - yet - but raising stops and maintaining a "loose leash" to give these dogs a little more room to run.
I think the wall will once again be HUI 150ish... as it wouldn't be prudent if we didn't expect to see some profit taking from here to there.
Imho; I think we're riding the wave of the final boarding for Iraq and sidebar issue's like the Venezeulan Strikes/Oil situation don't hurt either.
My "bet" is that this is a higher basing consolidation move.
We washed out the weak hands with that first major pullback in July and then a follow up double bottom in October and imho; we have now clearly established where the longterm/strong money was at in the HUI... ie: 105ish.
Now, we just may find 125-130 the next base level and 175ish our new upside target....although I wouldn't be suprised to see 150ish here met with one more visit back to 110-115; before we put in that new high and then new base at 125-130.
I think we must ANTICIPATE what all the pundits will be beating the drum on once the market turns down here as we move into IRAQ which I think is clearly a when, not if proposition...ie: they'll be recirculating all the old Gulf War market charts... the initial pop in gold/oil & downturn in equities... then as bombs started dropping, tanks started rolling and we clearly established control - things reversed.... gold/oil retraced and the broad equity market rallied.
The most significant point on how to anticipate how the market is going to react is as I mentioned before; the BULLS now have significant cash available to them that rolled out of the Bond Market top here of late and as they showed in the move to DOW 9,000ish; they are still willing... and as long as they are still willing and have that new influx of Cash that rotated out of the Bond market; they're also still "able"...so we should anticipate them (and history) repeating themselves... in pounding the drums on the Gulf WarII coming pullback here/pop in Oil/Gold as being the now 5th, or 6th THE BOTTOM and they'll buy the hell out of the equity market and the FED & the PPT boys will prop the US Dollar and throw a little wind at their backs.
THAT feel-good/Patriotic Rally & corresponding pullback in Oil & Gold; which will be propelled with much of that Bond Cash put to work on the equity side; will be the set up for the coming final washout leg of pain that will turn this Bear Market.
To break HUI 150ish imho; we need more "true believers" from the Institutional side and "they" in their mind; really haven't seen any further significant fundamental risk in the US Dollar; even though there is and will continue to be (they see it bottoming here, see Bush's new economic team as supporting the Dollar etc), they don't fear the derivatives bubble (yet) and ala LTCM probably won't see it coming untill it actually appears in the headlines and we have to remember;they don't really fear War with Iraq and are already setting up their new "Talking Points" that they'll use to call yet another bottom - once bombs start falling.
It's going to take the Dollar moving to unexpected SIGNIFICANT new lows and for the market to fall to new lows; both which I think we will see next spring.
Remember, these same players did not move to Gold/Gold stocks in any degree necessary to take the GOLD sector to any new significant highs during the collapse of Russia, LTCM, Brazil,the March 2000 market meltdown, the Sept 11th Terrorist attacks, or the any of the preceding legs of this Bear Market that took it to new lows.
They know they've got the "Greenspan Put" standing on the sidelines ready to fire up the presses anytime the market teeters on the abyss, event driven, or not...
They really haven't learned fear yet...and they have not yet capitulated; but, they will (vbg)....we're just not there yet.
The Bulls are going to have to continue to get "Stair-Stepped" down... slow & steady - leading them by the nose; with perhaps a few moderate upside knee-jerk moves along the way in gold... but, I don't think we're going to see any $30-$40-$50 short-term, or event driven spikes in the price of Gold; other than if we see a large scale bio, or nuclear event.
I think it's as simple as the US Dollar and the US equity markets continuing these stair-step lower lows; little upside rallies that generally will form bases at continuing lower highs; then fall to new lower-lows; rally once again, base at yet again lower highs; then rally once again as the Bulls call yet another THE BOTTOM; then go to yet lower-lows as the reality of valuations & the inflated earnings numbers that are being used continue to convert new "true believers" slowly over time. They come in waves, slow and sure... all the way down and that's how I think we'll build the ranks on the Institutional side for Gold.
Using "clean/real world" earnings - as we've discussed here many times... taking into consideration options, those seemingly perpetual "one time charges", the growing Pension Short Falls that may become one of THE stories of 2003 and what I think we will see be the next catalyst for the BEAR - that being accelerated foreign repatriation of US Investments... they'll see the fundamental necessity of a much lower US Dollar, of our continuing crisis in accounting & earnings credibility & the obvious VALUATION bubble that still exists and the near unfathomable underestimation in both TIME & MONEY of the cost of Homeland Security and the War on Terrorism... which imho; will make the Speculative Bubble Orgy of the late 1990's "Misallocation of Capital" seem like childs play - because the Investment Bankers won't be making Billions on writing IPO's or Bond Deals on this one... no Goldman Secondaries atop Saddams, or Bin Laden's back etc.
The misallocation of capital of the new millenium; will not be reckless speculation with borrowed money into Internet,Tech & Telcom Stocks that all goes to money heaven... but, instead the huge costs and the length of time those costs will be needed, for what is needed to truly secure the Homeland and secure the Global Geopolitical environment from terrorism and religious fanatacism for the coming decades.
The US markets have also imho; grossly over-estimated the willingness of foreigners to continue to both hold and buy our debt and equities, to continue to hold our freshly hyper-minted Dollars and equally; the dollar costs and timeframes that will be required to secure the Homeland and to Win the War on Global Terrorism & Fanatacism.
The more things unfold; the more I think this is going to be a near "decade" long story, rather than a 12, 18,or 24 month story.
For Gold; we may see a multi-year stair-step move to $500, or $600 and then end the cycle with a traditional speculative blow off top like we saw in 1980...
The real story may turn out to be; whether true Fiat Currency survives the first decade of the new millenium ?
This is a significant turning point in Global History and the US Markets are still priced at speculative, euphoric Bubblemania valuation multiple levels... and given both Corporate and Individual Debt Levels; given that we just played the Mortgage Refi-Boom Card... the future is not bright.
DOW 5000, S&P 500 and $500 Gold - all seem like "fair value" terrority over the coming 2-3 years imho... where we go over the coming decade from there, will imho be determined by how the War on Terrorism plays out... and then perhaps how Korea and/or China play out as the next threats; with China the rising Global Power as both a militaristic and economic threat...lying dead ahead...just after we'll emerge exhausted, debt laden & misallocated from the War on Terrorism... China with their exploding growth and exponentially expanding financial warchest... interesting times indeed....let's just hope those Chinese grow ever fonder of ole' Yeller vs Mr. Greenback... |
