re: ["Wouldn't you say that technically, if 460 holds
here today or even for the rest of the week, then it's
smooth sailing to 500-560 w/o having to re-test 400?"]
HUI 370 has been stressed tested twice and held twice.
Once in October and again in December. Old resistance
has become new support.
The next major level of technical support is
HUI 400 -- the old high.
It is the next key level of support/resistance
that needs to be tested.
It's already failed three times, in October, in November,
and in December.
...that's three failures in the last three months.
Oil has turned. No more triple digits...and perhaps
an "8-handle" today.
The BDI (Baltic Dry Index) is down hard and fast
since November.
There will be "no disconnect" of "ROW" (rest of world)
from a U.S. recession.
And we've already seen that there is certainly no
"disconnect" from the subprime contagion.
The Gold Bugs index has just run up +118 points and
+32% in less than a month.
To put that in perspective, that's the equivalent of
a 4,000 point move in the DOW in just 4 weeks.
Can you say volatility?
Can you say fast & hot money?
Fast & hot money does - as fast and hot money is.
...they shoot first and ask questions later.
Here's what I see...
The HUI has now pulled back to the bottom this trading
channel...and you are right that HUI 460ish is key.
Then HUI 434 -- "the money line" -- which was prior
resistance, and then became the launching point of where
all this new hot momentum money came in hard and fast.
Then the old high of HUI 400 -- which has failed three
times in the last three months.
460 and 434 are what I call "soft" support levels.
Their relevance is within the context of a "momentum"
move. If "nothing" else fundamentally changes... these
are just key pullback levels for an "ongoing" momentum
trade.
But, the next "hard" technical level is HUI 400...and
it has failed 3 times...and is the "unproven technical
soldier" that has yet to prove it's mettle under fire.
We are right at the precipice of this momentum move
unraveling, because the fundamentals are changing.
While gold and gold stocks initially disconnected
from a falling market...they are not immune to
gravity.
Yes, the Fed looks to cut and cotinue to cut for
some time... and yes, that's VERY POSITIVE for gold.
But, that doesn't mean we stand here and give back
a 4 week 118 point move.
We need to be honest with ourselves and set aside emotion,
greed and desire.
This move was -- "too fast and too easy."
Fast & Hot money is getting "shaken out."
Nothing more, nothing less.
See it for what it is.
Don't fight it.
We want to sell to hot and fast money.
We want to be - out front of hot money.
We don't want to chase it, or be behind it,
and reacting to it.
So stay "out in front" of the herd here.
If the broad market continues to get gutted, if oil
continues to roll over, if economic signals like the
BDI continue to show negative... that fast/hot money
will leave just as fast as it arrived...and we could
be right back to re-testing HUI 400 in the blink of
an eye.
I really don't want to give up anything below
the bottom channel of this momentum move (HUI 450-460),
so I'm cashing in, adding puts...and waiting for this
broad market correction to base...and to see what
the Fed does, and how gold behaves here into the face
of all this volatility.
This is a very dynamic, fast moving market.
We just had a 118 point & 30% rally in less than a month.
I don't want to give more than say -- 10% of that back.
I prefer to sit back and watch how this very fast moving
market bases...and bottoms.
I would be very, very careful and conservative on picking
a bottom and a re-entry point here. We are entering a
very high risk -- very low reward transition period here.
Sit back... let them use their ammo.
Let the market sort itself out here... and wait for
a better risk:reward environment.
There's nothing wrong with re-entering on strength,
and upon a rally off of the Fed cuts...instead of
trying to pick a bottom into a volatile correction.
That's my thinking anyway...
If the major players want to shake out the hot & fast
money momentum players here prior to the Fed cuts...
let 'em!
Ring the register and stand aside.
Let the smoke clear...and be patient.
...patience and prudence.
Be careful out there.
S.O.T.B. |
