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Gold/Mining/Energy : Barrick Gold (ABX) -- Ignore unavailable to you. Want to Upgrade?

To: Zardoz who wrote (838)	11/21/1998 8:43:00 PM
From: ahhaha	Respond to of 3558

I only know that the FED is pumping. The stock market has taken off and is way ahead of itself. That invites a technical sell-off regardless of FED action. When you have unsupported price action, you have the possibility of rapid decline. Unsupported means there hasn't been work done against supply regimes above. The price action is very much like short covering, but I don't think that's the whole story. Part of the story is that structural longs don't want to sell at higher prices. That indicates entrenched bullish bias. A little buying with supply above (booked orders to sell above) and few market orders to sell, sends price up the flag pole. The FED supplies the confidence not to sell market, so not much work is needed to drive price. This is often the conditions of a top. I suggested elsewhere that the FED could get away with pumping until February because by then the aggregates would be getting in to big trouble land. There is no reason why they wouldn't slow down any time in between. It's a random factor. How stupid do you think they can get? If you're going to trade stocks, that's what you have to predict, how stupid someone can be. That's unbounded above, whereas how smart they can be is quite finite. The same money hysteria that's driving stock prices is also driving gold stock prices. There are supply/demand factors arising that are constructive, but that is never a reason to go after the golds. When the T-bond yield starts falling the late summer mechanism is threatening to descend. The immediate effect is to cause stock prices to correct since they are sensitive to the downside over the short run anyway. It is reasonable to expect that the DOW will correct under the summer mechanism threat and FED will panic again and open the floodgates even wider. Maybe that will happen in January. So then the golds and stocks in general start zooming back up. This sort of game can only go so far until there are real economy repercussions developing. The FED is trying to use the easing off of domestic demand caused by the summer stock market crash as a smoke screen to prop up foreign economies. The problem is that Japan has finally reached the point of no return and they will do nothing to solve their problems. So the FED must try to save the world by pumping as long as the smoke screen hides the trouble. So it is reasonable to guess that the DOW will fall starting 12/1/98 for several weeks and lose 500 points. No big deal. The golds will fall too. Then in January FED gives indication that they will be lowering fed funds rate. Maybe a Greenspan over night special on Jan 8. All the troops start popping again because they expect the next guy is a bigger fool than they are. That's what this is all about, isn't it? That exact enough? It is ridiculous to expect the above time frame is accurate. The general shape is most likely correct since the forces are predictable, but as to when they move, can't be known. I have expressed endlessly throughout SI that even if I had next week's WSJ, I couldn't be confident that I could make a dime. I've done more than 15,000 trades over 30 years in all manner of professional capacity. I guess that makes me one of the most experienced operators on the planet. And I state the claim that with perfect knowledge I couldn't expect to succeed. When you understand that then you will know that you've graduated to the beginning of wisdom.