Saturday, November 19, 2011
Double Standards
How does a 4.17 % drop in November highs in one thing equate to a screaming buy while a 4.68 % drop in another equate to a screaming sell?
Simple: The former is gold, the latter is the S&P 500.
And gold should never fall in price nor have profit takers according to goldbugs .... and the stock market should ... well ........... the stock market should simply NEVER go up, according to these same people.
The stock market is there to short, that's it and that's all. That's what we're told to believe by those holding gold.
We're not hearing much in the way of shorting gold stocks, which are down 9.8% from their November highs, by the way.
Perhaps there's a lesson to be learned here ....
It's best left up to you in deciding what that lesson is.
Wednesday, October 12, 2011
The Parachute
Many have been calling for the market's head over the past couple of weeks (did I say weeks, I meant months ... or is that years?) and it's not that difficult to get caught up in all the bearish sentiment we are inundated with each and every day. It's there when we wake up to the alarm clock radio; it's there when we log onto Bloomberg's before the trading day begins; it's there in our trading chat rooms; in the newspaper; the evening news; our emails; the blogs we read ..... it's everywhere!
What has become apparent is that investors are not the only people caught up in "herd mentality." Those of us writing about the markets on a day-to-day basis are also guilty of it, and we are the ones who should be digging deeper and looking for reasons why the herd might be wrong.
That said, it's so much easier being part of a group of people who have essentially come to the same conclusion, than it is to say, "Wait a minute! Maybe we're missing something!"
Of course, if everyone else is dancing to the same drummer, then we are only guilty by association.
"So ... take me to court! The caveat was right there in the fine print (didn't you read it?), which simply states, 'I might be wrong.'"
"And besides, there's a good chance much of the analysis I presented to you was generated elsewhere (by some other unoriginal writers/analysts aside from me who couldn't think for themselves, either), and even if what I said came across to you as my very own ideas ..... I am ONLY one small member of the herd."
And the crowd becomes the parachute.
Saved by consensus (and a caveat, which, by the way, you can read at the end of this commentary).
Here's a chart, take it for whatever you think it's worth, and factor in the time constraints while you're at it.
We've been doubting Mr. Market for four years now, and he's continually proven us wrong.
When we start to think he's right ...........
That's when he'll be wrong.
Tuesday, October 11, 2011
Time to Follow the Crowd?
How many bearish emails can a person withstand in one week?
Four? Five?
How about fifteen!
No one is giving the market any credit these days.
Perhaps the bears are right.
The markets have been under the control of three weekly candles (numbered on left hand side of chart) and a gap since September of last year.
Consensus?
Let's see what tomorrow brings.
Saturday, October 8, 2011
Death Cross on $XAU
A death cross (50 DMA crosses down over 200 DMA) developed on the Philadelphia Gold and Silver Index ($XAU) late in September. The last time this took place was in 2008 and the results were disastrous for precious metals.
Of course, it's only one indicator and there have been some significant rebounds when the RSI crossed below 30; nevertheless, one of the RSI's worst failures to provide a timely buy signal took place the last time we saw the death cross.
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