Gold was grossly overhyped, and 720 was the orthodox Elliott Wave top of the last bull market in September 1980. 723.45 is 35 times the pre-Roosevelt gold price from 1824 to 1934. Perhaps gold will just go on up anyway, but I cut back to 60% of peak price levels both on the metal stock fund and energy fund. No gold bullion was sold, nor will it be.
Practically every asset class went down yesterday and today, except GM. :) George Slezak, an ex CBOT bond pit trader, says it reminds him of the 1980 top when everything went down for weeks. I was trading commodites then, and I remember it vividly. Personally I think it's facile to compare that market and this one, although there are superficial similarities for sure.
My guess is that in the US stock indexes we are in Elliott wave c of a larger degree running wave 2 after the completion of wave 1 up from last October. I read and listen a lot, so I know all the arguments about valuation, commodity wars, geopolitics, derivatives, US politics, the real estate flop, etc., etc. And there is no accounting for human panic. But I remain positive on the markets until we would see a low, a failure rally, and a new lower low.
Technically, yesterday and today in the SP500 futures June contract we had what's called a "three gap play" where three inter-day (overnight) gaps have been left behind in a rush to the highs. Old timers from a hundred years ago knew that these will often get filled in a short term smash. Two were filled today. The third gap is from 1292.90 in the June contract, just below today's low of 1293.50. If my Elliott and "three gap play" ideas are correct we will fill that gap Monday, and maybe even take out the bottom of that April 17 daily bar at 1286.70, and then go up.
I'm gone to Mexico for ten days tonight, so I'll miss all the fun of the market next week. I feel fairly comfortable in funds which have all weathered previous severe bear markets pretty well, the bulk of which are themselves hedged in some manner. I feel better having cut back or "re-balanced" 40% of energy and metals stock funds.
A good place for ideas in markets like these is Carl Futia's site. We don't always agree, but he trades a variety of markets and stocks I don't trade, and we use a lot of similar methods from the past. He's also very steady and reliable under stressful conditions, a must. http://www.carlfutia.blogspot.com
See you week after next.
Recent Comments