Entries Tagged 'Market Top' ↓

Albeit it’s still seasonal prime time for gold.  There should be many great weddings in India, drowning in gold.  And, heck, I agree with the scathing write-up on ZeroHedge about why this isn’t the blow-off top on gold.  Regardless, I’m still a bit suspect of this market.  There are a few things I want to say on the subject:

• The price of gold can come down really fast.  If you haven’t been long gold past a top before, you are naive.  This is a speculative market.  It’s a small market.  And, when it is time for it to take a break, watch out.  I remember being with a bunch of trader’s in Vegas during a metals run a few years back.  Sometime during day two of our stay the market turned over.  It ruined the visit for a number of new friends.  In short, don’t fall asleep at the wheel.  Just like any other market, this one is prone to sharp corrections.
• We’ve come a long ways.  We are up about 30% since April.
• I’m seeing signs of technical divergence surfacing on the price charts.  I’d go into more detail.  But, in this case, the technique I’m using is not published.  It’s not one I came up with.  But, it’s really not mine to share presently.

I’ll I want to say is be very weary of your long positions.

Even better than some general advice, let’s take a look at some recent history so you can get a feeling for 4th quarter gold prices:

Gold at the end of 2004:

Gold at the end of 2005:

Gold at the end of 2006:

Gold at the end of 2007:

Well, that’s 4 out of 5.  In 2008, gold had started a significant pullback earlier.  It was not up to it’s usual self.  Needless to say, this year’s market is set up for an opportunity here.  But, I am definitely not encouraging anyone to be shorting gold at these levels.  Just because the opportunity may be there, it may not be the smartest trade.

As strange as it is, there are really bright individuals out there that believe that this is indeed just the beginning of a very legitimate and solid recovery.  There are others that recognize the Fed has little to no choice and rates will be pegged to the zero for some good time to come; thus a wickedly higher market.  And, there are those that just struggle every day grasping for some clue as to why the market has seen such stellar performance since last March.

My personal bias is that things will indeed fall apart again; but, not just yet.  As always, I’ll reevaluate as needed.  The purpose of this post is to take a quick look around at what a variety of other writers, traders, and economists have to say on the subject. 

So, without any further explanation, I’m presenting a quick synopsis or sample of seven individuals whose opinion I respect:

• Larry Williams: Expressed this week that he is staying out, looking for a long in the next couple weeks. (~Bull~)
• Robert McHugh: Believes that dooms day is perhaps a week or two away from starting. (~Bull~)
• Bill Cara: On Monday indicated he was bullish gold and silver miners. (~Bull~)
• Bill Gross: “the six month rally in risk assets… is likely at its pinnacle.” (~Bear~)
• Paul Miller: “I certainly share that view that with consumers deleveraging at considerable speed, with unemployment still rising, bank credit still contracting, and capacity utilization very low, the recovery will lack vigor.  But that’s no the reason for my unease.  The financial world has not been reformed.” (~Bear~)
• Barry Ritholtz: “Given the recent market action, I am now starting to pull in my horns a bit, as this rally looks to be getting a little tired and showing signs of technical deterioration… This is not a major call, it looks to me like more of a minor reversal.” (~Bear~)

Needless to say there is a strong confluence of game changing contemplation in the air.  What would you expect for the last week of October?!