Wednesday, January 7, 2009

Another Look at Gold




On Monday Dec 29 I made a post entitled Careful With Gold in which I counselled caution on GLD and GDX. I passed on the trade but congratulations to any who played the double top in both to the short side. $81 and $29 look like add points but that's easy for me to armchair quarterback given my comfy seat on the sidelines !!

Given recent action I thought it might be time to have another look at both.

The chart of GLD (top chart) had the bulls foaming at the mouth via yesterdays bullish engulfing candle. Only to awaken this morning to have it dashed upon the rocks by today's breakdown.

The Market Vectors Gold Miners index ticker GDX (2nd chart from top) filled its gap down from Monday only to back off at the close yesterday. As my current notes indicate, countless bulls were trapped into buying Friday last weeks breakout thru $34. Volume was lacking but I am sure that didn't stop many. Speaking of stop, lets hope many of them were using stops as the pain is severe and could get much worse should $29 give way.

Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 1 unit Ultrashort MSCI EAFE ticker EFU @ $88.80 stop at $84.67
Long 1 unit Ultrashort Financials ticker SKF @ $102.60 stop @ $99.47
Long 1 unit Ultrashort S&P500 ticker SDS @ $66.15 stop @ $63.77
Short 1 unit Darden ticker DRI @ $27.70 stop @ $30.12

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