Monday, August 22, 2011

Random Thoughts

We’re looking for a few possible “tells” to give us indication of when to enter for a tradable rally.  Here are some thoughts and possible action scenarios:
  • Gold ($GC_F) keeps ripping, going  through $2000 while equities hold stable.   Gold then starts to reverse, market rallies.    We want the gold/equities correlation to break-down.  Today was a good start as market closed flat while gold again rallied hard.
  •  Is Gold $2000 like Silver $50?   We were all over the silver short but don’t have strong feelings about a potential gold short.  Not yet anyway.
  • We sell off and take out the $SPY low of 110.27 but make a higher low over the overnight $ES_F low of 1077.
  • There was whiffs of panic into the close as $GS got machine-gunned but we liked how tech held green and stable.   That’s a good start.  Small step, but in right direction.
  • We would prefer an intraday reversal 10x over these gap ups that are so often faded in bear trends.
  • We have a number of breakdown shorts on our list — we want them to all be taken out and THEN reverse.   If they don’t trigger we think the pain will only be postponed.
  • This action reminds us not of 2008 but of 2002 where we grinded down every day in a market that didn’t scare out the bulls, but wore them out.
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