The bottom won’t be in the Dollar until The TV talking heads are lamenting the decline. When Katie Couric and Matt Lauer ask to be paid in Gold instead of US Dollars, that will be the bottom in the US Dollar and the top in Gold. Mark my words. If this keeps up, you will have all the nut jobs calling the US greenback “fiat” money climbing out from their assorted rocks and holes in the wall. The first book I ever read about invsesting was by accident in 1975. I was 9 years old and found and old copy of “crisis investing”. If memory serves me, the author was bullish gold, canned goods, shot gun shells, nuclear bomb shelters and bullet proof glass. Maybe 35 years later we will starte hearing those people again.. We are getting closer though. When we make a fresh 1-year low, that will get the attention of the rest of the public. It’s easier to get upset about 1 year low or “all time highs in Gold”… That is more appealing as a story.
First the Stock Index specifically the Dow Cash… Since making a triple bottom back in August at the 9937, 9936, and 9941 lows on Aug 25, 27 and Aug 31st, respectively. You can recall those lovely day’s of panic and dismay and gnashing of teeth…. Low and behold, we rally “only” 1,012 points 9950 level Last Thursday’s end of quarter high at 10,948.
Thousand point rallies bring out the bulls. Just in time for another bunch of the bulls to come out…
My feeling is we rally into the Un-enjoyment number. The initial move from that Friday morning number will most likely be anti-climatic. It seems to me we are stuck, for better or worse, with unemployment here at 10 percent. Only a significant move above or below would be a surprise. With things as negative as they are, I would look for a better than expected unemployment number.
That may be the final straw for all the bears who got smoked since July, to finally throw in the towel and agree that the Sun also Rises…. Right about then, is when I’d like to buy some out of the money puts.
Back to the grains….
It took us 4 months to rally 1.85 in the corn, and 5 days to wipe out 75 1/2 cents of that move. Sunday Night’s low was a 40% retracement of the overall 4 month 185 1/4 point rally.
The elevator correction higher today gave us the 50% pullback of this 74.5 cent break….491 3/8… Next resistance is 500 which is a 62% retracement At 5.00 you have to step in and get short. Short with a tight stop.
In the beans, we rallied from 886 in June up to 1144 just 6 sessions ago on 9/27/10
We sat through at 5 day $1.02 “correction” after a 4 month $2.58 cent rally.
A Rally up to 1081 would be a 38% retracement. 10.93 is 50% retracement.
Volatility is a double edged sword. Don’t fall in love with any position. Play the 50% retracements, but don’t get too enamored with them. They can jump up and bite you in the ass the minute you think they are the be all and end all as to how to pick entry/exit markets.
Please have an exit strategy lined up prior to getting in to any position, long or short. If you know your exit point, you can sleep at night, and you can live to fight another day.
Good Trading
