I can’t for the life of me wonder what is keeping the lid on Dow index above 12,200. 8 times in the last 2 months, we’ve challenged that level and fell back. Last Thursday we traded well above that level, up to 12,293 intra-day.. Break out traders had their windows broken out, however, as the index settled below 12,000, giving any unlucky and johnny=come-lately bull a 300 point bloody nose.
Once again, today we poked above 12,200, only to slip down to the 12,000 level again… Quite honestly, although the TV and Radio pundits cry like starving new born babies when we have a down day of more than 95 pts, by now any regular reader of mine knows that in my opinion percentage moves are the key. I wouldn’t pay any attention to cable news analysis of intra day or intra week or even intra month trading ranges.
As a matter of fact, I am more convinced that the next surprise will be a bullish surprise. In the mean time, the Dow could easily break 1000 points lower down to test its recent 6 month lows. We could have that break and sill just be in a wide trading range, as opposed to such a break portending the end of the world as we know it.
Interestingly, please look below at my Dec 7th post last Wednesday. I commented then that Gold was moving to the apex of a triangle formation. The move below 1702 was the sell signal/ level… Today, 36 hours later today and we traded down to 1658.
There is no real support until 1600.00 If there is a liquidity crunch on the horizon, you could see gold back at 1,000.00 or even 800.00 If the world prints money, and we get a slow down in money flow, why couldn’t we see gold melt. Then all the bull bugs would be beside themselves. Just a thought.
The grains put in an impressive bounce today in the face of higher dollar. I think you have more time yet before we get a significant bounce. I’d look to get long sometime between now and the Jan 12th USDA. In the mean time, its been a choppy directionless trade with a couple head fakes. I’d stand aside and keep powder dry for now. It certainly is over sold. But who am I to demand that it rallies?
What it should do and what it is actually doing are not in synch. We have a month of trade before the USDA. There will be opportunities to get long. For Now, I’d be patient.
CER