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September 17, 2009

Filler Material

There is not much new to discuss out of the last couple days of action, hence the title of the post. We saw a new low printed for the dollar's slump out of March along with new highs for both gold and silver. All three shied away from their extremes. Apart from these trivialities, we still await a panic sell of the USD. One may wonder why I do not hedge or reduce positions at this point based on my view that a near-term ending move is at hand. The obvious reason is that I want to be part of the ending move, during which I anticipate spikes in precious metals prices. The other reason is simply that I may be wrong. Perhaps the dollar will continue to dissolve at a half percent per day, and if so, why in the world would I want to get caught without my full positions?

Keep in mind that silver has now run from $13.50 to $17.50 with nary a pause. If today's reversals signal a short-term correction, silver could retreat back to the $16 pivot. I'm sure that would freak out enough people to set up another healthy move higher. Such action wouldn't exactly fit with our plan for an imminent panic sell of the dollar, but it wouldn't harm our long-term plan.

Yes, I did notice that the BKX closed above the 48 pivot yesterday. I also notice it closed back below it today. The violations are marginal, so I'm not reading anything into it, yet. Technical analysis is an inexact science, and trying to calculate support/resistance to the penny is a recipe for trapping yourself into a nice, juicy head fake.

Tomorrow is opex, and we also get the pleasure of rolling our index futures to December in the watch lists. I'll be back this weekend with a little more in-depth discussion.


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