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August 4, 2009

New World Order

I'm lounging around in Queen Alia International Airport hoping to get back to the new world tonight and thought I'd burn some of the time sharing a few observations. You will have to excuse the lack of charts, but time is limited. First, I find it quite interesting that commodities, particularly silver, are rocketing higher today while equities are flatish. The first thought that came to mind was that big money was ready to pay more attention to real stuff and perhaps less to paper stuff. It's only one day, but it gives us something to watch in coming action.

If equities are going to run into trouble, we should see one or two days in the near future where the NDX leads lower. If we awake one morning to see the NQs significantly weaker than the ESs, I will probably increase my short exposure on the spot. In fact, I was tempted to increase shorts mid-day today because the apparent "breakout" on the SPX was betrayed as false by the extreme overbought reading of the 10SMA of TICK on the 5-minute bars. I decided instead to wait and see if the bulls could overcome. Since the market did, indeed, pull back, we see that perhaps stocks will start responding to our indicators on the bear side. Therefore, a fat reversal day on volume or the aforementioned relative performance of NQ to ES will be sufficient for me to augment positions.

As for silver, it is encouraging to see it hold strong despite the dollar index being slightly higher. These are the days that make my current portfolio mix look good: precious metals up with stocks flat. Next we need some days wher PMs are flat while stocks are down. It all adds up to higher PM prices and lower equities, which of course is the whole point. It's not likely that over time the two sides will both move against me.

If I make the flight tonight (I'm on standby), I'll likely be too burned out to post tomorrow. If I don't make the flight, I'll likely be too pissed off to post. So see you Thursday.


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