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January 20, 2009

Obama Nation

The magic goggles were true once again as a nasty round of selling sent the S&P 500 to a 5% loss. By closing at the session low, equities left no visible support between here and the November low. Apart from some routine consolidation days, I expect price to now gun for SPX 740. As usual, I'll be keeping a close eye on volume trends. If we approach SPX 740 on declining daily volume, we can expect at least a weak attempt at a rally off that support level. If volume accelerates, however, I would not count on any significant bounce until the market gods throw us a high-volume capitulation, probably at levels much lower than SPX 740.

stock index chart

Early strength in gold had mining shares pushing 5% gains at mid-day. However, by late afternoon our little yellow friend had coughed up most of the its gains, and weighed by continued general weakness in equities, the miners closed the day at par. I'm itching to short gold again but am sitting tight under the same guidelines that lead me into last week's successful trade.

gold chart

In the meantime, I remain short GDX via scribed calls.

There's not much else to say here folks, except that I hope you are having success. It's nice to watch trading accounts rise, but will those dollars actually be accepted in exchange when they are needed? One of my objectives this year will be to convert a chunk of my paper wealth into real wealth. Obama Nation appears headed for abomination. And it wasn't even the poor fellow's fault.


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