What Now?

Alright, I really have not had much to say this week but after digesting such vicious moves in the markets, I am ready to offer my take. I would love to go over many charts but tonight I will do 3 and over the weekend I will go over the currencies. Before I start with the charts I want you to know that I am at this very moment, bullish on GOLD and bearish on the USD. Because I am bullish on Gold does not necessarily mean I would risk the Farm, if you are going to trade Gold, I still think you would have to use very wide stops. My advice would be-if you cannot risk $3000 or more per contract, you are better off waiting for this market to settle down. If you own the PHYS, you will be rewarded for being in the right place, you may be frustrated now but the fundamentals have not changed, I wouldn't even bother paying attention to the price action on a day to day basis! BE STRONG- you know why you bought, do not let these criminal ......(I could come up with several nasty curse words) but I would like to think I am better than that.

Onto the Gold Chart- let's do 2 of them. The first is the daily- I won't say much about this but just look at it in awe because it truly is remarkable at what THEY have accomplished.

I am still lost for words and all you can really say is WOW!

Next let us look at what has been taking place since the big 2 day drop of more than $200. Below is GOLD on an hourly basis. We made a low of 1320, rebounded all the way up above $1400 in one night and we have seen huge swings between 1350 and 1400 all week long. Please understand that this market has been moving $20-$30 at a time within minutes, I have been trading Gold since 2003 and I have never seen it trade like this. I used to trade silver and I remember a time in 2005 when it fell from almost $15 to less than $11 in just a few hours, I was in awe of the volatility in Silver after that, I never really traded full sized future contracts in Silver again! I saw enough of that and was very fortunate to avoid the big downswing just like this in Gold. I lost money this go around but I did not get hurt this week at all, other than my emotions! My point is, if gold is going to be this volatile, it is not worth trading unless you can afford to trade with very deep stops and accept the risk!
I have remained quiet this week because I do not to be known for picking a bottom, I truly did believe the bottom was in a long time ago and that was with good reason. From what I see this week and specifically last night is this- 1320 low on Monday and 1336 last night in Asia- talk of strong physical buying and the price action we may have something developing here. Let us see how the week ends, is the low in, it could be-I do not know and neither does anyone else. Is Gold going to take off from here, I honestly doubt it, there is significant chart damage and it needs time to repair with some consolidation. For all I know, what is to stop Gold from trading in a range of a few hundred dollars for another 2 years. All we can do is be patient and take what the market dishes out. Take it day by day for now! Use these low prices to add to your stack, if you don't own physical-be grateful that you are able to buy at these prices. Whether you buy here at sub1400 or 1200 it is really not going to matter if you believe that Gold is going to $3000!

I spent alot of time with Gold but it truly is important enough and that is why I started writing in the first place. The storm is coming and it is not going to pretty- I truly do hope that more eyes are opening to this. Next, I am going to show a chart of the S&P500- yes I usually show the Dow and refer to it as HUMPTY DUMPTY but I feel that the daily chart on the S&P gives a clearer picture right now.

TOP- sure is starting to look like it, but we have the INVISIBLE HAND and the printing presses going at full speed. Let's see how we finish the week tomorrow, we seem to have traded down to horizontal support, does it break or will the INVISIBLE HAND come to the aid once again? Time will tell but keep an eye on it!

The last chart that I would like to share is Oil. Please notice that it too has traded down to horizontal support and has already gotten a significant bounce in the past day or so from almost $86 to 88+. Have a look

This oil chart has got me thinking that the support in the stock market may just hold and if that is the case I believe the US dollar is in for some tough sledding in the coming days ahead. I promise to go over the currencies this weekend. Lets see if these 2 key markets hold support and rally from here to end the week, if these support levels should break, maybe the storm is a bit closer than most believe!

Be Careful out there and thanks for reading,
Martin