(For more information on Cup O’ Joe for a Joe click here.)
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The relationship of gold to the dollar is integral to my Jacksonian thesis, and I think to this overall market as well. So I think it dispositive with regards to arguments that portray this market reflating on real earnings or anything of any tangible weurth (sic) to take a step back and look at a longer term picture of the gold dollar ratio.
I bring you that view here with the following weekly chart illustrating the price of gold divided by the weurth (sic) of the U.S. fiat dollar in the form of “$USD.”
Maybe not exactly a textbook “CANSLIM” Whitman-style cup & handle, but given the proximity of the 34-week EMA here, I think we are setting up for a blastoff.
Here’s my other confirmation-biased bias chart that tells me the dollar is about to meet it’s comeuppance. This is a longer term chart of the dollar alone ($USD again, and as of yesterday’s close) . Note on this weekly how we are fast approaching two very significant fibonacci lines (50% retrace of the upmove and 38.2% retrace of the down-move) which I think will serve as a hard brake on this dollar exhuberance.
Note again that this is an “end of day” look (thanks to Stockcharts chintziness, I cannot get you DXY intraday), and that we are already 40% of the way to filling the rest of that circled gap to the combination fib lines.
Ben has been re-appointed ladies and gentlemen, and there’s a reason for that. He certainly is not going to let down those 70 or so Senators who backed him in an election year. The dollar will weaken again, believe it.
Trade accordingly. I will be sniping for select names in the woods, as per usual.
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Excellent post!
Grazie!
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Cup O’ Joe for the troops reminds me of the Pizza and Burgers for the IDF troops.
http://pizzaidf.org/
Corporal Klinger (M.A.S.H.) once had some Sausage and Dogs mailed from Toledo.
Freaking Jews are always on top of it.
Speaking of, I’m now reading Mark Helprin’s first novel Refiner’s Fire, which I think is more than semi-autobiographical, and includes his time over in Israel with the IDF.
He is one of the few living “great” writers whom I’d really like to meet. A true “Renaissance Man,” if you will.
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Great post Jake! I’m starting to feel the pain in my SLV holdings, that usually signals a near term bottom. I may shop the gold & silver miners rather than adding to SLV. Also, RGLD looks interesting here at 43. Are you preferring miners over the physical or are you playing the levered ETFs?
Definitley preferring miners here, but that’s only because my physical is pretty much “in place.”
With the next phase of the bull, I think we’ll get a lot more leverage off the miners, including RGLD (which is not technically a miner, but a royalty financier).
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Nothing like carnage into a weekend! 🙁
Buck up Brucey. Always darkest before the dawn, bulls will try to shake the most weak hands they can, etc, etc, cliche, cliche….
Feel free to add your own. 😉
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Is Tim talking about you here?
http://slopeofhope.com/2010/01/the-snark-that-marked-the-top.html
One of them is reading this post right about now, and he’s really, really hung-up on me – – he even watches my videos, and takes the time to tell the seven people that visit his blog about how stupid and inept I am. Mental instability can make people behave in ugly ways.
Nah, I don’t watch his videos, and I haven’t even dropped in to see what he’s been saying for a while. No fun once I was banned.
Oh, and it seems this person he’s talking about is from Jersey, at least according to the link he made.
Tim went long PM’s also at the end of the year, which gave me great pause, but wasn’t something I could slag him about, save for the whole jinxing thing.
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Brutal sell off on the silvers. GOOD GRIEF.
Took a small starter today in SLW, will look at adding around 13 even and finally 12 if it sees those.
Good moves. I’m still keeping about 25% powder dry in case there’s a big washout Monday… I think we’ll reverse on that dollar target above.
Odd thing is it’s really the miners, as POS and AGQ are relatively off only a bit.
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Hang in there, Jay — this bull will buck!
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SLW can’t seem to find support. 13.20 should be the next level to try and gather itself, if not then yea, 12 or so. Falling knives these pm’s. I’m really down big now.
SLV is holding that key level. (15.80 or so)
Take a deep breath.
$HUI is resting ever so gently on it’s 61.8% retrace (which it briefly breached) at right around $376.15.
I may wade in here… I know, it’s nuts, but…. what’s all this dry powder for anyway, right?
Discipline, discipline…
I see a gap on SLW at around 13.37, btw.
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AGQ is giving me the warm and fuzzies right here, fellahs. Let’s see what happens if it can break $52, here…. (I may give it some help!)
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Jake-
Sounds like you have been trading the pms for quite some time and would know way better than me.
I was really hoping we would survive this correction holding this line of support/resistance. Notice the weekly action prior to the big drop in 2008.
I’m hoping for some support around the 200WMA or 350’s on the HUI. Hope you can see this link.
http://www.screencast.com/users/Jayhawk1991/folders/Jing/media/bd58af76-2876-4263-9cc5-bd5336e66165
Just checked the actual calc’s and the 38.2% retracement (which is also the same line as the 61.8% advance) on the move from the lows of $150.27 (10/28/08) to the highs of 12/02/09 at 516.16 is $376.39.
I think we need to hold that level or we’re in for more pain. Hang in there.
(And yes, I’ve been trading these mothers for ten years, and they ALWAYS rip your guts out. No matter how many times you fool w. them, you just have to grin and bear it, and stick to your thesis)
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I’m not a big fib guy, but that would be interesting for sure. Maybe just a quick flush Monday or Tuesday and get this correction over with on these miners??? (I like a touch of the 200WMA and reverse.)
That’s been the place in the past… very strong support.
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picked up some SLV, EXK on the cheap 3.13(hope you didnt sell!)…figure if i can beat you by 10 percent on an entry, i’ll take it! good luck to jacksonians
No way I am selling at these levels. I may join you on some EXK on Monday.
Nice purchases today!
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EXK that sumbitch is going down in integers…..As Mel Brooks said in Blazing Saddles ” I always get the warped one”
Jake…get on board with this team….if Self gets them firing on all cylinders it gonna be a hell of a run.
http://www.rockchalktalk.com/2010/1/27/1270623/tyrady-morningreed
Ah, KC, if only you lived closer, and TC too… I’d go drinking with the both of you every night.
You know I cannot break my state boundaries with regard to hoops — I’d be hung from the nearest lamp post.
The only exceptions I make are with Mom & Dad’s team’s, St. John’s and ‘Nova, respectively. No way could I ever root for the Rock Chalkers, though I must admit, the only time I ever won an NCAA betting pool was the year I picked Kansas to win it all.
EXK will be fine. The smaller miners are always more volatile than the larger ones, and that’s saying a lot.
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Hawks will be cutting down nets shortly!
Remodeling their own gym?
LOL!
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Make that the number 1 Kansas Jayhawks.
Very balanced year this year with a bunch of teams that can win it all. Should be a great March.
Agreud.
Don’t get me wrong, I think Kansas is excellent, and they really did steal a great coach from NC (thanks to NC?) in Self, but mein Gott, Kentucky has — legitimately — four first round draft picks in their starting rotation (Wall, Cousins, Patterson and Bledsoe. Only Bledsoe is a possible “stay” for next year, everyone else is long gone.
That’s a pretty strong incentive. If they stay healthy, they should be the heavy favourite (sic).
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True. However, in the one and done tourney, one bad night or one opponent has the game of their lives and you go home.
Remember UM with Webber, Rose, etc? We had that team in 97 with Piece that was number one all year long and lost to AZ and didn’t even make the Final 4.
I like our veteran leadership in Colins and Aldrich and hope Henry can start clicking in March. (Don’t get me wrong, he’s been solid but if he can step it up a notch we could be tough to stop.)
Fuggit, I just bot a K more GDX @ $40.70 … and look! I’m up a tuppence already!
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Grabbed some SLW at the close…Will add if we can turn next week.
Again, take a look at AGQ and SLV… the metals held tough.
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Jake, you should check the monthly chart of the USD. It suggests a few months of strong upward movement are coming, regardless of the periodic dips along the way. I am no fan of the dollar right now, and I feel this move up is somewhat manufactured.
Well they certainly have to sell a shasta-load of bonds (this week, coincidentally) in the coming years.
A strong dollar would make the Chinese feel better about swallowing that load of cement.
I will take a look at the dollar monthly’s but I just find it hard to believe it’s going to launch out of this downtrend without some extraordinary circumstances involved.
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Taco makes an excellent point: (see also a weekly $USD chart). Just as 5, 10 or 30 minute charts can be vital to day/swing/position trades, so too can weekly/monthly charts help avoid the ‘tunnel vision’ trap of shorter time frames.
Note also the Greece/Spain vortex and its effect on the Usd!!!
Agreed, but you also have to take note of the long term trend. We still have a downsloping 200 day and 200 week MA’s and our 200 week MA is at $80.44.
It would be highly unlikely that we break through that range on a first try basis.
As well, on the monthly chart, the 36 month (ie, 3 year) is at $80.41. That average, too, is down-trending, as is the 200-month average.
The odds are not with the dollar bulls, neither are the fundamentals. Of course, we could get a bit more temporary spurt here, but I don’t think it will last through all of next week.
Caution, we are dreadfully oversold here.
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“Caution, we are dreadfully oversold here.
On the daily, yes. Weeklies show possibility of more downside, imo.
Oversold can always get “more oversold”, as we all know. It’s why I dislike averaging down, as a general investment concept. Large money managers who have to deploy enormous sums of money – sure, they have to do it. But the smaller investor can afford to wait and be more choosy.
SLW could get down to the 40 wk DMA which is around $12, which also corresponds with October/early Nov support. Last time it ticked down near the 40 wk was back in July.
BTW, do you always use log charts ? The arithmetic for SLW going back to the November lows shows mid $11s for trendline support.
Always use log charts. And always use EMA’s too.
40 week EMA is 12.71, fwiw. I agree generally on averaging down, but I find it works better for me on PM’s.
Remember, most of my SLW was bot well below $5. I am not overly concerned with these short term fluctuations, as I am not day or swing trading them.
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OFF TOPIC — My new “second favorite website!”
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Truly, the Interwebs are strange indeed!
Damn, these WVU fuggers can shoot!
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Good Ball Game…..HUGS *THUGS N DRUGS (my favorite t-shirt of all time)
You think Bobby tips the scales at 3 bills? you think he can put on 20 lbs on a good Saturday night in Morgantown. Love the Big East….no give me’s.
Did you catch B.O. act on CBS…clowning it up with Biden in the Jack Nicholsan’s seats…just a couple of regular guys. He wouldn’t cheer GT ? hmmm
Yeah, saw that. Guess he figures it’ll bring his “reg’lar guy” poll numbers up. Should’ve left Dufus Joe at home, for that though. Looked way too staged with the two of them. But I could see Biden insisting on coming and ‘Bama just rolling his eyes… alllriggght Joe.
Friggin Cards are literally going to kill me this year. This is like our sixth game that we had won and let slip away. They just do not have the killer instinct, not sure if its youth, inexperience, lack of senior leadership, or what.
Just killing me. I’ll likely have an MI before Huggy has “the Big One.”
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Jake-
Look at DOC’s call from late Dec. (He refers to it in the post…He ended up going all in around the same time as Gary–early Jan)
http://www.thedocument.com/stock_market_blog/2010/20100130_gold_miners_rally.cfm?dsq=32187261#comment-32187261
Those are some nice calls… it’s amazing to see how many folks have trouble sticking to their plan even when they’ve got the geography mapped so nicely.
I’m guilty of the same, of course.
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Jake
I’m actually long a tiny bit of gold against the Euro and an even smaller amount against the yen. That’s how I’m playing it at the moment and I’m getting sheltered from any downdrafts. I think it’s OK to look at gold from the perspective of other currencies too.
I think it’s interesting that gold held up on Friday, even against that precipitous advance in the dollar. It doesn’t seem to want to break 1075, although I think I’d welcome the quick flush down to $1030-40.
The dollar should be interesting next week, at least.
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Jake,
Just for the sake of clarification, are you buying these names you’ve mentioned of late for a bounce-back, short term rally, or adding them with the idea of keeping them in a long term portfolio ?
TIA
The latter, although I may be selling again this summer, depending on how rapid of a reflation we get in the overall market.
I should be holding for at least six months, and, as has been true for the last almost ten years now, I will never sell all of it down.
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Good post on the summer of 2007 HUI chart and the bounce after.
http://goldversuspaper.blogspot.com/2010/01/gut-check-time.html
I may hate gold but this chart is full of win
http://chart.ly/r8mr49
You have snatched the pebble, glasshoppah.
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What am I looking at, chief? I think I talked about that gap the middle of last week or so…
BTW — if you are going to change your screen name, could you make it “Darth?” I know, you’re probably sick of it, but my kid has a teacher with your last name and that’s what we all call him… (even though he’s a nice guy, the jump was too irresistable).
😉
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