Not Ready for the Rubber Match, Obviously

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The good news is that we should get a really nice bounce here in the next couple of days, and perhaps as early as tomorrow morning. The bad news is that I think we’ll very likely drop another 50 points on the S&P, and may drop as much as 90-150 before we get that rebound.

Here’s what I’m looking for on the $SPX — the only index that really matters here, although one could make a case for shorting the Cubes (QQQ) tomorrow morning as well, as it has yet to drop like it’s brethren.  I think that it’s very likely we get a quick broken elevator tomorrow to 1050, minimum.   If momentum really picks up, it might even drop as much as 90 to the second (red) line here:

 

 

And yes, even 950 is a possibility here, if the momentum gets all ragey to the point of the Friday employment numbers.  I really don’t expect that however, as we are egregiously oversold here.   I will be loosing my SKF, TZA and ERY to the trade winds as we visit these levels.  I may keep a base of the Skiffles, however.

Another reason I see the downspike continuing is that the dollar doesn’t seem to be done here, after busting through that resistance at $79 on the index.   I think the next target is the 50% retracement here:

 

Important to realize here, on this dollar index, however, is that price is finally through the 200 week EMA again, and we have the 13-week EMA finally crossing back over the 34-week EMA, with both on the upswing.   This is not good news for either the market or our precious metal friends, girls and boys.

Get your helmet.  Get two helmets and sit on one.   Protects against land mines.

Best to you, and take good care.

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I am sorry if you were unceremoniously dipped in pineapple sauce and then stuffed into the cherry smoker today, ending up braised to a fine turn.

It’s not like I didn’t give you ample warning.  In fact, that warning was even more ample today in The PPT, where I announced I was adding to my growing stacks of SKF, TZA and ERY certificates. 

Those certificates, and their already in-place comrades, yielded substantial gains for me and mine this day.  And I’m pretty sure they are not done, as of yet.   In fact, given some of the panicked calls I received from friends today, I think tomorrow should be a pretty interesting open. 

If you haven’t gone short anything, it’s probably a little late to start right now.  I’ll have more on that with some charts tonight.  In the meantime, enjoy this Indian Summer we are having in God’s Country, and try not to get too upset about the wayward state of the economy.

Help is on the way.  My best to you.

Addenda:  as it seems Le Monsieur has grown tired of most of you over at his site.  Please let the man rest.  In the meantime, do feel free to vent your concerns and comments on my fora. 

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Rare Photo of Mr. Bilderberg’s Dog, Barbarossa!
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I’ve cut back once again to about a 25% position in my silver and gold positions.   This is merely a precaution, as the clouds looming seem ready to ram us down the throat of an all encompassing Deflationary Fat Man.

I also want to have some cash on hand for anticipated lower prices, especially in the miners.   We’ve been down this road enough times in the past ten years to see some of our favorite names go to “poleaxe pricing” — that state of irrational selling likened to a shareholder being bashed hard enough on his melon that all opposable thumb functions disappear, and share certificates cascade to the floor willy nilly.   We want to be there to pick those newly discarded certificates so as to be better able to offer them back to aforesaid bashees at prices significantly premium to their current ones.

I also added more TZA and SKF yesterday, and — in the spirit of true deflationism — added almost as large a position in the oil double neg, ERY.   I am now pretty massively short, on a dollar basis and on a “relative dollar” basis, especially, as all of these positions are leveraged shorts (either 2x or 3x short ETF’s).

I will likely maintain the SKF as I have been, and leave it largely alone.  With the TZA and ERY I will probably be more opportunistic, trading in and out as warranted. 

Any changes in this philosophy — and I may change radically tomorrow, such is the nature of a volatile bear market — I will communicate immediately, although actual trades will be announced in The PPT first.   I don’t pound the drum on that valuable service enough, but now is a very crucial time to be participating, not only for what the “better than the average bear” traders are saying in there, but for what they are NOT saying as well.

Best to you all.

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