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Unsurprisingly, gold and silver are not done bottoming, as per today’s evidence, and to my favourite Kansas Cityan’s temporary chagrin.  And like the dollar reflects the value of gold and silver as it crashes, so gold and silver serve as lodestone for the direction of the dollar. 

See, gold taking a bloody digger like it did today is not consistent with a plunging dollar.  Quite the opposite.  And remember that daily silver chart from just a few days ago?  Here it was:

Those were the predicted directions.   Now, let’s look at the same chart as of close today:

Wacky, no?  We reversed almost completely the pop we had the day before, and gold did worse, achieving recent near term lows for 2011.

It might get even worse, so hang on, and deploy capital sparingly.  I have added to my ZSL  about two hours before the end of yesterday’s session.  I felt a pained fool at the time… “but I got better.”

Here’s what I’m really getting at.  Take a look at this very large Fibonnaci Retrace on this almost three year dollar chart :

Now I realize the above chart is a bit busy, almost akin to the Punch Buggy Post we had the other night.  However, you need only take into account a couple of things.  First, we are hovering almost exactly at the Golden Ratio — the 61.8% retrace of the  large dollar move from the depths of the last Bernanke dollar destruction in March of ’08, to the peak in early March of ’09, when the market bottomed.   This is a significant resistance point for the dollar, in my opinion.

Second, we are also very close to the rising trend line in the dollar.   I believe the dollar is far too oversold to break the longer term trend at this time, unless of course Bernanke just starts shooting Benjamins out of cannons on K-Street tomorrow afternoon. 

So, if by chance that very strong Fibonacci line does not hold tomorrow, then I believe the uptrend line will in the next few days.

Whichever the case, we should get a snap back in the dollar, no matter how brief.  I think we see at least a 5-7% correction out of  that dollar, which will likely include our miners.  I may lay some more DXD, QID, and SDS at that point.

I also think our miners will rebound first, so be ready to start collecting.   Best to you all.

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Trust Ye Not the Evile Clamme!

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Well, wasn’t that a refreshing sell off we had today?  Will we bounce from here?   Likely, at some point.  But I wouldn’t get overly excited about it.   In fact, I’d take any rebound in the next couple of days as a welcome loosening of the steer-making device from around your sensitive bits, and lighten, lighten, lighten.   

You want to be as light as a Capezio-wearing chorus line extra dangling from a dirigible.   Because ladies and gentlemen, the Clamme  is not your friend!   The Clamme is the friend of men standing in bomb shelters poring over ruined real estate portfolios, but he is no friend of the genial Speculator. 

As good as it feels to revel in the seemingly endless supply of bubblicious liquidity flowing from the Helicopter du Clamme, you must believe that the other side of that euphoria is the long weightless drop down the elevator shaft, to which there is only one end for your portfolio.

Ker-freakin’-splat!

I love the Russell 2000 as a market indicator.   Are you going to pay attention to the Dow 30, instead?

A 10-12% sell-off will bring us back to the $72-73.00 area, where I see pretty solid support.   The 200-day EMA should rise to the $70 level here in the next couple of days, and that will offer additional support.   I don’t expect a bloodbath, yet, but why watch your portfolio shrink, or worse, get thrown in the chowder bowl when we will have larders full of opportunity in the coming weeks and months?

Patience.   It’s a most difficult virtue, but one that will pay literal dividends in the weeks ahead.

I added to all my market hedges today — SDD, SDS, and QID, to salutory effect.   I also off-loaded a small amount of MVG that I had not hedged, and sold off another quarter of my FTK holdings.  Tomorrow, I shall likely purchase some TWM and perhaps even some TZA, which I have held off on purchasing due to it’s razor-sharp canabalistic capabilities.

Best to you all, Clamme Diggers.

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That’s right, folks, I’m just going to keep steepening the metaphorical curve until this market breaks, no matter how ridiculous I eventually become.

Don’t worry, “SuperNova” is still some weeks away, and for now we will talk about silly bulls idling about in a bucolic wheat field only to be set upon by a near-silent International Harvester Combine with razor sharp blades that will quickly render them into so many two and a half inch ribeye’s ready for dry-aging.

Again, despite myself, my portfolio edged up again today, a half percent, sparks flying and hedges hedging.  And weirder still, my half and one-third positions (thus far) in QID, SDD and SDS were all off rather minimally today.  In fact, SDD was even up a tad.   None of this action is making me think my thesis is wanting, though I may be stuck waiting while we grind to the end of this current cycle.

The only hedge that drew significant blood today was the one that had no counterpart (unless you count my small core position in SLV), which was my one half position in ZSL, the silver commodity ultra-short ETF.    Everything else was offset, including my SLW sold calls, which were outpaced by the underlying stock’s gains. 

Many of you chided me today about silver having a good day, but in your heart of hearts, you saw how the price struggled, and how my two favourites, SLW and EXK struggled to retain gains.   This is not the action of a bull ready to take off, but rather one that is seeking a siesta.

Make sure you have cash on hand, and please, stay out of the cornfields, Children…

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Man,  I hate days like this.  Even when I hedge my portfolio and sell down to my core holdings, I hate to see my beautiful PM’s get whacked like a homicidal Joe Pesci character in a typical Scorsese mafia flick.

But this is the world we live in when we choose to invest in the biggest bull in the last ten years.  All we can do is strap ourselves to the mast, make sure our cargo is well stowed (in hideous questionably weurthy (sic) cash), and ride out the 60-foot waves.  Right now, the beauty of beauties — SLW — is getting cranked like a Model A Ford with battery troubles.  Did you sell down to your core?  Do you have hedges in place? 

Still hurts, doesn’t it?  Well, going forth all guns and vinegar butter hurts even more.  So get hedged, now.

Today, I actually got some short ETF’s.   I purchased QID, SDD, and SDS — half positions in each.  I expect I will add more.  I also picked up several thousand shares of ZSL.   

I’m off from the West Coast… will patch back in tonight.

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