[youtube:http://www.youtube.com/watch?v=WOdr9FiNZoQ&feature=related 450 300]

It Sure Ain’t Lionel!

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One thing I can promise you going forward is volatility, in everything, even your Commodores covers.   In fact, I wrote a whole witty diatribe about the dangers of buying “Fo’Teen” here — a.k.a. XIV — the anti-volatility hedge that’s supposed to be the opposite of the bear’s friend in VIX and VXX.   I wrote a whole spiel,  and tried to save it, and WordPress ate it for late evening snack.  Now you get the re-hash, bare-bones style.  Sorry.

It just so happens I was reading something this morning at the esteemed Stocktiming.com website that put me even more in the mind that the recently embattled “Fo’teen” is headed to “Ovaltine” status (that’d be “zero-teen” for the slow-witted among you).

It’s all about the Zero-based RSI indicator which I haven’t time to explain all over again (this being iteration two), so I will just link this page instead.  Suffice it to say, when that indicator is “below the zero line” on the NYA Index, we are looking at continued volatility and difficult-to-trade, bear-leaning markets.

This graphic below, also cadged from Stocktiming.com (hat tip to them),  in conjunction with the link above, will illustrate where we are in the current cycle.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As you can see… anytime the zero-based RSI is over that negative line, stocks have had a difficult time of it.

This confirms a lot of what I’ve been seeing in other areas as well, which tells me players are taking chips off the table right now in anticipation of a paltry Fall.

As a result, all I did today was continue to trim.  I actually tried to take some hedges off by letting the declining prices come to me (on the sold calls) but none hit my buy points, so I remain heavily hedged on some of my oldest deepest in the money positions.   I expect that all the value will soon come out of those sold calls, however, and I will likely end up selling even more rather than re-selling more calls at this juncture.

I also bought some more SKF today.  Not a tonne, by any means.  Nothing more than toe-dips for now, as we are due a nice snap-back rally here.   Use these opportunities, people.

My best to you.

 

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Ah, alack and alas! The world is melting down again, and I think we can say we’ve entered into a bear phase, ovah heah, if not a full blow bear market.  I’m not going to show you the charts, as I haven’t annotated them, but we’ve got bear crosses on the major markets and the Transports — up to an including my beloved UPS are leading the way down.

Like in mid-2008, we are showing signs of a true Dow Theory bear episode, and who knows how long this one will take to exhaustion?  We’ll have to play it by careful ear as we did in 2008-09, when I was a painful two and one half weeks early in getting back in.

In the meantime, like a fine-toothed cyborg marinated in Gatorade, the price of gold (POG) continues to break to new highs despite everything else melting around it.  Silver, too, is being dragged along, if at a slower pace, which is driving our Gold:Silver ratio higher… to 45x at last count.  You may recall when silver got to 72x the POG during the last extremis… I don’t think gold will break that far away from silver again…. but if it does…

I am continuing to take this opportunity to either sell or hedge my miner positions here, as I think they are not eager to participate in what may be the last rally for gold for months.   This gives me pause, and it should you as well.

On the other hand, I continue to see setups (AUY, NGD) in the mining space, so I will endeavor to keep an open mind.  One thing I am assured of, however, is that I should be trimming my non-metal positions, no matter what happens in the PM sector.  The regular market has become a toxic swamp, and you are better off picking up limited short positions (like SKF that I bot today).

Stay alert, and I will try to do the same for you.

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