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We are either going to bounce hard here, or we are going to be cast into a pit of molten lava, where blood and bone will be cooked to a fine carbon gristle with extra smoke.

And I’m talking about both the SPY and the PM’s here. Both experienced a Bollinger Band crash (violation of the lower Bollinger) and both should rebound here in the next week, at least to the midpoint. In the case of the Gold Bugs Index ($HUI) that probably means the 200-day EMA.

Here’s the $HUI weekly, which clearly illustrates the return to the October breakout. We break here, and we’ll be headed for that long term support line down in the 500 area first:

Now the daily, with the Bollinger Band illustrations:

Does that look like it’s done to you? Me neither, which tells me if we do get a bounce it’ll likely be later morning tomorrow.

Whatever the case, I believe that unless I see evidence of us getting back over that 200-day EMA (above), I will be bringing my core all the way down to 25%, which will be my bull market low point. You should already be at 50%, give or take, in your PM concentrations. This is simply the next step down in raising cash for the coming wave forward.

I don’t know what it means for the SPY, but I don’t expect there’s much left in that rope either, if the dollar continues to strengthen and the financials and commodities continue to get clipped.

On the brighter side, however, I will note that while things look bleak, copper prices have held up well. Our own miners were hurt by today’s rumor of a Marxist nationalization effort in Peru. Such rumors give me good reason to keep my mining holdings in NAFTA countries alone. We are not being paid to take nation-risk here people. Look to Canada, Nevada and Mexico for your long term core holdings.

Last, I say look to sentiment. The last time Fly and I were this conditionally apocaplyptic, the market took off in a blaze of glory. Hell, even Gary Savage is hiding in Switzerland right now. Be strong for me, my friends.

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Every chart I look at is registering overbought like a mother. Doesn’t mean that we can’t eke out some more gains here. I just wouldn’t bank on a big run, that’s all.

I may get some TZA this week, or QID, or perhaps even some SPY puts for the first time in an age.  You know how bullish I’ve been these past months since early September, so you know this is a serious admonition…

Get hedged, pledge.
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Helpless Feeb Trading, FTW! (Or Not)
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I don’t usually go for the whole gloating thing, as it’s unkind, and generally karmically challenging.

I’ll make an exception this one time, however.  Call it karmic recognition if you will.   Much to the cognitively challenged’s chagrin, [[SLV]] is triumphant once again, after many weeks of representing second place to Canadians and other luge and curling aficionados.

The dollar index, [[DXY]] , is back below $80.00, currently trading at $79.86. It’s proxy [[UUP]] is below a significant (61.8%) intermediate term Fibonacci line ($23.52), and looks to be heading towards $23.13, it’s next support.

Many of my compatriots are short or heavily in cash. Small traders have one of the lowest call positions recorded since last March’s lows. People cannot believe this market can go up. In short– It’s a basket weaver’s market, and I’ve just finished a fine set of cane-rush patio chairs.

I’d like [[AGQ]] to stay above $55.02, and [[EXK]] to stay above $3.36 first, and then $3.61 second.   Near term target is $3.76, but I’m holding for the long term.  [[SVM]] is approaching a very important 61.8% fib line at $6.99, and if it should break it (I don’t think it will on first try, frankly) then it should run right to it’s recent highs at $8.00.    Last, [[PAAS]] is good to go over $22.35, and it’s next stop should be in the $26.50 recent high area.

My favourite, Silver Wheaton Corp. (USA) [[SLW]] is labouring (sic) on low volume here, and needs to get above $15.95 in order to “release” to the recent highs of $17.80.   It bears watching, while bears are watching.

Here’s what’s giving me hope for a bullish continuation even amidst the ursinity of my peers… The Russell (I use RUT or [[IWM]] to track it) is breaking out ahead of the [[SPY]] .     If the [[DJT]] and it’s representative United Parcel Service, Inc. [[UPS]] can continue north and break above recent highs, then I will have further comfort.

Until then, please be sure to purchase plenty of technical trading books.  Those authors need to eat, too, you know.

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Krull Leaves the Poker Game for a Quick Smoke Break
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Up 3% yesterday, even with all my hedges still in place, I must bow to the volcanic power of the precious metal rebound we experienced yesterday.

That doesn’t mean I’m abandoning my post on the 12th slippery rung of the main municipal sewer — the cosy seat next to the extrusion pipe but before the extrusion weld.   No, I’m still expecting a pullback today from yesterday’s Ode to Joy/Bunny Rabbit Massacre, unbounded. 

But the dollar (seen on the intraday as [[UUP]] or DXY) still continues to fall off here, and I’m wondering if we will ever get back up to that $80.10 or so pivot (on DXY)  I’d talked about as a trigger for another downturn last week.    I won’t be surprised, however, if we get another exogenous shock out of Davos, the PIIG’s or even President Obama’s recently unveiled near $4 trillion FrankenBudget. 

For now, I’m liking what works on the rebound, and thus far, it’s the fast movers of the junior golds like Allied Nevada Gold Corp. [[ANV]] , Eldorado Gold Corporation (USA) [[EGO]] and “the X-factor” — Exeter Resource Corp. [[XRA]] .   I also like IAMGOLD Corporation (USA) [[IAG]] and Royal Gold, Inc. [[RGLD]] of course, and Lindsay made a nice rec yesterday on the nicely pivoting Taseko Mines Limited (USA) [[TGB]] .

Of course silver is my true Tsar Bomba play in 2010, as it has been lagging the 2009 move in gold, along with platinum [[PTM]] , Stillwater Mining Company [[SWC]] and palladium [[PAL]] .   Right now, in this first updraft, I like the double silver play [[AGQ]] a whole lot, and of course my core group of miners — in order — Silver Wheaton Corp. (USA) [[SLW]] , [[EXK]] , [[PAAS]] , [[CDE]] , [[SVM]] , Silver Standard Resources Inc. (USA) [[SSRI]] and the lowly Hecla Mining Company [[HL]] .

All of these should be gnawed at opportunistically, as one would a bread wheel from the boulangerie, deep under the steam pipes of Manhattan.

I am still not taking down my hedges (in  [[SPY]] puts and [[QID]] and [[BZG]] ), and will happily bleed money on them here, as that insurance policy has served me well these last weeks.   Nothing could please me more than taking them down at lower balances, however, as that would mean all of my other plays are working well, as they did yesterday.

Don’t forget about the banks, here, as they’ve never really suffered much of a pullback, even in last week’s deluge.  Today, they seem to be leading the red dogs, which may turn out to be an opportunity for you.   Again, I like BB&T Corporation [[BBT]] for the longer term hold, Fifth Third Bancorp [[FITB]] and Huntington Bancshares Incorporated [[HBAN]] for the Ohio pop, and Pacific Capital Bancorp [[PCBC]] for the lotto play (stay small and remember, it’s only a game).

Best to you all, First Amendment scholars.

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Busy, Busy, Busy.   Yeah, you got nothing today, but I threw some calls down in The PPT, because theys mah peoples, and theys payin’ the bills.  So sorry.

I bot some  more Silver Wheaton Corp. (USA) [[SLW]] calls — 40 more June $11’s at $4.30.   That brings my tote up to 160 in that class.   Yeah, there might be some more pain in this name, and in my other precious plays, but you know what?

I’m not going to get overly concerned. 

 I’m shrugging off this “Volker scare.”

I say here for you — it’s bullshit.   Rhetoric.  Albumen.

   I knew we’d have some sell-off and the PM’s were way ahead of the rest of the market in this cycle decline, which means that they will likely be done before the rest is too.

I’ve been adding tons here on Friday and today, and as I mentioned I was actually up at Friday’s close.    Not so much today, but that’s only because my hedges “gave back” some of Friday’s wins.    Those are the kind of losses I can accept.  I consider that the equivalent of paying off Sal & Tony for “protection.”    If we go bull green from here, I’ll be happier than Harpo at the Thai Masseuse convention, and I’ll sell those hedges at a loss, if necessary.

But now, they stay, even as a I load up on 4k more [[EXK]] at $3.45.    2k more IAMGOLD Corporation (USA) [[IAG]] at an unfortunate $14.31 (again, I’m not worried), and 400 more Royal Gold, Inc. [[RGLD]] at $44.52.

Between today and Friday, I’ve been loading up on PM’s and banks.   I didn’t add any banks today, but I think I may take a third swipe at Pacific Capital Bancorp [[PCBC]] and BB&T Corporation BB&T Corporation [[BBT]] .   One other playah that I bot last week is Fifth Third Bancorp [[FITB]] .  I may add this one as well tomorrow.

I may  look at coming out of my final [[GDX]] and [[SPY]] hedges tomorrow as well, as they are option hedges.   My only other remaining hedges besides those are [[QID]] and [[BGZ]] , which I will likely hold until I’m sure we’ve turned back to the green.

Make no mistake, I’m extremely bullish on the continuing inflation trade here.  Bernanke will remain, and so too will the continuing flog of the dollar.   Play that game by buying select equities and precious metal bangers.

Bless you all, and I mean that.

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I see you!
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Despite the best laid plans of mice and men, not to mention Time Magazine weasels, physics still work and even fiat currencies bounce.   We are experiencing a necessary breather here in the nine year plunge of the dollar, otherwise known as The Potemkin Bull.

Here’s a hint as to where I think we’ll be going in the near term on the dollar proxy [[UUP]] :

 

Before you get all excited about your extra-ursine activity however, just know that this is not likely to last for very long.   Give it a couple of weeks, tops, before Time’s Genius of the Year  presses the one button he’s made available to himself to guide us all to economic Valhalla. 

That would be the button that attaches to the dollar printing presses.   For those of us who’ve been following the path of Jackson, that will be our signal to start buying miners and royalty plays again, this time in size.   In the meantime, I’ll be over here adding a little more [[SPY]] puttage, maybe some [[TZA]] and a couple of dollops of [[DUG]] for (just) deserts.    If you are in The PPT already, you will see the purchases first, as you have been.  

If you are not, then “a ha’penny will do,” I guess.     Off to listen to the sounds of “fap-fap-fap-fapping” coming from the Dope Slope.   At it’s crescendo, I will be buying gold, glorious gold.

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