Jul 15, 2011

1.    "Charge of the Light Brigade".  Like a swarm of bees coming out of a hive, the top callers have reversed course, and there is now a fist fight to see who can place the highest price target for gold, in the shortest time.  "It's gonna double, now!" -Coconut Head Gold Analyst #1, July 14, 2011.  "You think 9 days up in a row is good?  Wait til you see what's coming!  There might never be another down day for the rest of time! Chase price, now!!!" - Gold Analyst #2, July 14, 2011.

2.    While the world's largest gold trader nonchalantly throws out [not discards, but makes public ] his "battle royale coming at 1600-1650" statement, the price chasers don't have time for such "rain on the parade" inconveniences to get in the way of their "this time is different!" race, to see who can chase the biggest price with the largest plop of capital, in the shortest period of time. 

3.    "Get out of my way, I'm on the superbuy, we're goin' to Pluto, now!" -Same investors who sold out into GDX $51 and proclaimed, "I'm short term bearish!" ?

4.   In real life, the charge of the light brigade refers to massive casualties taken by the British, during an offensive charge against Russian forces, in the Crimean war.  Let's hope the current swarm of price chasers pouring into gold on the long side now don't meet a similar fate, at the hands of the banksters.

5.    I say "hope" because that's all you can do.  Only "the ultimate market pinhead" chases 9 days and a hundred dollars of price, after blowing out positions into a hundred dollars of weakness.  Here's a minor suggestion: Let's finish your market week as a professional, not as...

6.   The Ultimate Pinhead".

7.    Professional market action separates you from the "it's 1980 again, we're gonna crash, now, and you'll lose everything, sell it all now, now, now!" idiots, and separates you from the maniacal price chasers now pouring forwards to buy all the banksters sell.

8.    "Step right up, because no matter how low your IQ is, we guarantee nobody is excluded, there's enough gold for everyone to price chase, here's some for you, and you, and you!" - banksters, July 14, 2011?

9.    As I write, gold this morning is down about $19 from yesterday's "Charge of the Light Brigade Highs" at $1595.  We are now sitting on the substantial HSR at $1478 [1578!], which is defined by the late April highs. Click this morning gold chart to get a grip on reality.

10.Check the morning static gold chart posting today on the website, for additional comments on how to respond, professionally, to price here and now.

11.It can be argued that price hasn't even really broken out over the $1478 [1578!] highs.  2% of 1478 is $29, and 3% of 1478 is $44.  [Should have used 2% of 1578!] It could be argued that unless price trades at $1507 [102% of 1578 = 1610] or even $1522, there has been no "breakout" or "buy signal".  It can be argued that price needs to exceed the highs by at least 2% to be a confirmed breakout.

12.Such a move would also mean that if price did then decline to $1478 there is enough weakness to make that area a more significant buy point [1578 resistance became support].

13. Click this wheat chart now.  While Elmer Fudd Professional Idiot is obviously incorrect that wheat could go off the board before his beloved Enron, Nortel, house prices, internet stocks (and now bonds), you still need to be a pro in your food market actions. 

14.Price is on round number support at 700, but coming from where?   What if the banksters have a debt ceiling Lehman style surprise, and Jim Sinclair's battle royal turns out like the one he called at gold $1000? [1000->700->1000-> ... Of course, that was during the prelude to the Lehman bankruptcy Sept 15 2008.]   Small price weakness equals small buying.   

15.I don't think the financial system could take another Lehman type event and remain open, but who knows for sure, and who knows what the banksters have up their sleeve?

16.The problem with buying in an uptrend is emotional, not financial.  Paying 700 for wheat on the way down is a lot harder, emotionally, than paying 700 on the way up.

17. If you buy into an uptrend with size, and then "Lehman2" or some other ugly surprise starts to crush price thru one support level after another, you may find yourself totally unprepared mentally to deal with the situation.

18.The simplest way of defining whether we are uptrending or downtrending is to look in the mirror and ask yourself how you feel.  If you feel great about price, odds are you want to be tweaking the size of your sells up, and the size of your buys down. If you feel concerned or nervous, then the buys should be tweaked bigger and the sells smaller.

19.Click this oil "chart of simplicity" now.  Note that the blue HSR line is defined by the highs at the tip of the blue arrow.

20.The two black arrows highlight the two times that oil has fallen to that HSR line.  Those interested in accumulating barrels of wealth need to take action when oil goes on sale, and take enhanced action when it goes on sale at HSR lines.

21.Most technicians, even the best ones, try to figure out whether price will hold or fail at a particular HSR line.  I don't care if price holds or fails.  All I care about is how much action I take at that line. [Because he assumes a secular bull -- the line will eventually fail.] In the case of oil, we are banging around the $100 a barrel round number, and there is about $4 of price weakness from there right now.

22.That's not exactly a "back up the tanker truck and buy til it hurts" signal, to put it mildly.  But if you have no oil, and rode a load of it down from $147 and liquidated at losses, then you need to place some capital here, and preferably very very small capital, to get your "go pro on oil" ball rolling.

23. Another great asset of wealth is natural gas.  The mistake a lot of people made with NG, as with all assets, is trying to find something that will rise in a long term trend against the dollar, and be sure that rise in price is making them richer.  Then when it didn't happen, the view became, "I'm getting poorer, dramatically poorer!" 

24.The reality is that gold wealth is defined by the number of ounces you build, and natgas wealth is defined by the amt of gas holdings you build, on sale of course.  Click here now to view the key natgas story.  There are two key points to focus on.  First, price is in a sideways blob or loose rectangle pattern. Second, volume is rising.  While strictly technically speaking, price has a 2/3 chance when in a sideways blob, of consolidating the trend in play, which is down.  Also, it is unknown whether the rising volume is more due to rollover of other futures, or represents additional interest coming in.  Price often bottoms in a rectangle after a long decline, so all is possible. 

Gridtime!  What you do know, is that if you hold natgas now, you hold a certain amount of wealth now that is defined by BTUs not by dollars.  While gold has mauled the dollar in price from 1999, oil has given gold a bit of a beating. Are you any richer now, if you hold the same number of ounces of gold that you held then?  Fudd is poorer, that's for sure, because basically everything he owns has been mauled by everything he doesn't own, making him a "wiener beyond wieners".  You hold nat gas wealth now.  It may or may not be true that you'll be richer if price rises against the dollar.  Use price sales to get more natgas wealth and don't touch your core positions on price strength, even if you've blown out all your trading positions "too early". 

Thank you!

           Cheers

           S "report card day" T....out!