The Dow Makes New Lows

Although the Q's have held at the channel support the Dow has broken down making new 6 year lows. I love it when a plan come together.

Unfortunately the economic situations continues to deteriorate. In fact as of Friday Senate banking Committee Chairman Dodd was talking about the possibility of the government taking over some banks.In the meantime safe-haven buying continues with gold crossing the $1,000 mark and silver making new highs. Yes we got back in last week. Even though the golds were looking like the momentum was weakening you always need a re-entry strategy just in case. All other commodities continue to drop with year over year prices now flat. The lowest growth rate in 53 years.

For this week will be looking to take profits on current positions as shorts are over sold and longs are over bought. Of course if the markets continue to crash tomorrow will stay on for the ride.

Devil in the Details

A week ago Friday the street was excited about the stimulus package. Last Friday as we awaited the vote things were not so positive. Investors exited positions coming into the Presidents Day long weekend and it would appear want more details before they put their money on the line.
We are however still in this trading range waiting for some direction. I know it sounds like a broken record but patience is key and rest assured there will be action soon. I am still expecting new lows and expect more individual stocks to pull a RIMM, slowly crawl a wall of worry only to be hit with reduced expectations and a slamming from the street. Be careful out there.

In the meantime although I did get out of gold last week I did re-enter on Monday but took silver for a ride this time. It is definately in a 3rd wave here, a beauty to behold.


In the meantime OIL and GSG continue to make new lows as we await signals to get long.

598,000 versus $780 Billion

Well we know which number the street liked better don't we. Although 598,000 jobs were lost in January, bringing the total jobs lost in the last year to over 3 million, it was the $780 Billion stimulus deal the street focused on, enjoying a nice rally Friday. The Nasdaq rose 2.9%.

I have attached the above chart though to put it into perspective. This market is still very much range bound. Although we have been playing around a bit for the last few months I just want to remind you that this has been with only a small portion of the portfolio. The rest is in cash waiting for a trending market again. Patience is key at these times. Do not be one of those traders that give back their profits trying to tell the market what to do. Listen and it will tell you.

As you know I still beleive we are in a bear market in a 4th wave and expect new lows in the future. That is my belief only and I will quickly change this belief once the market tells me otherwise. In the meantime the only way to trade this market has been on an hourly basis.

For those of us long gold I have taken profits last week and will explain why.

This has been a text book trade. Back In mid November we had a double bottom with MACD divergence. The KRD on Nov 13th gave us our buy signal to enter on the 14th. We have now completed the 5 waves and the MACD is once again showing divergence signalling the end of this trend. Now of course you have a number of options here. Take profits and look to re-enter, take partial profits and give the balance some room or continue to hold. Although gold seems to be the place to be I am going to cash and monitor.

One of the reasons is that this is the set up we look for to short. Case in point was this weeks pick from Dan EPIQ. This was again a classic set up for us. Major divergence late last week with a KRD in place. It broke hard as we both attempted to get into some puts.

As far as commodities these are still scapping the bottom of the barrel (pun intended). Still lookinf to get long at some point. (Copper is the new gold)