Observations on Quarter-End and the Forward Path of Gold
The world's wildest reality show continues.
The Greatest Story Ever Told.
No, I'm not talking about Jerry and his friends—although that's a worthy vibe!—I'm talking about how news outlets spin the price action. To say that the closing hours each day are important would be the understatement of our young year; with quarter-end on tap and fund managers schvitzing each and every flickering tick, the race is on, so to speak.
While I've been trading around a short bias—in both the S&P and NDX, through defined risk vehicles—my risk profile tightened before I left for Palo Alto, which is likely a good thing. I learned long ago that when you can't leave the tape, it's time to take a break; balance is a critical element when trading, and in life.
I’m no perma-bear; I operated from the long side for the better part of the move from S&P 1250 to S&P 1360—it's the last 40 handles that flummoxed me, which may be a function of Mercury Retrograde for all I know. To make matters worse, we spied the bullish technical pattern together before the latest leg higher and I chose to ‘trade around it,’ rather than cut and run.
And, depending on the time frame—syncing your time horizon and risk profile is one of the most important dynamics of wealth creation—I would offer that I'm extremely bullish as I look out across the horizon—it’s the steps between here and there that scrunch my nose, given the blind ambition that surrounds the Street.
The bottom line is this: The emotional agendas of fund managers around the world are running rampant as they sharpen their No. 2 pencils and prepare to share their fare to those that care. I remember those days and I sure don't miss 'em, but that doesn’t mean they’re not in play.
If the bulls can hold S&P 1400, they’ll claim victory and whisper "Pishaw!" to each other before they run off to do whatever it is bulls do.
If the bend breaks, so to speak, it will plant a seed of doubt in the marketplace for the first time in some time, and the bears know that every journey begins with a single step.
The Double Secret Reverse Gold Scold?
Yesterday afternoon on our real-time Buzz & Banter (click here for a free trial), I wanted to share a quick thought on gold, highlighting the fact that it failed at the 200-day moving average ($1,688) that we posted the day before.
But what did my eyes see? A potentially massive reverse head-and-shoulders pattern that, if triggered above the right shoulder ($1,800) "works" (in a technical vacuum) to gold $2,075. (Note: The target is calculated by subtracting the level of the head from the lines of the shoulder, and then adding that number to the shoulder level)
It's an if-then equation, but as I haven't seen anyone else discussing it, I figured I would share my eyes with ye faithful.
- Is there anyone out there who isn't conditioned to buy dips?
- What if T-3 really was the quarter-end gamesmanship, as we discussed on Monday?
- Research in Motion (RIMM): Am I hoping, or demonstrating patience, with my handful of out-month calls?
- If you haven’t read Roger McNamee's Ten Hypotheses of Technology Investing, I would get on it. I was extremely impressed with his candor in Palo Alto.
- The bulls will note how well the banks traded yesterday, while offering that this is a healthy and natural progression in an otherwise pristine bull market
- Of course they would—they’re bulls, what else would they say?
- Bank America (BAC), Goldman Sachs (GS), and Deutsche Bank (DB) remain my primary S&P guides (along with breadth and the price action in commodities) while the tech tape continues to be Apple (AAPL)-centric, with a splash of Google (GOOG) for good measure.
- Do you know the REAL story behind the Wall Street bull and bear, and how they came to be global symbols of the system formerly known as capitalism? We do—and it’s right here!
- Good luck today, and I’ll see you on the Buzz!
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Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at firstname.lastname@example.org.
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