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Observations on Quarter-End and the Forward Path of Gold


The world's wildest reality show continues.

Editor's Note: Todd posts his vibes in real time each day on our Buzz & Banter.

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.

Random Thoughts:
  • 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?
  • 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!

Twitter: @todd_harrison

Follow Todd and over 30 professional traders as they share their ideas in real-time with a FREE 14 day trial to Buzz & Banter.
Positions in SPX, NDX, RIMM

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

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