Wednesday, September 29, 2010

Portugal - Gorgeous Bear Pennant

For those who care, sorry for being away so long. I have been pre-occupied with other interests recently. Posting is likely to be sporadic for a while.

Silver has gone parabolic on a short-term basis and Gold is breaking to new highs on a daily basis. Things are obviously frothy and overbought here and now is not a time to establish new longs in the precious metals sector. I am rather enjoying the ride, however, as I don't trade my physical Gold. We will remain in a bull market in precious metals until the Dow to Gold ratio hits 2 (and we may go below 1 this cycle). Gold is good, stocks are bad.

My "long physical Gold, short stocks" trade is only half working (oops). We are back into nosebleed sentiment territory (again) in paperbug land, and I remain stubbornly uber-bearish here on equities. My favorite technical chart right now is of Portugal's stock market (using $PTDOW as a proxy). Here's a 20 month daily candlestick chart of the action thru yesterday's close:

Robert Prechter mentioned on an interview the other day that a recent daily sentiment reading on the U.S. Dollar was 98% bears. Since all fiat is trash, I am still looking for a powerful rally in the Dollar relative to other paper promises, which will throw stocks and commodities into a steep correction. A stock market crash is absolutely still on the table and risk is very high in common equities right now

Mr. Market keeps telling me the same thing: stop playing in the casino, put your casino money into physical Gold (and a little into silver), and sleep well. Some day soon, I may just listen...

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