While we wait for the market to confirm the breakout of 2000 it would be interesting to assess the present state of the market. Paranoid cat on a hot tin roof. Investors shift to and fro fearing that Janet will yell at ’em. Clueless money managers start reserving musical chairs when the music hasn’t even stopped. It’s not as if you could blame them. With the Scots about to disobey Obama’s rule and do something stupid; the wannabe Caliph in Iraq doing something stupid ever 5 minutes (want to poke a thumb in the eye of the most powerful country on earth? Behead a few of its journalists); the As trading away their playoff hopes; that esteemed non-profit corporation, the NFL, losing control of hundreds of over-testosteroned behemoths…well, on second thought maybe investors have a right to be restive.
Beneath the fluttering of the major indices in the mistral blowing over the Mediterrean major trends are shaping up. Silver and gold look to be tanking. (Chart below) The dollar is flexing its muscles. Interest rates may be already headed higher. And while the majors are fluttering they are the only haven in sight.
Silver appears to break under its low on a gap. Moderately aggressive traders (ourselves included) will sell it. More conservative investors will wait for a confirmation. (That is, another strong day down.)
We don’t really think this is the startr of the avalanche, but there is a trade here and we will be scaling into it.
We are already short the euro, (EUO) and will be adding on as the low is taken out.
These trends may be the beginning of something big. Time will tell.