The Long Weaks

If Gold is going to be the new reserve currency (it will be), and all paper currency will value around Gold, then Gold should go higher. However, we believe if gold is going to go substantially higher, which we believe, it will more than likely stage a decline first in an attempt to wash out what we traders call "the long weaks". "The long weaks" are those individual traders that have just bought along with the craze, and worry every day when to sell.

We believe this shake out must occur. We sold all Gold, Silver positions at 1440 earlier this year, and have missed only the last few weeks moves to 1480, as otherwise the Gold market held steady with no higher moves than 1440. Silver, on the other hand, also due for correction, just hit tops of $40.00.

Use a stop loss on silver, if you hold it, if it closes below 38.50. You might at that time consider a May or June ITM put on SLV and take 20% profits. GLD will give a sell signal below 1417, but also has potential to rise to 1580 before any correction.

If GLD shakes out many people that have banked great successes, sold nothing, and have no sense of cynicism will lose a great amount of their “paper gain assets”.

We find it most interesting that we are having to utilize moving averages, put and call ratios, big block transactions, sentiment indicators, PnF weekly and annual charts, and less on price action in a market like this.

For those of us that believe in sunspots and moon cycles, the plant Mercury is in retrograde for the next two week. Historically we can see a sudden drop with a market on upswing during Mercury retrograde and then another return to new highs.

And a question from a Blue Chip trader on why some of more volatile recommendations on rare earth or unique commodity stocks, that have brought us great profits, and made us also gasp with fast losses, the question was “what underlying fundamental could have an IPO drop 50% in a three day period?”

The answer is first that many IPO’s go through shakeouts, and Ned Miller, one of our students in small caps/day traders, best answers the second answer…

“As for the negative write-upon ______. we've seen this game played dozens of times in the past month... The short sellers take massive positions in a small China-based stock. Then, the editor writes a negative report about the company – and sends it to every financial blog he can think of. Some writers don't disclose their company for fear of a lawsuit. Others go as far as to hire small law firms to file suits against these companies within a week of publishing their report. 

Once the report is published on blogs, the stock begins to tank. The fear is enough to push these small stocks (which have little institutional ownership) down in excess of 25% in a day.”

Small stocks are the highest risk and highest gain trades. You must expect to return 136% in a week, or to lose 50% in the same time. There are no fundamentals or charts that show manipulation.

Several comments are appropriate for Floyd during these trying times:

-The Pee Party does not have a clue and no money will be saved over the long term

-Despite what any of us may think of Obama, the GOP has yet to give a plan (don’t spend money is enough to kill me, as they were the fucders that first spent the money from a zero deficit and it was okay”), or a candidate that would give me the comfort that they could represent us to the world.

-And yes, Mr. Huckabee, we want a worldly view President. We live in the world, not the U.S.A. That thinking is our core problem.

We as Americans think ours is the best and only way. Most of us have never even left our own counties or states.

I fear us most for our ignorance and prejudice.