There is one last stand support which is a simple Gann 50% of a market’s all time high (check where the SP 500 ended its 2000-2002 bear market, yep, precisely at 50%) the BKX is there now, which is only slightly below the 100% last bull market leg retracement. If this level goes, complete decimation can easily take place. Lee Adler has commented he thinks it could go to ehhhh, well, zero. The ramifications of such an event for our nation are very frightening but I now must acknowledge that technically we ARE on the edge of the ABYSS.True to form the bloggers are ahead of the general public as the VIX index finished the week resting complacently at 23. Yea, I'm shocked too, the put/call ratio is below its 200 day moving average as well. What Up with all this complacency. One explanation may be something we've been doing here with the inverse ETFs. On our positions page you can see that we are long are long DIG and long DUG. The significance is this, instead of buying a put as a hedge and thus increasing the put/call ratio the hedge uses the DUG which adds nothing to the ratio. This is probably what the big hedge funds are using. So the complacency may be higher than the traditional indicators are reading i.e. skewed.
For me the problem with being short the finicals this week is the same as it was last week only worse. By that I mean that the group is much closer to their ultimate support than to their all time highs. However the doveish FED result showed us a clear path to a sector which is just beginning that being the metals. It is now time to be long the gold, silver, oil and mining ETFs as well as individual mining stocks such as AUY and GOLD. We opened a 1/2 position on HL Friday and will add this week as well as open a position in AUY. This is as clear as it gets as the FED revages the economy and the country, but provides us with our Golden Moment of Clarity.
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