Market got creamed today.

[rickortreat]

Everything was down, including Gold and Gold stocks.  This shows that even they aren't immune to a market wide-decline.

The only things up today, were bonds, the yen and oil.

On a technical basis, the Indu's fell below where I thought it would catch a bid, but the drop was so sharp and so severe it's quite possible people were panicked into selling.

IMO it will be time for some bottom fishing for a number of stocks in the next day or two.  It is important here to watch the general market for clues, even the strongest stocks aren't going up on days like this. 

The bottom for this move in the Indu's should be at 12072.60. If it doesn't bounce there, the market is in real trouble.  We closed at 12216.24, after starting at 12628.29

Never try to catch a falling knife- make sure the market is going up again before jumping in here- unless your willing to take quick profits.

From a broader perspective- the market had been going up for a very long time, and had been giving signs that it was overbought.  Even with today's drop the market is still in an uptrend, and would continue to be one even if it falls to my target level, which was a price bottom back in November.

A correction in prices is healthy for a bull market, which is what the general market has been in.  I for one am not turning bearish on the market just because of one bad day, but it does mean that it's time to be cautious.

This is why I've kept some money in bearx all this time- a mutual fund that goes up when the market goes down.  With the hit I took in Gold today, it's probably the only thing I have that went up!

[rickortreat]

There are always explanations after a crash like we had this week.  The story is that the Chinese stock market- the Commie one - was getting to high as far as the officials in the government were concerned - they didn't like hearing stories about people borrowing against their homes to drive valuations higher.

Understand that the government owns the majority of shares of these companies- so it's nothing for them to sell a bit and panic the sheeple.

Investors/Speculators these days, lack vision and conviction.  They buy based on momentum and try to get in and out quickly.  Once other markets started to mirror what happened in China- in the middle east and Europe.  It was little surprise the US followed suit.

In the first place, the market hasn't had a meaningfull correction in a very lone time, and on that basis, was overdue.

On a technical basis, the market was oversold and had been for some time, and although the slope had moderated, it was still rising.

Markets really go down because more people sell than buy.  The only question is why did they decide to sell.  And the answer these days is " because everyone else was".

Gold itself got clobbered even though the Dollar was down.  Insiders in the market claim it was manipulated down.  I can't speak to that, but I did note after the fact that the peak was at a fibbonacci price level which should have at least caused me to be cautious.

If any of you bought on my say-so, please do not throw in the towel.  Gold will find a bottom very shortly if it hasn't already.  It did fail at $555.50, were down to $640 as of Friday's close.  There is fib support at $632

[rickortreat]

There are always explanations after a crash like we had this week.  The story is that the Chinese stock market- the Commie one - was getting to high as far as the officials in the government were concerned - they didn't like hearing stories about people borrowing against their homes to drive valuations higher.

Understand that the government owns the majority of shares of these companies- so it's nothing for them to sell a bit and panic the sheeple.

Investors/Speculators these days, lack vision and conviction.  They buy based on momentum and try to get in and out quickly.  Once other markets started to mirror what happened in China- in the middle east and Europe.  It was little surprise the US followed suit.

In the first place, the market hasn't had a meaningfull correction in a very lone time, and on that basis, was overdue.

On a technical basis, the market was oversold and had been for some time, and although the slope had moderated, it was still rising.

Markets really go down because more people sell than buy.  The only question is why did they decide to sell.  And the answer these days is " because everyone else was".

Gold itself got clobbered even though the Dollar was down.  Insiders in the market claim it was manipulated down.  I can't speak to that, but I did note after the fact that the peak was at a fibbonacci price level which should have at least caused me to be cautious.

If any of you bought on my say-so, please do not throw in the towel.  Gold will find a bottom very shortly if it hasn't already.  It did fail at $555.50, were down to $640 as of Friday's close.  There is fib support at $632

[rickortreat]

The Yen carry trade is what is responsible for the US market.  I didn't fully understand that until this week.

Please pay attention to this if you are in the stock market.

Note that the dump in stocks that prompted this thread, was coupled by a rise in the Yen.  The reason for this is that the BOJ (Bank of Japan) has continually lowered interest rates to stimulate the Japanese economy.  American hedge funds and investment banks borrow the yen at comparitively low interest rates and trust that the Yen will always go down against the dollar.

It is easy to borrow at a low rate- make profits off your successful investments in higher yielding funds, paying back the interest while reaping the profits.  The problem is that when the yen rises, it becomes more expensive to pay back that loan and you rush to cover your trade and pay it back before you loose money on the deal.

When a lot of people sell at the same time, the market goes down.  It's no accident that it went down when the Yen was going up.

What happened this week, was the opposite. Japan did not raise rates, and the yen became cheaper- bam! The carry trade was back on.

I like gold for reasons I've posted many times before- but gold has been going up for weeks and the miners were still selling.  They went up this week BEFORE gold did!  It was the Yen carry trade providing the liquidity.

Supply and demand are what governs the markets.  Cheap money begets a rising stock market.  Expensive money - high interest rates - suck money out of the markets.  The same is true in various sectors in the market.  Let's say you think banks are a good sector to be in.  Even if a lot of speculators think the same way, if there are too many bank stocks out there. The effect will be spread out among all of them, with none of them going up enough to make the trade worthwhile.

A new company came into the ethanol market, just as it was cooling off.  Their IPO did not encounter much success. 

[Reality]

testing 1 2 3
This is only a test.

[rickortreat]

That really would be a Super Manu!

Gold was strong this week, but miners got whacked on an impulse move down in Gold yesterday and did not come back today- options expiration probably had a little bit to do with that!

Too bad I was busy yesterday, since an obvious option play on Gold's weakness was to buy a 27.50 strike put on GG for $1.00 at the end of the day, you could have sold it back for $1.85.  Can you imagine making an 80% return in a day!  IMO there are option plays everyday that make at least 20%. 

Today, even though Gold bounced strongly, showing it's uptrend is well intact, the miner did not move.  A GG call today wouldn't have done diddly! This means the momentum is still against mining stocks, so the good news is you still have some time to get in.

With gold moving up, I think the miners are getting ready to pop soon. 

A GG call for $27.50 strike in May is now only .40.  GG is at 25.61, which means the option will expire worthless unless GG moves up $1.89 plus .40 for you to break even. The last day to trade the May's is Friday, May 18th, 20 trading days from today.

I don't propose buying them and then holding them to expiry.  Unless you can watch a minute chart on the stock and see and trade the options quickly don't even try this play.  I expect that those calls for .40 will move up to at least .80 at some point and then possibly fall back in one trading day.  It is the nature of stocks to do this, and with options you get enough leverage to make a profit on them in either direction.

The trick is to be ready when the pattern emerges.

The Dollar is looking worse and worse all the time, which is why I expect Gold and Silver and miners in them to do very well this year. The stock market looks absolutely boyant, having recovered to a new high after being slammed when I started this thread on Feb. 27th.  Going long since then would have been very smart, as I suggested.

Right now, the Indu's are getting very oversold.  The Yen carry trade is back on, and the money is going right into equities. It has happened so fast that it is now very close to being overbought.  I would be taking profits and selling sometime next week. At the moment there is still some more momentum to the upside, so if you sell into strength, you'll get your price easy.

So in short, if you are in stocks now, it would be a good time to sell and move into gold stocks sometime over the next 5-10 days, in my opinion.