Wednesday, July 27, 2011


9:04 am (Hawaii) Of all the scenarios I envisioned for this week, this was not one of them. Fear has cast its shadow over the market. The result is a pullout of cash in stocks, commodities ... but the dollar is up 0.9% (74.27). Treasuries as a safe haven? My guess is it's a contrary play by traders and this fractional up move is temporary.

Gold is teetering at 1614 after punching up to 1628.80 early in the session. (I slept right through it all like a baby. Weather in Honolulu has been wintery lately.) Silver rose to 41.46 before getting clubbed in the back of the head with gold. Spot is now 40.28. It's the first time in awhile since we've seen stocks and PMs decline together.

Volume has been a mixed bag. Breadth? My Regular watch list is 15% green, 85% red. Bearish tells lead: TVIX (+10.4%), TZA (+8.3%), FAZ (+6%), VXX (+5.4%), EDZ (+5.2%), QID (+4.7%). AMZN is up 3.6%, but down from yesterday's afterhours high above 228. LVS, PSN, NFLX also up in an ocean of red. AAPL finally topped yesterday and is down more than 10 bucks today, -2.6% to 392.80. No shock. Patience and conviction have worked for AAPL traders for a long time now. It was at 376 when the stock was halted for the earnings report last week. A healthy pullback to 388-390 was reasonable to expect, and that's what it had this week before the run above 400. Trading range until the next catalyst, probably iPhone 5.

BIDU is down 2.2% to 160.66 after a recent high around 167. Another post-earnings pullback.

The Metals list is almost as red. 18% green, 80% red, 2% neutral. DUST, SCO, FSG, ZSL, UUP, DZZ, DGZ are up, all bear plays. Between FAZ and DSL, I could've anticipated FAZ after hearing about bad news for Euro banks before the opening bell. My Debt Spiral list — all banks — is 8% green and 85% red. That 8% is FAZ. Everything else (banks) are at least 1.6% down.

My small positions are red. XG is at the bottom of the Metals list, down 8% to 13.01 with the usual huge momentum swing on days like this. I'll wait until after the debt ceiling agreement to consider adding more. Probably won't. I don't want increased exposure to miners.

DGP is down 0.3% to 53.61. GSVC is down 2.1% to 16.63. A month or so ago, on the stock's second major surge, I'd hoped for a pullback to 15.55. It never came on the way to the high 19s. Now, 15.55 seems very possible. A move below 16 and I'm watching carefully for more shares on a tiny position.

However long the artificial high lasts after the debt ceiling is raised (or a decision is postponed), that will be fun times for traders. But eventually, it'll come to a halt, a crash into an unyielding wall. The wall always wins. Only the best will survive. That's why I'm continuing add physical metal. The lower they bury gold and silver, the better to stack.

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