So Much Bullshit, so Little time

First a warning, this is a classic Traderneal rant, and therefore has good amount of pissing and moaning, i.e. cursing. You have been warned.


Where to even begin.

First, gold had a real nice rebound from the overnight low of about $919 to finish the day up a few bucks. But it was the silver that was the real star, at one point going over $17, which is a contract high, but closed slightly under that. The rest of the day was bullshit.

1. Today was month end, would there be any question whatsoever that "they" would allow gold to close over $17? No, of course not. On the 1:30pm close"they" painted the tape so it closed under $17. That's usually important for technical analysis purposes.

2. How in the world could the dollar possibly ralling off the economic news of the last two days? Yesterday, the Fed cut another 1/2 point and today, the jobless claims were through the roof . The Euro which was trading at 1.4912, got whacked down to $1.4850.

3. Let's talk about the biggest abortion out there today, the fucking gold stocks. The market was up over 200 points, gold at its highs was up $6 but spent the majority up $2-$4 and HUI got fucking whacked for 11+ fucking points. There are two or three reasons for this.

1. As Jimmy S. said tonight: This could/prolly be a complete bear attack from the shorts. I watched several gold stocks today, literally tick by tick, and the trading was very indicative of short selling. Take AEM for an example, the stock would try and lift its head and literally would be whacked down .20 in a blink of an eye. I am talking a quote of 60.47, then the trade takes place at $60.27 which was below the stated bid. NO ONE SELLS A STOCK DOWN LIKE THAT BUT A SHORT. Silver took out $17 today, and the silver stocks were down? PAAS was down over $1. You've got to be fucking kidding me.

2. Goldman Sachs, who in December, said that gold was going to trade around $700 in 2008, only to change their mind earlier this month when they upped that forecast, downgraded ABX, by taking them off their conviction list but kept their price target of 66. Now, I don't trust any brokerage firm as far as I can throw them. (Remember, I used to work for a major wirehouse and I promise a lengthy column about the bullshit that goes along with for one). But, to have Goldman, who, in my mind, is prolly very short gold, downgrade one of the major miners but keep the same price target is a perfect example of a churn. It allows the brokers to call thier clients for a trade. This knocked the stock for almost two points.

3. Now this is the important part. If I am wrong and this is not a short operation, then the price of gold is in real trouble. I mean big trouble. I am telling you, I have seen this exact movie before back in April/May 2006. Gold was sprinting to new highs on a daily basis and the gold stocks were acting as crappy as they have been over the last couple of weeks. Then in the second week of May, wham, the trap door fell out beneath both, gold and the stocks. Be careful. I would be very hesitant to take any new gold positions until the gold stocks start acting better. For those of you who actually trade the metal (I do not, I just buy and hold and trade the stocks and GLD), I would have some stops in to play safe. Keep in mind, this is just my opinon. FWIW, I AM VERY LIGHT GOLD STOCKS IN MY TRADING ACCOUNT AND IF THIS CONTINUES I WILL START SHORTING SELECT NAMES!!!

Please do not whine to me about how wrong I am. I am not saying that the run is over, I still think gold is going to over $1600, but I think we could have something more than just a shallow pullback. If I am correct and gold does pull back and the stocks pull back more dramatically, I will be in there buying with both hands.

On a similiar note, the media is starting to warm up to gold. This I do not like. The WSJ, had a full column on how wonderful gold is and it should be a part of your portfolio. To me, this is death. I want the general media/public hating gold, I mean really despising it with a passion. I have often said, I want the gold party to be exclusive as possible. When the time is right and the fundamentals for gold no longer warrant a higher price, only then should we throw open the doors to the great gold party to the unwashed masses and sell our gold to them.

Tomorrow is jobs Friday. The prediction is for 75k (wow, there is some strength). I have no idea where the number will fall, but I am sure the number will be a contrived one. How gold reacts is anyone's guess. I will say that gold always acts funky on jobs Friday. It would not shock me to see a terrible report (i.e. job loss), have the dollar rally and have gold fall off a cliff. I have seen this before. I hate to be so negative, but the action of the gold stocks has me very spooked.