Wednesday Afternoon October 10 2012 After US Market close 4:53 PM CST
The good news is that in the face of a 120+ point drop in the DOW, gold stocks pretty much rallied across the board. GDX and GDXJ both moved up today. The reason this is so important is that gold and gold stocks usually make their lows and advance before the overall stock market. I am not where I can easily produce the chart but gold make its low in November 2008 while stocks delayed a final low until March 2009. I am not expecting that kind of delay now but this is a clear sign that the bottoming process is underway.
If one wanted to put positions back on with longs in some of our original recommendations this is likely a great time to do so. SIL is still strong, XES has dropped four points and of course various bears are looking for $80 oil.
Whether all this will happen in time to save my options positions remains to be seen but
we have a relatively low risk entry on the long side for risk assets. As we said this morning it is highly unlikely that anyone at MarketWatch will correctly predict the start of the bear market right there for everyone to read and stay safe. Now the move out of risk assets needs to get under way again.
I am attending an accounting seminar at 7 AM tomorrow morning and will not be in the office until a bout 10 AM Bottom line as follows.
an early low in gold which apparently began today as stocks were still tumbling is likely to proceed a later bottom in stocks. Internal indicators on the hourly charts have now sagged below their 200 bar MAs, this will no doubt give the bears more ammunition, this will be a classic bear trap.