Thursday Oct 13, 2011
I believe the Fall Low is in. This year it happened August 8. We detailed those lows via the number of new lows August 8 and Oct 3-4. Readers might refer back to those time frames.
Money has flowed faster into QQQ shown in green, the high tech index reflecting Apple and Amazon. The NYSE is in red black and has lagged. But the NYSI summation index has poked its head above its moving average. This prompted me to suggest earlier this week that the Fall Low is in-it occurred August 8 and Oct 3-4.
The time between now and Thanksgiving will likely see more up and down but with less ferocity. UUP the US Dollar moved up sharply and took stocks down with it. Even this morning a small bump in UUP is turning stocks down.
Some of the laggards have still not moved much. There is the opportunity to put orders in well below existing market levels. For example a succession of orders placed lower and lower starting about 54 for the QQQ will not doubt pay off by the time this rally tops out.
One reader post on our blog suggested Dow 12,000 as a target. The better idea is to target the internals topping out, when Bullish Percent rises over 75, when the NYSI regains new highs. when VIX falls under 20, and when we read that government bonds, TLT, are really getting slammed, those will be the clues to exit positions taken August 8 and Oct 4.
Bill Gross sold when TLT was below 90 earlier this year, we were buying.
He waited untile TLT got over 100 to start buying again, admittedly our exit was early.
Perhaps he will start dumping his purchases when TLT sags again. And yes we expect TLT to pull back as stock peak probably after the New Year.
And, as the Dollar pull back from its recent rally we will be looking to add, yes finally, shares of gold mining companies.
As a matter of fact, one should begin placing a succession of lower and lower orders, spaced into equal percentages of investment for GDXJ. I would suggest beginning at the 28 level and placing successive orders lower and lower at odd amounts. in other words, do not place orders at even amounts such as 28, 27.75 but levels like 29.93 and such. We cannot know how low GDXJ will go. And good buys can only come from having an order in before the low is reached. In GDXJ below unless one already had a limit buy order in near 26 prior to that level being reached, one would certainly not have gotten it at that level. Even staring at the computer screen when the markets are open is rarely a clue to when the low is reached, but it is always clear afterwards. Start placing orders now. Gold is still in a bull market. Gold Shares as Dave Rosenberg has noted are likely to dominate in the next part of the gold rally beginning next year.
NOTE - Do not jump in early. Decide on what dollar amount you would like in gold and silver stocks. Remember that they always go to absurdly low valuations in a sell off, so place orders accordingly. Which is to say, lower and lower.
Hmm I just checked, Hecla HL has a book value of 3.73 and is trading just under 6 with a recent low of 5.
Coeur d Alene CDE is already trading below its book value.
Silver Standard SSRI is trading at half its April high, now 1.5x book value. It is bouncing off last summer's lows. I got several calls about the necessity of buying silver earlier this year. Lately I have not heard from anyone regarding silver investments. That's a positive sign for investing.
After all the media hype about gold and silver earlier this year, as usual, no one is ringing a bell at the bottom when they should be.
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