Tuesday Nov 26 2013
John Hussman has a long but informative article on how the market is over priced.
Energy
The 50 day MA approaches the 200 day MA in a crossover to the downside. Price has fallen below the lows posted earlier this year. It is looking like we might have a back test of the 98 area. That will be critical. If price then falls, we are headed much lower. That along with the breakdown in gold will be deflationary.
Gold
Gold fails to overcome resistance at every turn. Notice the last failure as the 50 day touched the 125 MA. Now gold has fallen below the previous 'support levels.' As with energy above, and it wil be interesting to track this, exepect a small rally to test the breakdown, If price then falls for gold and oil, see above, we will have significant deflationary pressure.
Let's put them on the same chart to test correlation
Sure enough, we see a high correlation between the two in the bottom panel. The two peaked in late August and have been falling in tandem since.
I bought nine March 21 GDX 2014 puts. Things are getting interesting again.
Comments