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Gold is taking a pasting today.

Here's our piece from last week on gold: "We’re also thinking that Gold will be the next “shoe to drop” (commodity to fall in price). Momentum is waning, negative divergences are developing, and some technical indicators are starting to show some “dead crosses” (when shorter- term indicators cross below longer-term indicators, giving bearish signals."..

This system driven comment was closely supported by the fine bearish pattern on the day chart on GLD, NEM etc. NEM probably is the best pattern to study.

Back to real time (plus or minus a bit...) -- we're on the negative tack - still - on NDX - while neutral SPX.

Why?

The market has given back a lot quickly, so the time for outright bearishness, short term, probably has passed. Having said that, despite pockets of resistance (SMH for one), it sure feels better to be neutral with a short bias than anything else at this juncture, until we get any sign of stability and the potential to build a decent base of sorts.

We added MU on a promising setup a few days back. We would not have put money on a +10% move with the NDX having fallen as much as it has. Strange times. Money squeezes through the narrowest of gaps, and kind of parks itself there until it figures something better to do. I know not what that peculiar (and peculiarly smart) fellow Jim Cramer said reference MU. But thank you Jim, anyway.

Perseus, aka QQQ / SPY Advisor (he responds to either), flattened off on SPY and indeed the bearish options plays. Not appropriate to record the return on the option positions in this forum...

Rather gamely, he's still in the game, as opposed to on the game, so to speak, in NDX. And today that was the right call.

Overall, we're in a bit of fug here, re any decent directional trend in equities. Our hope is once Iran settles back a bit, and sufficient air is extracted from the crowd's favourites, we can restore a bit of sanity. Gold pulling back into its box would be a helpful start. A huge percentage of incremental demand for gold has actually come from gold ETFs. Safe haven buying, until the water in the haven gets a bit stirred up.

And then where do our Mid & Far Eastern friends go with their excess petro & export dollars?

...from our last note on 02/02/2006 @ 20:24: < We’re also thinking that Gold will be the next “shoe to drop” (commodity to fall in price). Momentum is waning, negative divergences are developing, and some technical indicators are starting to show some “dead crosses” (when shorter-term indicators cross below longer-term indicators, giving bearish signals).

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