Wednesday's Musing
Good Morning Investors. Are you having a good day? I hope so.
Over the weekend I had decided to stop publishing the Hitchiker's Vue, as it did not seem to be helping anyone. (Or at least I had no feed back that it was helping. I get several comments, but they are usually questions about investing in this or that; not comments that would be helpful to expand on the big picture.
Then out of the blue, yesterday, a couple of friends in California asked about Jim Sinclair's http://www.jsmineset.com/ You can read about Sinclair from his web site.
I then committed to spend at least a week covering the gold market: not from the daily news perspective, but from an investment perspective. What does that mean? Investing in any asset requires you to have three things (that every one my age knows from the song the "Gambler" by Kenny Rogers).
- You must know when to enter the market.
- You must know your risk parameters and money management strategy
- You must know when to exit (no when to stop out with a loss, or when to take your profits.
(Know when to hold them, know when to fold them, know when to walk away)
Mr. Sinclair is claiming there is no gold, and from the perspective of demand in the physical bullion and the markup in price, he is correct. However, neither he nor I can know what the USA, Swiss, and others really hold in gold. Hear-say and speculation does not really help us in investing. (However, if you are a trader, rumors are what drive the markets.)
Opening VUE:s
- Yesterday's twitter hack caused a tremendous move in the stock markets. Call this MIDDAY MADNESS. Welcome traders to the new world order where technical snafus, hacks, high-frequency trading are tied to data real-time data mining using twitter (facebook, blogs and whatever). A hack into Associated Press with a fake tweet, and boom, the market took a hit. Then after the White House confirmed the President was all right and they confirmed the tweet was a hoax, the market recovered.
- This morning , overnight trading in the DAX (Germany) suggests we will have a choppy day. Look to the first 1/2 hour trading to give an indication whether we will have a choppy day. All today's important economic reports are out, and the market is up slightly from yesterday.
- Important: The S&P 500 (and the DOW) have nearly erased the drop on 4/15/2013. That was the morning that IBM, GE, and McDonald's plunged. At the moment, there is every indication the market is headed up again. WARNING: Human behavior at this point is instrumental in what the market is going to do. Now, how does one forecast what human's in mass are going to do? Well, be attuned (in the short term 3-5 days) of support and resistance areas. 2013 high -- resistance 2013 low major support especially after the run up we've had. Monthly (April) and Yearly high are the same. Therefore, this is major resistance after the correction we've had. The theory would be (if the big sharks don't run the stops) is that if the market penetrates this high, then we could observe a major move to the upside. Even a blow-off move. Don't go long unless you have a VERY good risk management plan. Be sure to take out insurance on any long positions you have. Yesterday indicates what can happen on the downside if any unexpected major event happens.
7:00 AM PDT
The overnight trading suggests a choppy day coming up, and the 1st half hour confirms this. Unless there is some unexpected news that enters the market, the market has found value right at yesterday's close on the S&P 500. Right now the market is up fair value is positive. There is no indication that program trading will be active at this point.
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