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Monday, February 23, 2009

Monday Failure?

I blogged that around options expiration games would be played, and the market move would happen Friday/Monday time period. Well, we got our Friday move, a decent move down, breaking "decisively" from DJIA to the down side. From S &P 500 however, that index did not break "decisively" down. With basically means going into Monday the direction is still up for grabs.

On Friday, I got rid of some of my riskier positions, some probably at the near term low "locking in" my losses. I also sold some of my winners, such as a little of GDX and a little of some baby miners.

I am now about 50% into cash, something I'm not normally in. There are so many extreme scenarios on the table, I can't take the risk in any direction.

Some thoughts of what is possible.
1) Monday we open UP 100+ points. This jump starts a reversal and we will experience a multi-week up move, not in a straight line, but generally up.
2) Monday has "issues", looks like its game over. The government steps in yet again with another announcement the result is:
a) go to step 1
b) 1929 style crash, its time to cash in your chips.
3) Move volatility, indecision, and day by day bleed of the market being bi-polar into the week.

If the market gets ANY strength, to the up side, it is quite possible GOLD and gold miners will be losers. Gold to me is three different "plays".
1) gold as a resource and as it gets used its scarce, used in jewelry, etc.
2) Gold as a fear play, people "dump" into gold when they have no clue where else to put their money.
3) Gold as an inflation/storage of wealth play. It's not fear but speculation, a hedge, or other financial type use.

Right now, I can't imagine #1, being used for normal business use is driving gold up. After all, people are not spending like they used to. So I am dismissing #1 as a factor in the next 1 to 5 years.
If the market gains some strength, it is quite possible demand for gold as an investment for #2/3 are reduced.

Bottom line? I'm going to sit in cash, keep some positions and wait. Market goes up, market collapses, I'll bide my time for when to jump in more. If you want to track some of my riskier trades, sign up for my Twitter account (see link on right).

From WebSurfinMurf's Financial Blog

Below is a mildly entertaining critique of Keith Oberman who "bashed" CNBC Rick Santelli.

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