Happy new week, everyone. I’m relieved we’re past Thanksgiving and can get back to normalcy. I wanted to make a couple of remarks about two big commodities out there – gold and oil.
As for gold, it’s been having a wretched time since July 6th, from which it’s fallen about 15%. It is finally getting a little bit of strength, but I think it’ll be short-lived. The most logical place for it to crawl back would be the gap I’ve pointed out below, just about $1200. After such time, I think the weakness will continue afoot. I have no precious metals positions at all right now, but if gold strength continues, I’ll be looking hard at GDXJ again for a short sale.
This is one of those “what were they thinking?” events in the stock market. The stock DRYS had gone from about $200,000 to less than $4 (yes, you read that right). For reasons unknown, people suddenly decided it would be a great idea to bid this piece of crap up like crazy, zipping up to its last major gap (see arrow). Well, they almost made it, except………well……..it’s down over 80% today as I’m typing this. So whatever stooge bought it at over $100 this week is probably feeling pretty goddamned silly right about now.
Weird morning so far, eh? All I heard about, over and over again this weekend, was the big Time Warner (TWX) buyout, with a purchase price of $106 per share. Right now it’s trading at 87.48, down about 2.5% from Friday. Umm, I don’t even care enough to explore why, but it hardly sounds like an orgy of excitement to me.
What’s crucial to my eyes is for the Major Market Index to retain its broken trendline and stay beneath the gap I’ve highlighted below.
I offer this up as a superb example of “filling the gap”. GOGO rallied mightily from its lows, but the moment the gap was closed (with literally two pennies to spare), it reversed hard.