It's a bit of a paradox that the better we are doing in the market, the more nervous we get. It seems to me that the bears have finally wrested control of the market from the bulls, but the choppy down-and-up nature that I see in the months ahead is going to be very challenging to navigate, at least from a short-term trading perspective.
In the long-run, I'm confident that it would take almost a miracle for prices to shake off the weakness we've seen for the long haul and push their way into a new bull market. Looking at a graph like the one below, I think such a notion is nothing short of absurd.
But the "snapback" that some of us are dreading (or anticipating) is harder to call. Certainly the past week saw many opportunities for such a snapback, including more than one triple-digit rise in the Dow, but each of those rises was stamped out like a wayward campfire discovered by Smokey the Bear. Looking at, for instance, the $RUT, I see such a snapback being good for only about 3% to 4% on the big indexes (in the case below, about to where that horizontal line is).
I'm trying to keep my eyes open for the best place to allocate funds for the snapback rally. I have tried – repeatedly – to do so with precious metals, but that hasn't taken hold at all. I've made a little profit here and there, but I've had losses too, and on the whole I've netted a small loss – – my activity in SLV and GLD has simply not been worth the bother. I still think SLV and GLD have a shot at a nice bounce, but I think I'm going to avoid GDX altogether. Its pattern seems horribly vulnerable right now:
The last time we saw a top like that, the aftermath wasn't pretty:
I am normally blessed with good health, but I'm fighting back a cold right now, so I probably will leave this as my one post of the day, updating the site with another OilPrice post later. Thanks, and enjoy your Sunday.
