How was your ride? Thank goodness we are cash and cushy and out of the harm’s way. This market is a recipe for disaster and perfect for losing money. This is what I meant when I said that the direction is not clear. However, those who were screaming the death of Euro and Eurozone in the morning hours fell silent by mid-day when the index has covered most of its early day loss. Surprise, surprise!
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The 2012 year is off and running and before it gets away from me, I wanted to publish the outlook for the new year and get it done before the middle of January like last year. I will do a review of the 2011 Predictions later, which I might suggest you read here – 12 FOR 2011, where I might say I was right more than wrong and really on point in several key macro level directional calls. (Back patting over now).
Let's jump into it.
VOLATILITY, VOLATILITY, VOLATILITY
In prior posts, I've mentioned the interesting comparison of the $HUI gold index between 2006-2008 and the past couple of years. Below is the grid chart showing the past behavior on top and the recent behavior on the bottom. The analog speaks for itself.
Instead of just eyeballing the charts, I entered the dates into a spreadsheet of the difference in time between the major turning points. The length of time is quite similar, although the present instance is just a little shorter (95.5% of the length) that the prior one.
The interesting thing is calculating what this adjusted delta yields in terms of a "start date" for a breakdown in the pattern. The date turns out to be January 21st (a Saturday, but hey, it's just an estimate).
Can we count on some kind of hard fall starting then? Of course not. But at least it pinpoints a day for this analog to see if some kind of breakdown does indeed occur around then.
Was it just luck that we sold our long positions yesterday? Call it whatever you want, I must always thank God for showing me the right path and remain humble. Yes, it was a good call to sell and close the long positions. Thank you Lord.