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Did binve's world start today?

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January 22, 2010 – Comments (6)

Binve, a poster who I respect, in both investment/TA terms and HTML/blogging ability, has long since preached long gold and commodities and short the general stock market. As we have all seen over the past several years, the opposite has been true though during the tech boom and 9/11 it was certainly the case.

But today was unusual. It was the first day that I can recall in a long time that the market went down 2% yet the USD did not increase against the Euro or Franc or Gold. It was also the first day I can recall of the market being down that much and my caps portfolio took an insignifcant hit and my real portfolio being up. Gold stocks were ever so marginally up today. The correlation of Gold vs the market since November other than Tuesday through Thursday has been poor. Today really looked like the bottom for gold, but the market bottom looks nowhere near in sight. Another reason why today might be the bottom is that I absolutely refused to buy more this morning, so naturally instead of tanking some more, my potential buys would have been up!

Does this mean Gold simply leads the market and it will rebound before others or is this finally when the market turns while commodities soar through stagflation? Either one is fine with me as I currently hold only gold/oil/biotech/reduced debt (ie short less cash) positions and am just licking my lips in anticipation of actually getting my CENX target of $11.50 by Feb 1 to load up on calls again.

BTW, the performance of Silver today is an absolute joke. Just goes to show you that the scumbag banks I named in my last blog are toying with it before they are forced to scale back.

6 Comments – Post Your Own

#1) On January 22, 2010 at 5:00 PM, FleaBagger (29.30) wrote:

Say something about SQNM.

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#2) On January 22, 2010 at 5:15 PM, EV38 (99.76) wrote:

That one seems dead for now....I was very happy that they had that news release on options expiry day so I could get out at a decently small loss. I didn't get back in the Tuesday morning as it shot up too much (and I know it always comes back down after it shoots up), so instead I put that money into gold where I could lose it there instead of on SQNM :)

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#3) On January 22, 2010 at 6:28 PM, binve (< 20) wrote:

Hey EV38, thanks for the props!! Man, I really appreciate those compliments, thank you!

That decoupling between the dollar and equities that you observed is exactly the situation that I have been discussing. The strong inverse correlation between equities and the dollar will turn into into positive correlation, and the transition will be the sort of limbo we are seeing now where they are seemingly decoupled.

My forecast for the next few months is a "stronger" dollar and falling equities. I think the inverse correlation persists just a little bit longer because the dollar carry trade has further to unwind. But eventually that trend will change.

It will not happen overnight and there will be fits and starts (times of inverse correlation followed by positive correlation) but over the long term, equities and the dollar are in positive correlation. And I think both are headed down and commodities and gold are headed up:

I think when P3 for equities gets underway, the US Dollar Index and the Equity Markets will resume their long term correlation stance: positive correlation.







Here are a few posts that describe my position and how to take advantage of the trends as I see them. Not only in how I think they will come to pass but also some confirmation signals to look for in case I am wrong:

What To Look For As a Long Term Trend Change Confirmation - http://caps.fool.com/Blogs/ViewPost.aspx?bpid=330257
Specifically not calling the top, but describing a way to confirm the top is in, and where to buy on the next long term down trend, assuming it happens the way I predict (actionable trend trading advice)

The Dow / Gold Ratio - http://caps.fool.com/Blogs/ViewPost.aspx?bpid=327553
What does this indicator mean, and why is it relevant. What is it forecasting? In-depth discussion as to why gold will go up and the Dow will go down.

The Long View - http://caps.fool.com/Blogs/ViewPost.aspx?bpid=314202
Fundamental case for being bearish on the economy and equites from a valuation perspective (and why stocks can fall due to lack of demand from poor fundamentals in an inflationary environment)

The Long View - Q&A - http://caps.fool.com/Blogs/ViewPost.aspx?bpid=314893
Description of the stagflationary scenario and a risk assesment for the bullish / neutral / bearish case for equities

Thoughts on the US Dollar, Analysis of the USDX Long Term, Follow up on the Gold Blog - http://caps.fool.com/Blogs/ViewPost.aspx?bpid=261443
Long term fundamental and technical reasons for being bearish on the Dollar. Lots of macroeconomic discussion

The Gold Blog. Gold/Silver/GSMs (and a little Oil for good measure) - http://caps.fool.com/Blogs/ViewPost.aspx?bpid=258723
Long term fundamental and technical reasons for being bullsih on Gold

Thanks again for the props! Good luck to you in all your trades and investments!!..

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#4) On January 22, 2010 at 9:48 PM, ChrisGraley (29.69) wrote:

Keeping any eye on the spot gold and silver prices before Monday's open may reveal some clues.

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#5) On January 23, 2010 at 1:35 AM, uclayoda87 (29.18) wrote:

Fractals!!

Posted by columbia1 on
November 01, 2009

I was fascinated by the similarity of this complex repeating pattern, which prompted me to begin raising some cash in November.  I bought some CEF, and a few small miners this morning.  I still have 75% of my cash available for more purchases over the next two months.

Look at what was predicted for early 2010, an early buy probably from mutual fund reinvestments, but then starts the fall.  I am betting that metals and miners will rebound like they did last year, so my purchases during this sell off period will concentrate on this sectors.

I was unable to copy his charts in this post, but I would recommend reviewing them and his comments.

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#6) On January 23, 2010 at 12:05 PM, jesusfreakinco (28.80) wrote:

Down with JPM.  May they rot in hell for the manipulation they are doing (for the Fed).  They've sold their soul and their stockholders to their friends at the Fed.  May they get what the deserve.

JFC

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