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Valyooo (99.82)

Take a little off the table

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October 13, 2010 – Comments (4)

I am good with math, but I never had a good stats teacher. My math teachers always taught me how to do good on tests (got A's in all my math classes, algebra, statistics, business statistics, etc) but they never taught me the real world applications, so I still need to catch up on them one day.

 

Ultralong recently stated that silver is 6 standard deviations outside of its norm.  I havent done the math on that, but commodities are on fire.  I love riding the trend, but not only is the SPY and a lot of commodities over valued on the RSI, but look at the press.  The top story on yahoo finance is: What's the Hottest Commodity?: The Whole Sector- CNBC

The hot commodity in today's trade is basically that whole sector. Commodities are on fire!"

Cmon now.  Thats a contrarian indicator if I have ever seen one.  I am betting that commodities are up tomorrow in the morning but then a wave of profit taking will cause stop losses and plunge commodities for a short period of time.  This is just a guess, not putting money on this.

 

Thoughts?

4 Comments – Post Your Own

#1) On October 13, 2010 at 6:21 PM, portefeuille (99.78) wrote:

Ultralong recently stated that silver is 6 standard deviations outside of its norm.

That is utter nonsense, hehe ...

see the table here.

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#2) On October 13, 2010 at 11:13 PM, SockMarket (87.29) wrote:

My math teachers always taught me how to do good on tests

Evidently english teachers didn't. ;-)

 

Not sure how he defines it's "norm" but it is about 3 sd's away from it's 5yr average (based on Jan. 1 prices for each year). The chances of that happening randomly I believe are either 1% or 3%, so it is still up dirastically, just not as much as might otherwise be believed. 

 

I would guess that commodities, especially gold, are due for some sort of a pullback, but I don't think that we are seeing anything close to 5yr peaks right now (especially in energy)

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#3) On October 13, 2010 at 11:22 PM, starbucks4ever (99.54) wrote:

Who ever said commodity prices must be Gaussian random variables?

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#4) On October 13, 2010 at 11:47 PM, MegaEurope (22.68) wrote:

zloj, lots of people have made that assumption.  But Mandelbrot and others proved it false pretty convincingly.

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