2009

November 15, 2009 · Posted in Weekly Posts · Comment

The US equity market’s correction doesn’t feel quite “done” and in fact the market is not behaving at all like t has after previous corrections. The breadth is not there, the volume s contracting, the Russell 2000 continues weak etc. This is a time to be cautious. As our members know we are maintaining a large cash position which we will put to use, long or sort, when we get a more solid indication of the market’s direction.

The USD continues to erode and it seems every international meeting simply sends it lower. Preserving dollar strength is not a priority for the US government at this juncture nor should it be, nor can it be with our fiscal position as damaged as it is.

Gold looks overdue for another of its periodic corrections. It is up tonight again at yet another record but looks extended. We will buy back in on the paper gold side when we get some downside. Until then we maintian our physical gold exposure only.

So far the US dollar decline has remained orderly. One has to wonder when each international meeting, Fed announcement, etc provides yet more ammunition to sell the dollar, how long this order can last before we either get a whomping good rally or the decline becomes disordered. That will bring trouble to every market and investment. One analyst coined the phrase dancing near te door as the strategy to employ and that is probably sound advice. Whatever the investment, be prepared to exit rapidly if things start going wrong. We frankly do not know if a dollar raly will sink gold or not. We also do not know if a dollar drop leading to an equity plunge will cause gold to rally sharply or sel-off as it did in 2008. All any of us can do is be prepared.

Below are annotated charts for SPX, USD, and Gold.