General Update and Gold Rage

The EUO trade was stopped out (basically breakeven) today during the erratic post FOMC action. I anticipate re-entering this soon, maybe tomorrow.

I also plan on re-entering SPXU soon, most likely tomorrow. The cash S&P showed a shooting star type candle that reversed off the now declining 21 day exp. MA. When these types of candles happen in a trading range, I don't put as much emphasis on them as opposed to at the end of a trending move, but it does offer a nice clear stop point for a new trade entry, so I will probably see what things look like in the morning and then decide whether to enter right away, or see how the early part of the session goes.

I occasionally give updates on gold on this blog, typically noting times of extreme price highs. I take this approach because the sentiment was so uber bullish last year, that it smacked of a major long term top and just wanted to help any would be gold buyers out there steer clear of buy the top ticks of an inflation fearing gold mania. That remains my main emphasis with mentioning gold now, and even more so.

The latest Commitment of Traders data shows that large speculators are by far and away more bullish than any time in years. It is similar but not as extreme with small specs. Both groups tend to be wrong at the extremes. Additionally, the "smart money" commercial hedgers are way more net short, and thus bearish on gold, than any time in years. I know that at times like this, some percentage of people will be convinced of the next best thing, which is gold this time. But like with housing a few years back, when everybody thinks its the next best thing, it probably won't be for very long. In any case, I'd really warn anybody who's thinking about investing in gold or who may have a major investment in it to realize that the real money data like the COT and Rydex fund data, are consistent with very significant highs in gold. It looks like a little mania is ending - not the time you want to invest in it.

Also today showed a gap up on GLD and a doji at the close which could be indicative of some degree of topping. If tomorrow gaps down and falls, it may end up being an Abandoned Baby candlestick pattern which is one of the more rare and more reliable patterns, in this case a topping pattern.