Sunday pre-game, 5/5



Hello, friends-
I'm currently not trading the metals because I'm betting on the NBA playoffs. A much more even playing field - I don't think anyone gets calls in advance notifying them of what's going to happen. I've always done well with basketball. Sports like football and baseball i find nearly impossible -- too many variables. Betting successfully on basketball, especially playoff basketball (when you can assume that players actually care about winning), comes down to to the ~8 players on whom the outcome will depend 95% of the time, and a few other factors like home court advantage. Just using the golden rule "which team would be more okay with losing" (or if you're playing the spread, something like "how okay would team X be with being blown out") has led to more successful bets than failures. and then there's prop betting, which I've done even better at, but you'll have to subscribe to my newsletter to learn my secrets.

But, returning to the metals, as a gold bull, I'm convinced the ratio of the gold price to stocks is what's important right now. Simply put, a macro-environment in which stocks are shitting all over gold is not one in which gold can shine (there's a real stinker of a pun there - did you catch it??)

On that note, gold's ratio with the S&P500 recently broke through an important price level and hit a fundamentally important trend line (dotted blue) and (very) long term horizontal support. This needs to be watched closely. 











The huge three line break to close April on the monthly chart is not encouraging (note the last red bar is in still "in progress" -- where it ends up or if it disappears will depend on how May closes): 




Just for kicks, I did punt on some OTM calls Friday, after gold recovered nicely from the de rigeur jobs report sell-off. I'm looking to sell half at $1500, i.e. the 38% Fib level from the recent ~$1800 top. Then, hoping for $1550, which would be the 50% level from $1800, as well as the 38% level from the $1920 top. 


The longer term picture, also showing ~$1500 as resistance (yellow line)


 Just a few more charts that popped out at me this week. Check out the ratio of 10 yr yields to the Russel Small Cap index since the market low of March 2009:


And the linear chart of yields priced in "real shit" continues its steady descent since 1990, oblivious to all the volatility around it



8 comments:

duggo said...

"but you'll have to subscribe to my newsletter to learn my secrets." Ho! Ho!

Although I wonder how many people that subscribe to newsletters take the cost of the newsletter out of their winnings when they tell you how much money they made.
If I was stupid enough to subscribe to a newsletter predicting the future I'd want a copy of the writers bank statement showing how many millions he had made.
In my "betting" days I had 20+ internet World-wide betting accounts. My speciality was tennis because it's win or lose only.
I made up a spreadsheet that could show me when two bookmakers were against each other. I couldn't lose but in the end it was too much work.
Anybody looked at KingWorld news lately? All of these "experts" foaming at the mouth about shortages and all sorts predictions about Gold and Silver. Which planet are they on?

Warren James said...

.. they aren't on planet Screwtape. I am interested that the different camps are now almost completely polarised, p.s. Duggo you got your boxing match between Bron Suchecki and Dave Denver (though I imagine you already read it): link.

I too am flirting with sports betting - a result no doubt of the disgraceful (and pervasive) in-match advertising here in Australia. Seems to be more predictable than gold and better return than silver at the minute ;p

Louis Cypher said...

I subscribe to KidDynamites "You're absolutely right" service. It's top notch.
http://kiddynamitesworld.com/youre-absolutely-right-announcing-a-new-blog-service/


GM Jenkins said...

Lol - Thanks for the link, Warren... Bron against Denver Dave is like Brock Lesnar in a cage match against a retard

Louis - I am thinking of subscribing to KD's service, I need some heavy-hitter testimonials for my fledgling male enhancement business to go with my aggressive marketing campaign

In other news, another identity revealed by Screwtape... Duggo has been located in the French riviera.

duggo said...

GM Love it!

Funky Tape said...

GM - thanks for the SPX:GOLD chart update. I track the inverse (DOW:GOLD) so it's nice to see a support line pointed in a different direction sometimes...weeee!.

Warren - I'm not going to waste my time finding it, but you can find at least one time (if not many) Dave in Denver empathetically stating that "whoever doesn't have 90% of their wealth in gold/silver is an idiot." He didn't say this last week after the market got hammered...no, no... he said it sometime in 2012 which means if you'd have followed his advice, you're clearly the "idiot.'

I did make a comment on his blog when gold had that huge $90 up day on June 1 of last year stating it was simply an emotionally-charged oversold bounce and it would be given back. You can only imagine the childish response I got followed with a slew of nonsense about how CB's run the show and they wouldn't let that happen...bla bla...gold trades fundamentally, not technically...take your Fibonacci and shove it up your ass....blaaah.

Gold trades "fundamentally" huh? How is it that when gold lost EXACTLY that candle (low of $1545 on high volume from 6/1/12) it got SMOKED...literally fall off the edge of a cliff...as we all know? How is it? Oh yeah, that's right, gold is just another market just like anything else and it DOES INDEED trade technically. So much so that you can take your "fundamentals" and shove THEM up your ass cause they simply do not exist.

You cannot change stupid. If there were only an idiot goldbug ETF that tracked such blind, cult following we'd all have FIAT pouring out of our asses.

/rant

duggo said...

I see FOFOA's dream looks like coming true.

http://bullmarketthinking.com/world-bank-whistle-blower-precious-metals-to-serve-as-an-underpinning-for-paper-currencies/

I would have posted this on the FOFOA site but he follows the same policy as Dave in Denver. It can't be done under the "handle" Duggo.

S Roche said...

FT,

Dow is a collection of winners over time, does that effect its accuracy?

I am waiting on Art Cashin's (UBS) follow up article about structured products (portfolio insurance a la 1987) kicking in at $1540 gold giving way. This would explain the massively oversold plunge to the low $1300s. Per one comment, no-one sold there because they wanted to.

Coutt's (sold as $1600 gave way) bought heavily under $1400 looking for $1550 according to Bloomberg. I think a lot of longs would like to see $1400 successfully retested before re-entering.