Tuesday, May 3, 2011

Did the Music Stop?

Super nice day here, almost 70 degrees. Spring has sprung I do think. It is going to rain a bit the next few days, but as long as it is warm that's ok.

Silver Top Calling?
In one of my last posts before vacation I told nervy metal holders to drop silver at $50 and gold at $1550. Did I set the price? Reader Anon left a hilarious comment last thread:
After Mr. Get set the price, the parabolic SLV rise led people to conclude that the Duke Bros were trying to corner the market. Get knowing fully well that Clarance Beeks report would show that the Goldman story was a bunch of hooey, he aggressively shorted, making himself rich, and simultaneously ruining the Duke Bros (who coincidentally couldn't cover their MARGIN) in the process. Coincidence? I think not.

AND FURTHER, did they not conclude their little caper with a little R&R on a Caribbean island? HMMMMM - I don't know Get, this all seems very suspicious to me.


Maybe I wrecked the metals market? Sorry!

Did the Music Stop?
Sometimes I think I have to listen more to myself! What did I write last night?:
Unless silver was THE ONLY vehicle for hot money, I think market players would be wise to note what is going on. If hot money flows are that nervous, silver may be the first of many things to get firebombed soon. Could be the canary in the coal mine for the "reflation" trade. It is hard for me to see the S&P going ever higher if momentum spots are being closed out. Unless silver is the only irrational bubble in the markets right now.
While the overall indices were not too ugly, looking under the hood we see an engine full of broken parts.

There are too many stocks getting murdered right now to list, but plenty of old hot names are getting axed. Here is a 5-day comparison between SLV and some hot names: LULU, TZOO, and UA:

We see bubbles are all a matter of taste, some high flyers are getting pasted as bad as silver or worse but that is just a normal correction, not a bubble popping(?). I know, it's hard to follow along sometimes.

Low volume ramp ups were the norm for a couple of years. To think all that money went into silver and cotton is pure fancy. If it had, a silver bracelet would cost you $300 and a cotton T-shirt would set you back $100. It went all over the place and equities got plenty of it.

Now this could be a few day event; a few random earnings misses; some other conspiracy. Maybe this phase is over and everything rebounds big time. I hold that if silver and commodities in general get poleaxed, equities are not going to rise above it all in a soaring eagle fly away pattern. They will follow in the elevator down, especially the previous hot names.

I think it a bit too obvious that the end of QE 2.0 trade could be put in force so fast. In any case, I will be keeping an eye on market internals as many stocks are really dropping but the indices hold up somehow. I know everyone is always out before any drop, hedged so that they are up, or went short 10 minutes before any drop but this is happening pretty fast so be careful out there. Could be a long summer until the fall foliage of QE 3.0 rolls out and adds fuel back to a hot money fire, I mean confirms the strong underlying fundamentals of the stock market.

Comic Relief
Love this Natalie Dee cartoon (link):

Should have been a unicorn, not a horse!

Have a good night.


watchtower said...

GYSC, do you feel like fielding a couple of questions tonight?
If so:

At what price (if any) would you buy more Ag at?

I always thought that once gasoline went over $4 a gallon (which it did in my hometown yesterday) that the biscuit wheels would come back off the gravy train, do you think that will have any effect in the near future or is everyone in 'Honey Badger' mode?

watchtower said...

@ Anon

LMAO, that Trading Places parody of yours is classic!

getyourselfconnected said...

Watchtower, no problem, I love questions. Never seem to get many though.

I wnated to see how much of a drop we get in Ag, and then do a full write up. Long story short, silver stopped following my modelling and targets last october when I sold that SLV position for a big gain. I wonder if the area of $22.50-$24 will need to be retouched? I don't know but I would consider adding there. I may play some ideas as trades around $35-$32 but those would be small spots.

I think $4 gas this time is not as bad because people have cut back so much. It is still a monster drain, especially as summer driving season approaches. Energy and refiners are getting murdered right now reflecting a worry about gas consumption and of course I still hold a spot in the stock WNR which is getting killed :)

Anonymous said...

Glad everyone liked my trading spaces comparison. It was on TV the other day so thus on my brain recently. The parallels were such that I could not resist.

BTW Get, my wife indicates that Sue Sylvester, the gym teacher on the show "Glee" was referring to another character as the HONEY BADGER!!!

getyourselfconnected said...

We set the trends here Anon, dig it.

Jennifer Hillier said...

You definitely set the trends. I got three of my friends saying "honey badger don't give a s***!" now!

And the writer in me agrees: unicorn would have sounded way better than horse!

getyourselfconnected said...

I thought so JH! New post in a bit.