Carl Futia writes about a dollar bull market (blog link, search for the August 11, 2008 entry if you are reading this later). His target is 110 on the dollar index (currently mid 70s).
If it unfolds like Futia is calling it, oil and gold will be much lower, possibly $500 USD on gold, if gold stays at it current level in Euros. Gold is cratering lower today (Kitco price link), even on the news of the Russian invasion of Georgia. As I have been writing, oil is the dog, gold the tail. Support and resistance on the gold chart are dangerous to trade when gold is trading in this fashion.
Normally, I would look at $800 as a hard line in the sand for gold. However, the lyric from the song the Gambler comes to mind, "know when to hold 'em, know when to fold 'em." The ever defiant permabull gold camp has seen a 22% haircut off the peak $1040 on Bear Stearns weekend. That is acceptable for long termers, but to my mind, unacceptable for traders. Taking those kind of hits means those players may have to leave the game as they go down with the ship. I remain long term bullish on gold for macro economic reasons, but for trading, the legendary Ed Seykota called these factors "funny-mentals," and felt they were basically useless for short termers.
I was caught flat footed by Friday's mega stock market rally, having taken my SPY profit on Thursday's decline. These things happen. I still feel out of synch with the market, and remain in a defensive mode. Grasping for trades often leads me into trouble.
Positions: long BUD, IBM both expiring this Friday and looking good
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