To build a house you start with the foundation, CB actions and the economic fundamentals are the most basic drivers of macro themes. The last discussion covered among other things the investment merits of gold and rental property. If you want to zoom in to something more 'actionable' then feel free to toss it out there.
Global Macro Trading Journal
- Thread starter Daal
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To build a house you start with the foundation, CB actions and the economic fundamentals are the most basic drivers of macro themes. The last discussion covered among other things the investment merits of gold and rental property. If you want to zoom in to something more 'actionable' then feel free to toss it out there.
http://ftalphaville.ft.com/blog/2012/06/07/1032651/the-swiss-hill-that-may-become-a-mountain/
SNB losses are declining. EUR dumping going on. I'm surprised people even find credible the 'SNB will dump peg soon' argument
Because the way to play a trading range is to buy the bottom of the range and short at the top, not to get long in the middle.
Well, obviously all market situations can go up, sideways, or down. The point is to find situations where the chances of one of those 3 scenarios becomes significantly different to what the market is anticipating, and then make a bet to take advantage of this skewed probability.
One way to attempt to do this is to work out the likely way in which each scenario will develop, and then to adjust the chances of each scenario which does not fit the current path of prices and market developments. So for example, if Bernanke's speech yesterday had been met by a mild bit of selling for a few minutes, then gold had recovered and closed with a powerful rally, this would have indicated the bullish scenario is the most likely to occur (thus supporting my original view).
As it happens, it was met with a $45-$50 fall in an hour or so (that's 3%, not 1-2%), which is a significant move and quite the opposite to bullish market action. I consider it sensible to alter my scenario probabilities for gold when I see significant market action in response to a declaration of Fed policy. I was bullish because of all the reaosns I listed in my original post, and couldn't find any bearish points - a short while later 2 bear points appeared. Hence, I have to shift my view, which yesterday's response called into question.
So I now view it as an important test of the state of the gold market. As darkhorse said, if it responds well to the test (e.g. doesn't break the lows around 1525, then breaks out above 1630) that is bullish, if it responds badly (break below 1525) that is bearish. We shifted from what looked (to me) like the early stage of a rally from the lows of a trading range, into an unclear situation that should be resolved by a significant breakout in either direction. What's the right response for the latter? In my opinion, to be flat until a breakout occurs.
Finally, at no point in my original post did I confidently predict that gold would double.
More nice research on divvies from an old classmate of mine ...
http://www.thereformedbroker.com/2012/06/07/yes-dividends-almost-always/
http://www.thereformedbroker.com/2012/06/07/yes-dividends-almost-always/
A teeny intervention re gold: the miners have been signalling for quite a while that the direction of least resistance is down. I have never, and I have traded gold for a real real real long time, ever seen a situation where the metal lead the miners. It's always the other way.
If it turns out the other way this time, it will be a first.
GDX bottomed 5/16/12 and has been trending higher since. While GDX has pierced the 4/27 high, GLD has not. Gold didn't really put in a solid bottom until 5/30/12. Miners have been leading from recent lows.