Top Line: Where to begin??? The major mover on Monday was Gold (and Silver and of course, the dollar). Haven't the Olympic Gold medals been paid for already? The stock market had another wild day which should be close to going down hard.
The stock market charged ahead for the better part of the day but ran into some trouble with two hours to go. It ended near the middle of the trading range. The main issue for the Update is that the market still thinks it can go up and of course it can if it wants to. Our position is that the rally from the July lows is only correcting the drop from the May/June highs and will eventually fail. The market seems strong to many and the price move has been strong. The strength can not last and when it does end the market should be in virtual free fall.
We have just lost the rest of our post for the evening and we are getting extremely tired of dealing with this. The essence of the remaining paragraphs is that the GDX, a gold mining ETF, has dropped into an interesting position this evening and deserves at least some consideration at this point. The mining stocks have been subdued with the rally in the metals and now they are leading to the downside. With gold dropping hard today and this evening, the mining stocks have told us that the gold will probably Keep dropping. As you know our target price for gold is around $600 but that doesn't mean the gold stocks will drop from here.
More tomorrow and hopefully we can keep the post...
VXO: 22.26 +0.38 (heading up to 50)
SDS: 63.28 -1.22
QID: 39.66 -0.76
Dow Industrials: 11,782.35 +48.03