-- Posted Monday, 17 March 2003 | Digg This Article
The hourglass has run out of desert sand for Saddam. The White House is saying that the window for diplomacy is over, and who could blame them, after all Saddam has had twelve years to comply with U.N. resolutions to disarm! The expectation is that a short and decisive victory against Saddam is just around the corner. This somewhat optimistic consensus caused stocks and the US dollar to breathe a sigh of relief under the premise that the stalemate with the U.N. would soon be over and Saddam will have vaporized from the landscape. The Dow rallied almost 300 points, the US dollar soared over a cent and gold lost some luster, giving back all of it’s early session $6 gain to close only 60-cents higher.
It may seem counterintuitive, but the notion of a war finally occurring was actually favorable for the financial markets. The weight has been lifted from the shoulders of equity and dollar bulls. As they say, buy the rumor and sell the fact, or in this case sell the rumor and buy the fact. You get the picture. Of course the consensus could be wrong, and all hell could break lose from any angle, so the unexpected should certainly be anticipated. But, for the time being, the assertive tone of the White House has finally put an end to the delays and guesswork we’ve all been accustomed to. Markets are breathing a sigh of relief that perhaps they can soon return to some sense of normalcy.
An emotional metal such as gold is susceptible to the whims of day-to-day rumors. The gold rally earlier this year and now the subsequent sell off clearly indicates that gold remains a psychologically driven metal. With prices off about $50 from the recent high, are bulls now too scared to charge back in, or will these lower prices goad them along. Market gyrations are driven by fear and greed, so will bulls be fearful of losing and scramble for the exits, or will they be so greedy that they just have to buy at any price so as not to miss a potential move?
Today the low near 334 held, but barely. Prices are below moving averages and appear choppy. Aggressive traders could enter longs in this area, but as always exit soon if you jumped the gun. We can forecast and assign all sorts of reasoning or rationale to market movement but what really matters is to position ourselves with a favorable risk/reward ratio. Be sure to watch TradeScope daily. Remember, with futures and options one can be short or long, feel free to contact me to discuss trading strategies. Each contract/option = 100 ounces, a $1 move in a futures contract = $100.
To open an account and receive trading recommendations on gold futures or options contracts (also stock indices, energies, currencies, etc.), or to use PaperTrader Online contact me at erik@altavest.com. Visit www.altavest.com to request a Free Starter Kit. Keep in mind that there is risk of loss in all trading.
May Silver: Close = 445.0, -.8.8-cents
As expected, silver tanked as gold fell from its perch. The bearish head and shoulders formation is not fading away into the woodwork, it just won’t be denied! The volatility is quite high as everyone is on edge over Iraq. We can’t get too cute in assuming we can predict prices daily. Overall, there is plenty of potential for this market to rally and get through 500, but only on the shoulders of a willing gold market. But, with prices now chugging along the low road, look to the 443 area as major support. As with gold, perhaps aggressive bulls might want to buy, maybe near 445 or so, but as always be sure to exit if wrong. On a close above 475 look for new highs. Finally, there is a bullish seasonal starting, where in 12 of the last 15 years May Silver has rallied from approximately March 18 to May 4 an average of about 11-cents. Of course, history isn’t guaranteed to repeat itself. Each contract/option = 5,000 ounces, a 1-cent move in a futures contract = $50. Contact me anytime to discuss strategies to fit your needs.
To open an account and receive trading recommendations on silver futures or options contracts (also stock indices, energies, currencies, etc.), or to use PaperTrader Online contact me at erik@altavest.com. Visit www.altavest.com to request a Free Starter Kit. Keep in mind that there is risk of loss in all trading.
-- Posted Monday, 17 March 2003 | Digg This Article
