Monday, September 7, 2009

The Mysteries of September

September is here to stay! (for another 23 days anyway).  Yes, dear readers, fall trading season is in full swing starting tomorrow.  What wondrous things can we expect from this month in market terms?

Well, at this point it is tough to say.  The rally still hasn't breached its trend line or made a lower-low after a few days of correction.  The USD still has not squeaked out of the oh-so-tight quarters at the end of its triangle formation.  Gold still hasn't cracked $1000.00

And where is the collective psyche these days?  Well, we've got a sky-high stock market held against the backdrop of 26-year-high unemployment numbers (which are official so take that as you will, oh discouraged or should-be-putting-in-full-time-hours workers)

Chart of U.S. Unemployment


We've also got Super-O getting the lowest approval rating we have seen yet.  This by itself isn't a huge deal but couple that with the plethora of other data coming over the wire in the last couple of weeks, and this makes for a fairly negative social mood.

But it's anyone's game as to where the market goes this week.  Will it break that support line?  Will it rally to a new high?  Will it consolidate sideways?  Maybe.  Maybe to all of these things.  This rally could take us over the 10,000 mark on the Dow Jones Industrials.  Or not.  If we see 10,000 DOW, then I would be willing to stake a "goodly sum" that we'll see $1000 / oz Gold on the week too.

Please see my post (and thanks for the steady flow of denouncements, guys! :) on what I think will happen with gold in the mid-term.  But no mail-bombs please.  I have grown to despise them....

So here's my take on the DOW:

And there you have it.

One thing I'm fairly certain of is that we are going to see some historically huge moves in every market on this planet.  Take your pick - dollar, euro, gold, silver, Dow, S&P500, TSX, Hang Seng, the list is miles and miles long.

Just make sure you are on the right side of the trade.  The market only makes money for those who deserve it. More importantly, it takes money from everyone who deserves it too.

So if you are a long-only investor my recommendation is to hold cash and maybe some short-term treasuries (3 or 6 months).  There will be a time to buy.  For sure.  But not now.

The time to buy will be when everyone you know hates stocks again, because they were trying to hold on and make back those losses they had in '08.  And as astute and well researched investors we know that, in general, the average retail investor buys at tops sells in and out when bottoms and corrections are forming.

The moves will be big, dear readers, and they will make some wealthy and many poorer.  If you are not sure that you can be part of the few, than my advice is to stay clear, wait for the big dips and buy the things you know will be worth something in ten years.

Enjoy the rest of your Labor Day!


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