Wednesday, February 4, 2009


All of the sudden the theme with some in the MM seems to be that we have factored in all possible bad news and we are destined to go higher. I maintain that if we do it will only be a suckers rally. Many were pointing to the drop in the treasuries with the thought that all of that money will move into equities. With Disney reporting such terrible numbers last night--I can't see how anyone could feel that we are to the end of this bear market.

I think that gold may decline over the short term under the same mentality that money will be flowing out of the safe havens and back into equities. I think that will be a great buying opportunity. I believe that gold will hit $1250 this year. If you look at the UDN which is the ETF that tracks the inverse relationship to the dollar---it was up sharply on heavy trade yesterday. Could that be a leading indicator that we are getting ready to see real weakness in the dollar? The mainstream media paraded out a number of experts last night that said the dollar will stay strong. I think we could see some weakness in the dollar shortly. Now I think the Euro is done---they are in much worse shape than are we and it looks destined to drop, particularly against the yen.

I will watch RNT if we get a rally with the idea to short more. I am also watching EMS as a potential short. I think the next few days are a time to exhibit extreme caution as we get a bear market rally. I believe that we are still in a downtrend and will not fight the trend by buying in this rally.

Crude looks to be putting in a bottom and I will look to get long soon.
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