On October 14th I mentioned that shorting gold might be a good idea. Although I didn’t participate in this trade, I mentioned the setup was there. Why I didn’t get involved in this one? Funds wrapped up in my previous ideas + funds settlement hell.

From October 14th 2008:

Short GOLD doubly good

Where we are now:
Well we now know that we are not in an inflationary environment, at least NOT yet. However, all the Treasury action is going to be inflationary, but not for a long time. The market has been telling us deflationary for now so that’s the trade. I’ve been yapping about directional moves since forever and the momentum that has coupled with them. One look at the Ag, coal, general indexes, and oil trends tells the story. I think this one has the same potential. Many people have been fearful and many people think gold is the safe spot. Since gold didn’t move on “all this crap” that happened in the market you have to think to yourself, ‘If not now, then when will gold ever move?’

3 days and 12% later the DZZ, which is an inverse double gold etf, is higher.

Now what?
You can’t see it on that chart, but the gapped up doji above the top bollinger band(13) tells me a 1-2 day pullback is coming (maybe a buck?). There might be one more day up then the pullback, but that pullback should be bought – whenever the pullback happens take it. I like DZZ for a intermediate swing trade going forward.

Thanks for reading

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