Bear Market Rally ?…………..Gold Update

Reading and listening to the pundits over the weekend and this morning the big question being raised is either:  1) is this a bear market rally or 2) where will it end.  It is continually pointed out that the 200 day moving average is still pointed lower, the S&P 200 day average is at 1003 and and the Dow is at 9395 a big move from current levels.  What is important is that there are few bullish themes being touted now.  The on-line chartists are pointing out S&P resistance levels in a range between 865 and 880. That is not far above current levels and means that buyers will be reluctant here, afraid they are buying into a top.  This is good, in the overnight trade today the 16 point S&P drop from new move highs show that trait.

From this scenario you have two choices, be patient and ride this move to its expected first stop, 900 to 920 on the S&P or be a short-term trader between the 765 to 840 level as the market tries to disprove this rally.  We will probably work both themes for the moment.  We will let you know if we do some short-term selling. 

 More importantly we are now looking for areas that will provide the biggest move up from current levels, one choice now from a fundamental and pricing standpoint is the auto sector.  It has been years since the offerings to the auto buying public have been this good and exciting.  As soon as people start getting back to work this oversold sector will move big time.  We have mentioned this area before and will soon announce signifiicant reallocation of assets to this sector.

We are still short gold and long the double short gold ETF DZZ.  At this point I am not sure whether I am bearish on gold or not, mainly just making the point that we are not bullish.  The world is going to end long gold crowd continue to hang in there and probably will hold on until the world does end and then they will be unable to sell it.

The EMA ETF Fund Nav was 1056 at the close Friday.

7:51 AM CDT

Gold Update at 10:25 AM CDT

We just got out of our short gold positions this morning, Gold Futures at 867, DZZ at 25.07