Thomas
DeChastelain
Memorial Archives

So This Is What The Grizzly Man Felt?
posted Jun 13, 2006 at 07:01PM

Introduction

How bad was it out there? Let's put it this way. Over the past few months I have been lightening up, selling into strength or when stops get hit. I only have one meaningful position and that is Connacher which I have long described as my buy and hold experiment. Unless the chaps who bought this stock at .28 are still in, I own the the cheapest stock, have the best entry point, on the planet. I am up 1300% and yet today every fibre of my being was screaming to "capitulate".

So yes I am up but when the share price has taken almost 50% haircut and the markets look to be in free-fall, I can tell you that there was "pain". I can only imagine what it is like for people who are more fully invested.

But in the end that pain, so far, I will use as a contradictory indicator. The fact is if I had managed to actually sell at the peak and actually stayed out of the stock to this point I would be a very excited hombre right now...with the money in the launch tube...but you know I probably still wouldn't buy...I would wait for it to get squeezed just a bit more.

If it all works out down the road then I will mention the "intestinal fortitude" and "discipline" needed for buy and hold investing. If not, then my original premise, "buy and hold is for morons" will not only be back, but I will be an honorary member.

Anyways, from specific to the general a look at where the carnage has left the markets and to look to see if the burgeoning cash percentage of one's portfolio should now start to be deployed.

Connacher Close-Up



Connacher Longer Term Study



XOI Index



Not shown but crude oil still remains above its breakout point and continues to show the best relative strength.

The XOI has completed a long-term stochastics cycle and so far has maintained its pattern of putting in higher lows.

Housing Index



I have been talking about the 200 level on the housing index for quite a while. Looks like that day, for all intents and purposes, has arrived. Definitely a falling knife signature. I don't play this market but I think some kind of bounce or intra-day reversal would be seen as welcome ...even to hard-core gold-bugs.

HUI


Technically you have to figure that the 260 level has to hold. If not the whole integrity of the bull market starts coming into question. It is trading at a discount to its 200 dma, and historically that has been a decent place to at least start looking at stocks.

GLD



I interpret the blow-off volume as bullish, even though price can continue to work it's way down.

Thoughts

Well the markets do resemble a basket of falling knives, which is always of interest to contrarians. Right now though, because I want to hang on to my CLL I am reticent about putting any cash in at this point. I do think this is a "deflation scare" scenario and not the real thing. But it is a very convincing scare so I will remain on sidelines for now in regards to the gold market.

Bullet Bullet Bullet