Thomas
DeChastelain
Memorial Archives

Cash is Nice?
posted Oct 25, 2004 at 06:45PM

Well this morning I sold my last energy stock and am at this point, at a 100% cash position.

I must admit that during the trading day that I thought there was just too much weirdness out there. There is that rule of thumb that says when in doubt stay out.

I keep having the feeling that there is something about this market that I am missing...so I cashed in my chips and will sit on a cash hoard until I get a better sense of what is going on.

Right now the only thing that half-way interesets me are gold...but the sector and too many stocks are in a techncial condition which is almost diametrically opposite of what I like to buy

I have a contrarian style and momentum breakout tradings is not my forte...but again I am watching some pennant formations of certain gold stocks

But through out the day I kept getting a "tingling" nothing definitive from a TA standpoint just a little voice saying "beware of paper"?

Actually, now thinking about it, there are a few things: one - despite the fact the fact that gold and the USD are at testing relative extremes (tops and bottoms) gold stocks (HUI)are nowhere near thier highs.

General equitiies are at critical supports and with a crumbling dollar and high oil I just can't excited right now, even from a contrariarian point of view, and despite a lot of good technicicans saying we are reaching an inflection point.

Looking at Asian markets I see the Nikk also at key support - other indexes $jpn and chn looking even softer. The latter especially can easily be interpreted as a massive H&S with confirmed neckline resistance

Yield spreads are duplicating the trajectory of the Titanic

Copper is not recovering convincingly, and its earlier swoon may be a huge warning shot that the market is dismissing

So when I do back of the envelope analysis I am thinking bullion looks strong, bonds look to continue defying gravity , but paper is either underperforming (gold shares) or weak (general markets)

Now I know there is a sub-strata of humanity that have been calling for the end of the world since we climbed out of the tar pits...but all in all the above seems to be a reasonable prelude to an equity crash?

Well tomorrow is a new trading day..we will see what gives.

Until then,

Bullet Bullet Bullet