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A Tale Of Divergences Over The Holiday Season
posted Dec 27, 2004 at 11:29PM


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I enter the new year at about 80% cash with the rest scattered about various equities across a number of sectors. There is no "theme".

If I was forced to commit myself to a "fearless forecast" I would have to say that I am expecting short term trends to reverse sometime early in the new year. In other words I would say that all things paper are going to be in for a rough ride for the better part of the first quarter.

A lot of my caution is due to the potential, and that's all they are at this time, potential divergences. The divergence that spells the most problems for paper is the one in which gold has not made a new high despite new print lows for the dollar.

Cautious does not mean "paralyzed". I do plan to trade - but with with a wary eye and under more stringent criteria, and with no qualms about pulling the plug if things go sour.

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