Rolling Over and Topping Out!
We are making a couple of observations about our IDW that we think suggest the re-flation play is “rolling over.”
- The rate of increase is clearly in decline.
- The inflation play has been in decline since the start of 2010 and if history is prologue to the future, the equity markets and thus most likely the IDW will be down for the year.
- Our moving average intensity reading has fallen from an optimum +3 at the start of 2010 to the mildest of inflationary reading, that being +1. In other words, the momentum of all but the longest term moving averages are no longer positive (inflationary).
- Gold is holding up extremely well, vis-à-vis a basket of all manner of commodities that being the Rogers Raw Materials Fund. That suggests the paper market is not about to come back at the expense of gold.
As this was being written at about 1:00 NY time, the Dow was down more than 54 points. The plunge protection team must have been at work lately in trying to con average people to stay in the stock market, because in something like 20 of the last 22 first day-of-the-week trading sessions, stocks have gone up. That kind of manipulation clearly makes it more difficult to short this market. If you are inclined to trade, you might want to consider shorting by using the ProShares Short S&P 500 (symbol – SH) on Tuesdays and then getting out by the end of the week. The trend is clearly lower for these stocks. We want to preserve capital as much as possible so we can pick up a few points on down days to offset losses from our stocks.
Jay Taylor
Mr. Taylor is editor of J Taylor's Gold, Energy & Techn Stocks newsletter. A native of Ohio, he has resided in New York since 1973 when he began working there for Barlcay's Bank International. His interest in the role gold has played in U.S. monetary history led him to research gold and into analyzing and investing in junior gold shares.
In 1981 he began publishing North American Gold Mining Stocks, which preceded his current newsletter. His continuing interest in gold mining prompted him to study geology at Hunter College in New York City, supplementing his MBA in Finance & Investments. Throughout his career Mr. Taylor worked as a commercial, then as an investment banker. Most recently, he worked in the mining and metals group of ING Barings in New York. Prior to that he was involved in the first gold loan made in modern times in the U.S. to Amax Minerals, a 250,000 oz. loan facility led by Citicorp.
In 1997 he resigned from ING Barings to devote himself full time to researching mining & technology stocks, writing his newsletter and assisting companies in raising venture capital.
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