Sunday, September 20, 2009

Shiny Windows Coming to a Portfolio Statement Near You; Patience and Knowledge = Greater Profit Potential...

This upcoming Friday, September 25th is mutual fund managers' last chance to dress up their holdings. Money managers can elect to fool existing investors as to their shiny  holdings during the past quarter, caution.
Although window dressing is an old school phenomenon, many traders respect it and use it to profit. Here's how gold looks technically, it closed at $1,006.50/ounce on Friday, Sept. 18th:

Since gold has historically been a defensive position, exhibiting an inverse relationship to the S&P 500 (reverse beta), its run is that much more impressive in the face of an explosive stock market since March.

POTC believes this dislocation will eventually fix itself, yet looking-forward to this end of quarter window dressing effect, we believe gold could glisten to new heights; perhaps as high as $1,050+/ounce by foolish Friday's close. IF we do get that print this week, the short-term risk:reward favors going short the under-performing money managers who will be dressing up desperate and late.
Although POTC believes gold will not be in bubble territory until $2,100/ounce sometime in mid 2010, this upcoming week's aggressive move should be faded/ignored, not bought, as patience is critical to reaping more consistent profits.

POTC recommends establishing short positions beginning the week of September 28th in three incremental trades if the technical phenomenon works out (through futures or the GLD exchange traded fund). Then we'd look for a viciously fast retracement from $1,050/ounce level to the $950/ounce within 3 weeks after this window dust settles, so by Oct. 16th.
Please review the 11 Commandments in the left margin, and we urge you to never force trades, as forced trades are nervous trades that often turn into losing position trades. The Psychology of the Call hopes this piece was somewhat forward-looking and educational. IF it turns out to be prophetic, all the better!
Thanks to all who followed our chief political correspondent, Capitalist Pig Bob, to Facebook. Our chief Pig promised to make his political rants a lot more raw on Facebook, as the platform for commentary and suggestions amongst friends is ideal...

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