Red-Hot Resources

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Tuesday, January 22, 2008

Jack Crooks Is Scaring Me

My friend Jack Crooks, a veteran currency trader, sent me this chart this morning ...
As Jack says: "Nominal Dow vs. the Dow in Gold Terms…a big divergence. If the Nominal Dow plays catch up, this could get ugly."

I do think gold could go a bit lower -- the front-month contract has support around $848, and I may add new positions at that level. But the broad indices could tumble a lot harder and faster than that.

I'm adding hedges in Red-Hot Canadian Small-Caps and Red-Hot Global Small-Caps today. The plan is to send the issues out AFTER the open (look for them around 10:30) to avoid the immediate volatility. The Fed is stirring the pot with its 75-basis point cut, and that only makes it more dangerous for both bulls and bears.

Now, I have to go catch a plane. It's unnerving to be on a plane when the market is experiencing this volatility, but I have to travel sometime, and the days ahead could be even more volatile.

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