Wild Gold Action
October 9th, 2007WARNING: This is not a recommendation to buy, sell or hold any financial instrument.
Man, the action on gold has been wild. Look what happened after I issued my warning last weekend:
Volatile, rangebound action
Notice how I never suggest that Cryptogon readers should even think about shorting the thing. While the situation I described previously might seem like an obvious shorting opportunity, it would be a move for hardened, full time experts, and they wouldn’t be interested in reading what I’d have to say about a move like that. Those guys (and girls) are too busy looking at their multiple displays and practicing effective bowel control.
Why is that?
Look at that wall of green candles. A short squeeze is a terrifying thing to experience for shorts. That’s why the charts go vertical during squeezes. In the back of every short’s mind is this simple script: “The risk of loss is infinite. Cover.” (Note: Options offer a fixed amount of risk.) So, with gold way up high, lots of shorts are rolling the dice on the downside, but it’s a brutal gamble and the big boys can use this for sport by touching off decapitation squeezes on shorts.
Here’s what I wrote a few days ago to a reader who bought some put options near the recent top:
The puts were a bold move.
The uptrend is so strong, I probably would have taken the actual futures short on those couple of breakdowns we got, but only intraday. In fact, I wouldn’t have gotten up to use the toilet with a short position live. Not on this thing.
So…
Consider taking profit: Sure.
Consider moving stops: Sure.
Consider accumulation under $738 and above $721: Sure.
Consider short: Experts only.
