First Sellers Step Into Equities, Gold to Blast Off?

Wednesday, June 16, 2010

Stocks rallied early before paring gains to close flat on the day. Today was a great day of consolidation considering the entirety of the move off lows and through the 200-day moving average. The S&P is now 7.1% off lows and a milder 8.6% off highs. I sold the last of my NYSE:SPY feeler position around the close as today felt like the first bit of real selling entering the market. I sold it because I am expecting to be able to buy back stocks in the coming days on a pull-in and I wanted to lock in the gain.

I am currently long a large swing position in gold through NYSE:GLD. Just a hypothesis, I think the equity market may see a minor pull-in in the coming week that would reignite the bearish headlines and help gold overtake new all-time highs. Relative strength is one of the most proven aspects of technical analysis and gold's strength could not be any better. What better relative strength than one of the only assets classes or markets in the entire world trading at all-time highs (besides the Sri Lankan stock market)? While this would likely mean it is not a good time to be investing, I do see it as a great momentum play for the swing trader.

Apple (NASDAQ:AAPL) is a stock I just keep on telling myself to buy but I continue to shy away for some pathetic reason. I put out a note where I argued for a $300 price target last December before the iPad was released. Now we have the iPad and the iPhone 4. I am going to close my eyes and buy this stock on any weakness. The reason it is so difficult to enter this stock with a reasonable stop loss is because everyone else wants the same buy so it never materializes.

Disclosure: Long GLD.
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