The last 2 days are very bullish especially during this time at the end of the year. Volume are decent. These are days of quiet year end holiday trading where average volumes are using very small. Usually at this time of the year, there are profit taking especially after a year of stellar gains.
If it breaks out the previous high, it should go to the next resistance at 1470. Elliot Wave analysis points to the beginning of new wave 1 or a new bullish cycle. It will have to go through another wave 123 and a b c for this cycle.
Below is another analysis using Andrew's pitchfork which supplement the above. It should gold bouncing nicely from the upper channel of the fork. It was working fine for the last few months.
Many of the upside are short covering on Tuesday especially for silver.
Most of my positions are naked right now. I may add in some OTM short calls tomorrow before going for the long weekend. There are no signs of deceleration of the bullish trend but to be conservative, I should add some hedge to all the trades.
My account should end up another very good year in 2010.
With all the bullishness around, any bad news will send the price for a correction of up to 10%. This applies not only for gold and silver but also for the general market.
The bullish sentiments on the second half of 2010 is simply incredible. Normally, I would have gone to at least 50% cash with such sentiments. But with options hedging, I am still 80% invested. Also, I have another 25% with bearish positions of covered puts and synthetic puts. It acts as a hedge for my whole portfolio.
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So I am wrong. Precious has turned decidedly negative short term.
ReplyDeleteI believe this downturn will last 1-2 months.
Fortunately, my greed was controlled with short call for all my positions even though the stock was rising.
I added puts to all my positions resulting in a collar. I am on the defensive again.
If gold show signs of weakness over the next few days, I may even roll the SC down.