Forecasting the stock market’s price swings accurately is just a cheap parlor trick, as we often like to remind subscribers. For the most part, and notwithstanding the diligent efforts of Wall Street’s Masters of the Universe to manipulate shares to their advantage, we see technical evidence each day that suggests that stocks and commodities are ruled by a sort of cosmic metronome. If you’re skeptical, we would urge you to visit the Rick’s Picks chat room sometime and see for yourself that predicting the exact highs and lows of minor trends has become a matter of routine for many of the technically trained ninjas who frequent the room.
Far less predictable, however, are the kind of seismic events that make headlines and which have the potential to shake the financial world to its core. Indeed, speculating about what might happen the next day, even the most gifted market seers cannot but hazard a guess as to whether the Dow Industrials are about to plummet by two-thousand points or instead rise by as much. Thus do the market’s more or less predictable ups and downs ultimately do the bidding, not of algorithms and trading machines, but of a fearsome, id-driven hybrid of insect, reptile, sea monster and rabid dog. Traders step into the cage with this diabolical creature each day and take its measure not really knowing whether it is about to lull us to sleep, or instead rewrite history with a feat so stunning that even those who have observed the markets for 50 years will be numb with shock.
Lulled to Death
But as long as stocks continue to move mainly in one direction, as they’ve been doing since March of 2009, we tend to see, not the nightmares of investors’ collective subconscious, but a quite normal species that inhales and exhales and which moves with a flow whose rhythms can entrance us with their regularity. The resulting feeling of tranquility is what naturalist Steve Irwin may have felt as he snorkeled above a sting ray that was lazily making it way along Australia’s Great Barrier Reef. One moment, Irwin was in harmony with the eddies that bore both him and the ray along. The next, without warning, he was in the agonizing throes of death, his heart impaled by the creature’s barbed stinger. Will investors fixated on a bull market that has run for more than four years suffer the same fate?
Speaking of Gold…………
Way back in February of this year I got a call from a futures broker trying to sell me on his scheme to sell puts on December 2013 gold futures.
At that time gold was trading at about $1679.
He said it would not drop much further and the puts would expire “worthless”.
I said no thanks but I have watched the price of put options that were way out of the money at that time.
Strike Feb 2013 June 2013
1300 $7 $109
1350 $11 $107
1400 $16 $188
I guess he got stopped out at some point.
Similar action in NUGT which has gone from $97 in September 2012 to $5 today.
Amazing returns if you take the plunge.
Too scary for me to trade.