Sitting in Flatland, June 24

Technical Read: The June 17th exit long (eL) signal is the dominant feature of today’s technical read. The massive rise on that day triggered the risk reward statistics to move the model portfolio to neutral on that day. The June 17th exit is probably the ‘easy money’ big trade of the month. To use a metaphor, we have all heard of the infamous night-of-the-long-knives. Going forward we are likely to see trading resembling night-of-the-SMALL- knives as volatility bleeds off from the gold market. The Conquer the Mummy website Is optimized for options trading (which decay with time) so the best course is not to be too eager to get back in, at least not until signals give a more favorable risk/reward reading. Remember the philosophy of this site: Thump the Mummy and get out, do not hang around to be grabbed and crushed.

What is next now? The civil war in Iraq (featuring the ascendancy of the Sunni ISIS movement) is no longer a surprise and the gold market has moved decisively to factor this in. So at this point, I am looking for the next catalyst to move the market. This week Secretary of State John Kerry is meeting with Kurdish leaders, reportedly to convince them to join a plan to overhaul the current Iraqi government. What the Kurds seem to really want is increased autonomy. Secretary Kerry is a very bright person but I fear he may fall into the trap of simply telling the Kurds what he wants them to do as opposed to trying to work a deal that is stable over a long time horizonCMT062414. A sizable portion of arrogance can negate intellect.

Market wisdom: Remember the old market adage about “bulls can make money, bears can make money, but hogs get slaughtered”. Do not get too eager to reenter. — GHG

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