Saving Sanity in this Market: The Tense Times Questionnaire

I am very pleased to announce that we have arrived at the point of maximum confusion. The voices you hear are real, and what they are saying is also being generated by the haze within which we all find ourselves. You’d be best not to pay them any heed.

Your only goal now should be to maintain your sanity, as what happens next is sure to both terrify and surprise. Unfortunately, there’s little we can say in advance to help you prepare for the shock and awe of what’s imminent. Only stay calm. Keep your head. The impulsive and cocksure will be lost. The deliberate and even-keeled, saved.

Before the insanity of the present progressive ensues, we recommend you take this short questionnaire prepared by our benefactors at the Council on Foreign Relations in order to better understand how well-equipped you are to face the immediate future imperfect. Do not trouble yourself with lengthy responses. Full paragraphs will suffice.

PART A:

1. Do you currently own gold or gold stocks? (If no, please continue to PART B.)
2. If yes, do you currently believe that we are approaching an upside breakout for gold and gold stocks?
3. Do you believe that the American economy is about to implode, its currency about to fail, and that large swaths of the population may be on the verge of taking to the streets to demand “Justice” and “Jobs”?
4. Do you sense that the Dow – indeed the American equity market in general – is poised to drop anywhere between 10% and 40% in the coming months?
5. Do you believe the US dollar is on the precipice and will shortly drop to depths heretofore unimaginable to the average American?
6. Do you believe Tim Geithner is part of, or has ever attended meetings of the Plunge Protection Team or any other group involved in undermining free markets in equities or gold?
7. Have you ever been treated for rabies?

PART B:

You’ll be fine. Get ready to buy.

Results:

Please forward your results to the Internal Surveillance Unit, along with a recent photograph and your social security details. If you have a gun license, please indicate. Any familiarity with martial arts should also be documented.

Your score:

• If you answered yes to 3 of the above seven questions you are simply confused.

• If you answered yes to 4 of the above questions you are likely suffering from something more severe than mere confusion, and a trip to your local blood-letter is in order.

• Answering yes to 5 of the above questions means you are best suited to solitude and should avoid venturing outdoors too often – for everyone’s sake.

• More than 5 yes answers means you do have rabies, and the CFR recommends you exit the gene pool forthwith (after sending in the above listed materials). All requests from the Council for “compassionate assisted gene pool exit processing” will be met with favorably.

The charts are showing a major market inflection point has been reached.

Here is the Dow for the last six months. The old girl is a mere hiccup away from breaking to new lows.

Or should we expect a bounce?

Meanwhile, gold has been rising steadily for months and may be ready to stab the last retracement high at $980 right in the neck!

Only the declining trendline (in black) offers pause.

The dollar, too, is being watched like a stripper at a frat party. Check it out:

The dollar is defying all the jugheads and chowder crunchers and will very shortly form either a double top before diving, or will also bust out to new highs. Current weakness in the Eurozone suggests the dollar could be a lot “stronger” than many expect.

And commodities are also adding to the confusion. Here’s the Reuters/Jeffries CRB Index for the last six months. What the hell is going to happen next?

To sum it up, we are currently approaching or are already at massive technical tipping points in nearly every major market. That also means that we should all be ready for the unexpected, because breaks in even one of the above charts could lead to unexpected moves in any or all of the rest. And that means the wildest of swings may await.

Finally, the moment you’ve been waiting for!

Oh, you dreamed of days like this, didn’t you, you big trader, you. You dreamed of the day when (insert your market here) would finally (break up/break down) and make you richer than rich. But it just isn’t going to happen the way you think, boy genius. There’s too much that can happen alongside that little dream of yours that your big trader brain hasn’t accounted for.

Make sure that when it all unfolds, bigshot, that you don’t lose the family jewels, that you don’t fall into a depressive funk and cry to your Maker (and anyone else who can handle your whining) that it wasn’t supposed to unfold this way, that you were supposed to be right, that you will be right – if you just hold on, just a little bit longer.

And while you wait and watch the market get away from you, and the money goes spinning out of reach, and you spin, too, in a muddle-headed daze, remember that McAbby told you that it was your sanity, you arse, your sanity that was most precious now.

Foaming at the mouth?

Comments

[Steve in Gr...:]

Is there an anti-watchlist I can put Matt on? Some way to highlight his writings so I don't accidentally click on them?

Feb 19 03:04 PM

[Roger Knights:]

Wild! (Although I'm a goldbug myself, sort of).

Even wilder if the loonies are right! (Which can happen when the moon is full.)

Feb 19 05:52 PM

[yellowhoard:]

Well done Matt!

Consider me hunkered with my family jewels safely at hand.

Feb 19 06:52 PM

[Cesato:]

Interesting to see the open interest table in NYMEX (CME). The highest Open Interest for Call Options is on USD 1.000 and USD 900 strike prices, that indicates that although traders expect a break of USD 1.000 a drop down to USD 900 will only find additional buying interest. There is no significant Put Options Open Interest until USD 850. That may change in a day but for now consolidation between USD 961 and USD 988 leaves nothing to guess on. There is additional Call Options Open Interest at USD 950, so that for short term traders or investors wanting to lock in some profit it would probably be below USD 950. I'm not willing to guess this time, a Call Option at USD 1.010 Strike, instead of adding at this levels, should keep my mental health within a manageable level, just in case. I know is it just technicals but fundamentals, momentum and market sentiment are already aligned for a break, although I agree that th break down may also happen why not, stops and Puts are in the Menu as well.

Feb 19 07:53 PM

[TA:]

Loved the article, great stuff

Feb 19 08:30 PM

[Mayer Amsch...:]

What kind of crackhead wrote this sh*t?

Feb 19 09:20 PM

[nmelendez:]

Well, i am not a gold bug. However gold went from 42 to 300. It has been at 300 for how long? Considering all the inflation from 1980 to today, what should the price of gold be? I mean if you bought a house or put money in stocks in 1980 i am pretty sure they have both appreciated. So what's wrong with gold appreciating as well?
Personally i look at it more as the pro dollar than the anti dollar. As inflation rises gold prices rise just like any other commodity.
People like you should really start looking at the logical and not at the BS involving gold.

Feb 19 11:46 PM