Leif Peterson

Saut: Sell Financials, Gold; Some Buy Ideas

The ultimate oscillator for GLD is again approaching 70, and just like in March (08), there will be a drop -- so play it safe and get out. Also, look at the 1 year EMA chart for DBA and GLD on the same plot. GLD usually follows DBA's by about a week or two, and with DBA going down, what do think GLD will do next? Kitco.com also showed gold down today, so if everything is so bad right now, why is gold down? These are signals of deflation, when money is pulled back resulting in trading days when everything is down (shorting ETFs, gold, equities). Indeed the definition of deflation is when everyone is pulling out and the money is circulation slows significantly -- most likely due to people cutting back on consumption. Drug companies are now hurting because a large percentage of prescription drug patients are stopping out of pocket co-payments. Look at the medical and equipment and supply sector, which was up earlier in the year but correcting down as we speak.

Recommendation is to go with good asset allocation based on e.g. 50% low risk funds, 40% (foreign) growth and income stocks, and 10% risky explosive equities -- all of which have consistent high yield (dividends) and consistent revenue growth. These are the only things that attract money from a fundamental perspective.

Last, there will be no bell sounded for when to get back into the market. Buy low and sell high, and don't by and sell, go in, go out, since you'll never get ahead. I was a gold bug, and am doing my part for goldville by having 10% in gold mining stocks, and may by a small amount of GLD and SLV this week. However, if you ask smart investors about gold (the rich guys, -->not me), the response is typically: "I wouldn't touch it."