If it is not already occurring, it will soon: John Paulson and his Advantage fund will likely implode from the move in gold. And the gold ETFs, by their very nature of buying physical gold on the way up will be heavy sellers of physical gold on its way down which could further exacerbate the decline. However, 1400 is the lower decade-long trend channel and could provide support.
Also, Dennis Gartman, editor of The Gartman Letter, told CNBC this morning:
"There are a lot of people throwing up their hands. Throwing positions overboard. Panic is everywhere. I've never seen anything like this. I mean it."
Dennis has been around for a long time, but perhaps he overlooked the action in Bitcoin the other day (or didn't care about it). People threw up their hands. They threw their positions overboard. Panic was everywhere. It was a crash.
It was social mood at work. And it sent a very loud signal to those who listen for such things.
Speaking of social mood, I was very thankful to attend the 3rd annual Socionomic Summit in Atlanta, Georgia this past Saturday. There was an exciting roster of speakers from all over the world and a wide variety of backgrounds from physicists to technical analysis gurus to teachers, all of whom are using the new science of socionomics to broaden the world. It was immensely inspiring.
I was pleased to meet teacher Marah Boyesen who actually had two of her students in attendance with her, both of whom are now enthusiastic socionomists. And it was delightful and gratifying to meet author, consultant, and professor Peter Atwater who had spoken at the conference last year and was in attendance this year.
In chatting with Peter about how he makes socionomics relevant to his students, he told me that he employs the concept of food which students immediately relate to as they notice their food choices changing with their moods. I thought this was a brilliant idea that he was kind to share with me.
Get this! I mentioned the September Vogue article that I blog each year and he said "That's you?!" He said he had just showed it to one of his students. I was amazed and felt a wave of gratitude flow over me. Thank you, Peter. To know that a student may find it even a little helpful or relevant is a huge inspiration to me.
Regarding the markets, it seems that the inspiration is on the sell side suddenly. It feels as though a switch has been flicked since last Wednesday's big rally.
There is a phrase that I find descriptive: "break it out to break it down." The fact that the market broke out after the Fed minutes got released early, as well as after the debate began about a possible QE3 exit, leads me to believe that large institutions may have used the rally to get out of long positions not when they wanted to but when they could.
The yen has taken a U-turn over the last few days, and gold is sending a loud and clear signal that something has changed.
1575.25 is the spot I'm watching today. It is a 38% Fibonacci buy retracement and coincides with a rising trend line. Below this level could become challenging for higher prices. I do see higher prices coming, but I would seek to use them as a way to position for a deeper correction.
Oh, and I tried to post this photo last night on Twitter, but it didn't work. I think the burger was too big. This is the 3/4 lb. Matt Burger at the Original Smoke Station in Savannah, Georgia, with bacon, a fried onion ring, grilled onions, barbequed pulled pork, lettuce and tomato.
Southern Hospitality was in force as well. The knockout blonde waitress was a real Georgia Peach if there ever was one. She came over and said: "Has anyone helped you yet, hon?" "No." "Good, then you're all mine," she said.