All along, into and throughout what NFTRH has called the predictable 'Hope '09' rally, there have been two scenarios in play for the broad markets, commodities and euro (in other words, the stuff that is anti-USD). Gold miners? Yes, they could take the hit if the dollar rebounds, but these dynamics would only fuel their bottom lines for the next big leg up. They are different; they benefit from economic contraction for all the reasons harped upon over the years.
So back to the anti-USD trade, still hanging on and still hoping. I am short financials, short oil and short euro and watching these proceedings closely because ironically, if the Hope trade follows its most bearish scenario it will rise here and now to new highs and I will probably abandon the shorts. While I am great at some things, like strongly bottom feeding other peoples' fear, I do not seem to have the psychological makeup to remain short human hope beyond certain short term parameters. Blog readers saw me attempt to short oil repeatedly in 2008, finally catch the top and proceed to barely take advantage as I sold my USO puts too soon. That is because I was psyched out due to my Achilles heal.
So with that baggage, I will likely not be short oil up to the NFTRH best case target of 78 and a broad market taking a next leg up here and now to best case targets. As it is, everything from the SPX to oil to silver (and gold) are potentially forming little bear flags before additional downside. Today and maybe early next week will be pivotal.
Scenario 1 = New highs for hope and bearish from then on. Shorts abandoned (for now).
Scenario 2 = Hope bear flags into a correction, the nature of which will be evaluated for possible bullish potential thereafter. Shorts are covered at downside targets.
