I am not sure who mentioned the next bubble in this thread but the next bubble is Gold. Here is why I think that.
If you look at the COT report, all of the recent buying is being done by small speculators, with the Commercials massively short this market. Commercials being hedgers do fight trends at times so this is not that unusual. However, Large Speculators who are the trend drivers have reached their max long position and the breakout has not occurred yet. This usually leads to major declines in price. This also means any breakout in price will have to be maintained by small people like you and me, buying small amounts against large players selling large amounts. Rumors of large buying by China etc are just that. If they were doing that it would show in the COT report for the cash gold market. Another bullshit story from the people selling metals investments.
Also the PPT’s manipulation with SP 500 futures to keep this stock rally going has resulted in this market being more over valued here in many ways than it was when the Dow was at 14k. They are doing it now to help them spin the story that the stimulus plan has worked and the stock market rally is proof of that.
Barry is using the PPT in ways it was not used in the past. They normally just showed up when plunges occurred to attempt to stablize things. Having been aware of the PPT for some time, I am usually able to tell when they show up and have posted some of those appearances on my blog. This has been a little tougher because they are so active it is not quite as easy to tell any more.
I would sure love to see the publics reaction if it were revealed that alot of the derivative losses with banks were PPT buy trades placed in their accounts to try and stop the stock market selloff last year. Goldman Sacks and Merril are two places rumored to be where the PPT does their trading. Is it any wonder B of A paid 50B for a company going out of business in a deal put together by the government. It is no wonder they will not reveal how the money has been spent.
He is using it to further policy, which is incredible. However, if we happen to hit a point where the funds start to sell, probably a 20 day low, even the PPT will not be able to stop it. They have been able to stop a 20 day low so far, but odds are it will happen eventually.
I am a trader not a long term holder of things. But I would have my stops close in the Metals here, that way you can keep riding this if it goes, but you will be out if a large decline occurs here which does seem likely. Those who have held this for so long have a great trade on their hands, but don’t get too greedy.
Seasonals call for a top in October, so by then it would be imperative to have close stops or be out.
I heard a bank analyst who did a report on the financial health of that sector, Chris something or another I can’t remember his last name. He rated 2600 out of the 8500 banks basically insolvent, and only gave 3000 an A in the clear rating. If that is anywhere near accurate, we still have some problems out there about to surface.
