gold trades -battle begins sunday nite

  1. 13,669 Posts.
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    subtitled 'Goblin Goes Down'

    Saturday, September 06, 2003

    Been burned on over-bought and over-sold indicators?

    Author: Jim Sinclair

    Q: I would very much like to join your order but do not take promising you something lightly. Here is my dilemma.

    I'm not a fan of overbought/oversold indicators. I've been burned badly in the past, as I have found these indicators can remain stuck in either territory for extended periods of time when the given item is trending strongly.

    I generally wait for some form of confirmation (%R moving out of buy/sell zone). This gets me out early but certainly not ahead of the game (selling into strength).

    Quite honestly, I feel I have no business questioning your recommendation but am struggling with this. I'm not big on hand holding, so if I need a swift kick in the pants then kick away.

    A: The error you are making is not an inherent weakness in the indicator. The % R and Stochastic in terms of over-bought and over-sold only apply when a situation is chopping sideways.

    Once the quote clears the high of the chop sideways or drops below the low of the chop sideways, the situation or commodity is trending again. At that time, you shift to the MACD and Momentum - not in the sense of looking for over-bought or over-sold but in terms of the integrity of the trend as it continues higher or lower.

    Tech stocks were over-bought for years and kept going higher didn't they? I would need that kick and Mother Nature would apply it if I approached your question that way. You are wrestling with one of the most important criterion of how to apply the tools of % R and Stochastic. That is knowing when an item is in fact chopping and when it is trending. Now you know. Is it clear?

    Selling strength has a great deal to do with being satisfied. Being satisfied is the sign of growing professionalism. On Friday, September 4th, we had a major breakout in gold that could not only be a sign of $400 but also of $500.

    A great deal will depend on the guts that this new Gold Community has developed in recent months. Satisfaction for a pro is when a stock or commodity appears to be in a range of fully pricing itself for that period in the market.

    In terms of TA, a rich price exists along the over-bought side of the prevailing up-trend and therefore the channel. This is what selling into strength means. So use it for 1/3 of your position but no more. The core position must be kept because of the horrid long term fundamentals in spending, debt and deceit.

    However, because we have serious enemies among the Commercials, we need to expend 1/3 of our ammunition to continue the fight. We thrashed them last week and with dedication we can take them to the cleaners this week.

    I am a warrior. I do battle with my mind first and my money second. The money is the ammunition so each time I win I take back enough money for tomorrow's battle. That is a Seligman/Livermore secret that made them the successes they were.

    Those in the Gold Community who do not camp with us need to wake up to the fact that they must sell 1/3 into strength so they remain viable warriors. Without money, all they can do is yell and make rude hand sign against the enemy. I can make war because I am never without ammunition.

    One of the times I killed (financially) Dr. Jerky and the Comex local shorts in the 70’s, I had to sell 9,000 contracts to get my ammunition back but the minute the market turned, I ran in front of the shorts who were trying to cover buying 18,000 alone on the Comex. Then I went into Hong Kong, London and onto the Continent. Every time the shorts tried to buy, I cleaned out the offerings in front of them.

    The gold cartel had a little taste of that last week but wait until this Sunday night. The second I see one of them sticking his head up, the battle will begin. I do not make any claims except this one. I have money and they do not. I am fast and compared to this trained mind, they are slow. They are afraid and I have never understood what that word means.

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