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9/10/2014 6:20:13 AM

Good morning Traders,

While we are long puts in gold, the trade is starting to get crowded:

Gold Put/Call Ratio Chart

This always makes me a little nervous - I like to be alone in my calls on the market - but when everyone is betting on downside, the market tends to disappoint.

On the positive side of the trade, option writers are betting on further downside. I tend to call option writers the smart money because pros tend to write, individuals tend to buy:

Gokd Options Open Interest Put/Call Ratio Chart

And finally, as it's Wednesday, we start to get some decent weekly data:

Gold: Investors Intelligence % Bulls minus % Bears Chart

Since we've been designing trading systems on the market since 2000, this is a key indicator (more so on the fear side) for market timing. As you can see - we're at significant highs, which is understandable. And while this condition can last, it doesn't tend to end well. So stay tuned. When I talk about magnitude and frequency, we do have a magnitude move ahead of us - it's just a matter of when...

We remain in Sell Mode on the Qs expecting lower prices.



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