9/10/2014 6:20:13 AM
Good morning Traders,
While we are long puts in gold, the trade is starting to get crowded:
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:
And finally, as it's Wednesday, we start to get some decent weekly data:
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.