Defensive Psychology


My overall market view remains negative. On my October 12 blog I wrote:

“I continue to see the September 14 highs in stocks and commodities as a “blow-off top” following the latest round of “Q” from global authorities and I’m trading accordingly. I think that there is a risk that Market Psychology may become increasingly negative during the next couple of months.”


A Romney win might have moved Market Psychology in the direction of “Morning Again in America” but the Obama win negates this…the “Rich” must now feel as though they have a target on their back and they will be trying to arrange their financial affairs ahead of tax increases.

Market Psychology is now “defensive” at best which means that stocks, commodities and foreign currencies are sold, the US dollar and high quality bonds are bought.

Gold and Silver drifted lower throughout October, then sold off sharply on November 2….only to bounce back sharply following the election (we have a Key Weekly Reversal higher in both metals.) Both metals are higher not only in terms of US Dollars but also in terms of stocks and commodities…if Market Psychology becomes increasingly negative and stocks and commodities move sharply lower then gold and silver will likely also move lower against the US Dollar but rise in terms of stocks and commodities.

The CAD traded to a 3 month low on November 9…down 4 cents from its September 14 highs.

In my short term trading accounts I am positioned to benefit from lower stocks, higher gold and a stronger US Dollar.

In my long term savings accounts I maintain an ultra-high cash position with ~25% of my net worth in USD, ~75% in CAD.

avatarVictor Adair - Victor Adair posted Friday, November 9th, 2012.

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