OPINIONS, OPINIONS: STOCKS, BONDS, GOLD, SILVER, EURO, US DOLLAR
Stocks: Neutral. There are reliable sentiment indicators that began flashing near record amounts of bearish sentiment with respect to the equity markets last week. During Friday's decline, the put/call closed above 1.40 as we are nearing the August lows. This type of sentiment picture doesn't allow for a break of the August lows unless a surprise economic event takes place. Tomorrow's gap down is likely a buying opportunity given the vomiting sentiment that is sure to show up after Friday's decline.
Bonds: Bearish. The bond market is discounted for the worst case economic scenario. Anything that makes participants feel that this worst case will not take place, will cause a substantial decline in bonds over a short timeframe. I expect bonds to decline substantially over the next 1-2 months. Long TMV
Gold/Silver: Bearish. Precious metals in their current lifecycle are nothing more than an insurance policy against calamitous financial events. Gold/silver is no longer correlated with any macro asset class, be it the US Dollar, interest rates or commodity issues. Gold at 1900 is essentially a CDS contract on the European and US financial/governmental sectors. As soon as the attention to risk subsides so will gold...and perhaps dramatically. The decline a couple of weeks back was the first signs that gold is susceptible to a large run to the downside. Long DZZ.
EUR/USD: Bearish Euro/Bullish USD. I remain long the EUO (short Euro ETF) from two weeks ago. The US Dollar will continue to gain as the problems with the EU become more pronounced. It is nearing some technically significant levels here around 1.40 on the EUR/USD. I'll hold this one for the time being.
