Bill-

On our merry way to $620!

On the flip side, J. Hussman has this to say about market breadth. Seems he and I are on the same page:

"In a richly valued market with upward interest rate pressures, it's a particularly unfavorable sign when within just a few days of new highs in the major indices, leadership “flips� so that the number of individual stocks achieving new 52-week lows actually exceeds the number achieving new 52-week highs. That's exactly what happened last week. The S&P 500 achieved a fresh bull market high on April 5 th , at 1311.56, yet only days later, new lows have already flipped above new highs."

And this to say about the "Hindenburg Omen", an indicator I first read about on Friday:

"I've noted often that a great deal of the information conveyed by markets is contained in “divergences� between securities. While investors shouldn't read too much into any indicator, there's an interesting signal that has enough validity as a measure of divergence that it's worth mentioning here. Think of it as more than entertainment value but less than a reliable guide to investment.

The signal is based on new highs and new lows, and is cheerfully called a Hindenburg (the actual name given to it by Kennedy Gammage is the “Hindenburg Omen� but that strikes me as a little too, well, ominous, because it's certainly not a sufficient condition for a market decline). It's a relatively unusual event that has often preceded fairly substantial market declines with a fairly short lead time (usually within 30-60 days, including deep declines in 1987, 1990, 1998, 2000 and 2001), but has sometimes proved to be meaningless or insignificant as well (such as a cluster of signals in September 2005).

The basic elements are 1) the market is in a rising trend, defined as the NYSE Composite being above its 10-week average, 2) both daily new highs and new lows exceed 2.2% of issues traded, and 3) the McClellan Oscillator is negative – meaning that market breadth as measured by advances and declines is relatively weak. Peter Eliades added a couple of other conditions to eliminate signals occurring in clearly strong markets: 4) new highs can't exceed new lows by more than 2-to-1, and 5) 2 or more signals occur within about a month (he uses 36 days) of each other.

As it happens, we observed a Hindenburg on April 7 th (just 2 days after the market high) and another one on April 10, so we've got all 5 of those elements in place here. We'll see whether anything comes of it this time around."

So maybe we'll get to put the Cara 100 to work sooner than we think!

Regarding the "incorrect" Hindenburg Omen in September 2005, could it be that the market was ready to roll over at that time just as you predicted (and when you first mentioned getting the Cara 100 ready for publication), and the Fed just inflated its way right out of it? I think so. Just look at gold's behavior from that point on. After a desultory summer and basing in the fall, gold has never looked back. It could very well be that a similar decline happens here. 10% or so gets taken off the top then WHOOSH, we reinflate our way to nominal gains again in the indices. If this is what is happening the "tell" will be gold and Bill's Merry Crew can all get rich on it, miners and the NR stocks. If not, we will all make our legacies by scooping up stocks at the bottom.

Thanks again.

Mark, don't you think the miners will retreat initially along with the general market? in the last two weeks they've not followed the gold spot up. I've got my "Cara Cash" waiting on the sidelines...

EJ-

Yes. They SHOULD be hit hard along with the rest of the complex. The bullion not as much. They'll base, and rise along with gold once again. I would expect their performance to be tepid at first and strengthen later. I have my Cara Dollars set aside as well. Not chasing anything here.

Okay folks, this is a little TOO frisky (gold). Specs have wrested the wheel away from the adults and now Bill's barber is on the phone to him hourly. Instead of a short term type corrrection, I think we are setting ourselves up for a sharp intermediate size one.

Is it the Scale Back 'Season?'

I liquidated my gold position (GLD) today at $61.18 for a nice intermediate-term profit. Thank you, Bill! Will wait for correction before going back in. I am 90% cash now, light on equities and hedged with a short S&P position. (Rydex Ultra Bear RYTPX) ProFuncs also has a good fund for this and other special situations. http://www.profunds.com/default.asp

C.Note-

IMO, it's prudent to raise stops across the board on this market. Scale back if that is what makes you comfortable. There's still time on the clock but I think it's in the fourth quarter of the game. But I am not trying to give advice, just share my opinions.

Long gold and everything else hedged to the max.

MarkM/CNote/ToddL-

If one is a bull intermediate and long term on the metals BUT negative on financial assets generally (or stocks specifically) short term why would you not remain long say 10% (JUST example) metals stocks and hedge that long with a 10% allocation to an inverse fund? Today was unusual but you can see the benefit ;-) of being long natural resources and inverse the NDX or SPX.

A thought occurs... what if 2006 ( Bill's "year of the metals") is = 1999 (the year of tech/tele) ... only different? Remember that year? The ONLY place to make money was tech- a very narrow market indeed. Ultimately the bear camp was right... but not before tech got ALL THE FLOWS and the resulting super spike in prices. The natural resources stocks are fewer and much smaller in mkt cap. Do you think it is possible that we could see a super spike before this is over? If so, how do you avoid gettng faked out on a 'little spike' up before (if) the BIG one occurs?

I am not being critical of anyone here, we all need to know what our style and point-of-sleep requires. But I am puzzled why if one was nervous about the market caving in here... you would not hold the bull market sectors (natural resources) and hedge it up to 100% by being long an inverse fund as ToddL mentions above.

Again, not a recommendation, not being critical, just trying understand other views/actions expressed here.

stockman-

As I have admitted before, it was a mistake not to go 20% long on the NR position in February. So.... where is an entry point? Here? How so? Couldn't justify it technically and fundamentally some of these prices are separated from reality. Copper up what 40% or so in the last few months? Gold up today 3%? Silver? Pretty bubblicious. The only prices grounded somewhat in reality are energy and that has a fear premium of 10-15 bucks a barrel. THAT I understand and could trade. (In fact I've called about every bottom since November.) So I wait for a pullback and I'll decide then. That's my story. But I like your trading strategy.

If you look at the charts, gold is overbought on both a daily and weekly basis. It could use a rest. I'd like to see a retracement to the 50dma again followed by a move to $650 and above. I think that would be healthy. What I don't want to see is a blow off move and a collapse. That's what happens to parabolic charts.

Long GLD and a few miners.

Earlier trip to market this AM found gasoline on the rise ($2.669USD up 10cents overnight) ... CDE/GFI/FXI/GLD advancing my little nest egg and LYO hanging in there even with oil on the rise .. going to climb the 'possible' stockman spike for a tad longer.

C.Note-

Now that the Fed has "spoken", hell I'd let a mechanical stop take me out if at all. No sense in trying to game this thing. The printing presses are in full production and we don't want to disappoint the market, especially as we are taking away the housing punch bowl.