Bill,
Jim Puplava has been saying that it will be a mid-cycle slowdown rather than a beginning of a bear market. But your opinion seems to be a renewal of a bear market. Won't all these newly minted money going into stock market, at least in the beginning? My personal view is that all these money will go more into stocks first and then commodity.

Yesterday I had asked what happens to PM stocks if there is a correction. I was teetering on selling a portion of my PM holdings, but didn't. Now I guess we get a first bit of input on what happens to PMs when the broad market goes down. They go down.

Bill, what's your thinking about the correlation between PM stocks and the broad market if this continues downward? thanks for the input.

Hi everyone,

Do you think that the changes to margin requirements will increase the valuations of stocks & ETFs, and now would be a buying opportunity?

http://www.fimatpreferred.com/cf/Portmargin.cfm

My thoughts are that most PM stocks have higher risk and in a downward trend most stocks with higher levels of risk will be sold off with the others, and bonds & fixed income will be bought.

aleisen:

11:46AM my alert bell said GLD was green again and the DJ was still down 140 so there is a difference in these times ;)

It's kind of strange because at about 3 am in the morning, I woke up and I kid you not, I had this tremendous impulse to sell all my gold positions today. I got up and checked Kitco and noted that gold price had not collapsed, so I went back to sleep. But it does seem probable that we have three trends vying with eachother if the correction continues in the broad market: (1) melt-down due to defensive selling and margin calls in the broad market; (2) sympathetic melt-down in PM stocks due to the same factors; (3)support for PM stocks due to the secular bull trend. Bill has stated the reasons for the secular PM bull clearly over the past year. At some point, I would guess that PMs as a defensive position also kicks in, but is that after the broad market is down 15% or 20%??? Other points of view would be helpful....

This is my first post here, but I've been reading for a couple months.

My question is about the CNBC talking heads reporting Bill's Bell Cow, GE, on the other side of the fence, the lone DOW 30 up today.

Does this have any significance Bill?

Thank you,
Craig

Can't say why exactly, but I think the miners go down for awhile even if gold prices start to recover. Capital preservation is paramount in a falling market. Anyone who entered or re-entered PMs on the January signal is still way ahead at this point. I'm going to take a modest hit today, clear the table, and wait it out. Too many cross currents to play right now.

I'm hanging onto my PM's (and oils). As Bill has stated many times, these should be the last to fall in the bear market and you don't want to throw away good stocks in a selling panic. I think a better approach is to increase shorts to offset your overall market risk using stocks which should be hurt more in this environment such as financials or techs.

Also, in case you didn't see this, Doug Kass (thestreet.com) is saying the time has never been better to short - http://www.thestreet.com/_tsccom/newsanalysis/investing/10341170.html

bb,

I hope you're right. I'm taking the chance I can buy back in lower in a few days. Shorting the QQQQ by buying a little PSQ also sounds like a good idea.

ALOHA !!

If you bought Hecla(HL:NYSE)when the DOW went from 1050 to 550 you would have made an 800% gain.

This is long term ... Notice that gold stocks were in an up trend for over 20 years rising with inflationary pressures from 1960 to 1982.

This says it all ...

Link: http://www.nowandfutures.com/download/dow_goldstocks19472000.png

C.Note-

That was just a short squeeze in gold.

For those asking what gold and miners will do on extended market weakness that has been gone over about a dozen times here by me, Bill, g034 and others. Look at some historical charts. Not trying to be difficult but you have to do your own work. Kaimu has kindly posted a good link.

Good luck.

Heh......red skies indeed. Down 3.5% on the NDX as I write. Let's see if the last hour brings any relief. If not, can we presume that HB&B have pulled the rug?

Interesting: VIX April 10 Calls, bid $4.00, ask $4.40, while VIX is trading at 15.92 as of 2:41PM. !?

ALOHA !!

Do you want to see what credit expansion does(debt)?

Look what level the housing boom is at compared to (inflation adjusted)housing booms of the past ...

How close is a bottom in housing?

Link: http://www.nowandfutures.com/download/history_home_house_prices1890-2006.gif

Now look at housing when it is priced in gold ounces. Anyone notice what happened on the left side of the chart in the 1970s and early 1980s? Does history repeat? I believe Marc Farber must have seen these two charts prior to his sell recommendation on real estate and buy recommendation on gold ...

Link: http://www.nowandfutures.com/download/house_gold_ounces_USAVEHLGC6.gif

ALOHA !!

To read the "History Of Home Values" link I provided you can click on the image to enlarge it ...

Link: http://www.nowandfutures.com/download/history_home_house_prices1890-2006.gif

Si02 -

What is your point? I have VIXEB May calls, and am enjoying the ride !

Me too Jock :-) Not selling yet.
The point is that Strike + premium < current

who is panicking faster, the mom and pop investor or the brokers and institutions? "Big swinging dicks" cant pump on the way down can they? What a day. Still holding onto my juniors. Be safe everyone!

Ok, folks, I just bought some SPY puts. That should mean this dramatic correction is over.

Will there be anything left to short after today ? AAPL, GS, GOOG, RIMM, AKAM,....all my favorite shorts decimated. Bill wasn't kidding, when he envisioned a 500 point down day on the Dow, a few months back. Anyone have a link to that post. The crystal ball works.

ALOHA !!

number2: LOL ... Very funny !!

Hows that saying go? When who "sneezes the whole world catches a cold"???? Is it CHINA now?

Just how dependant on foreigners does our elected leaders want us to be?

Monday at close of market I was watching EFA - global ETF and right at close, some one dumped over 1,000,000 position (like over $79 million at one pop) and another huge trade just before on same ETF - I should have paid more attention and sold more stuff myself.

ALOHA !!

I do not have TV out here in the jungles of Hawaii and I was told by a friend that there was some debate on CNN prior to the closing bell that the markets were shut down so that nobody could sell. Then when the closing bell sounded all the floor traders booed. Were the boos for the down day or the secret shut down? Any truth to this info?

Also take a look at the access market(after NY)in gold. Hummmm ... down $20 as soon as it opened. Who is selling I wonder? What IOUs are they trading?

If anyone has any doubts that the gold markets are rigged then click on the link below ...

Link: http://www.kitco.com/charts/popup/au24hr3day.html

kaimu: I'd say that one factor in the gold sell off is that when you are big on Margin and about to get our Butt handed to you like a lot of traders experienced today, a lot of high beta stuff goes first. They hope beyond hope that the big stuff will stabilize. Don't worry as the decline continues Gold and other related materials and stocks will be heading back up. Just hold on!

Anyone notice that dip on GS today, down as low as 8%! Where's Hank when you need him.... :-)

kaimu-

I saw a freeze on some tickers but my feed kept working. CNBCs numbers were indeed stuck for awhile but their other feed in the scroller was working. Maybe that was what they were taliking about. Happened around 3:20 I believe.

Data was erratic all day. Fidelity was a complete mess.

kaimu and others

http://blogs.wsj.com/marketbeat/

Tabulation Trouble
Posted by Chris Bain
Scott Patterson reports on the Dow industrials quick 3 p.m. drop:

The sudden, sharp decline by the Dow Jones Industrial Average shortly before 3 p.m. Eastern time today was triggered by a tabulation delay by Dow Jones data systems, which calculates the average. There was a temporary lag in calculation of the 30 large-stock average due to a surge in order flows as the market continued to tumble in afternoon trading, much like a clogged pipe. Just before 3 p.m., Dow Jones Indexes switched over to a backup system to calculate the average, which nearly instantly registered the huge move.

“There was a huge disconnect between the Dow futures and the Dow average” of about 200 points, said Brian Williamson, an equity trader at Boston Company Asset Management. Similarly, the S&P 500 and Nasdaq both fell, but the decline isn’t nearly as dramatic (see chart).

The glitch wasn’t the cause of the decline, but it did cause the drop to register far more quickly than it otherwise would have. Other indexes fell at the same time, but more gradually. Some traders noticed a discrepancy between futures contracts tied to the Dow industrials and the index, which directly tracks the stocks. Usually, the futures contracts closely track the overall average.

The Nikkei is being taken to the cleaners. Down 680 points. WOW. Is this just a sharp pullback before a continuation of the bull or is it time to change trains ?

TheAdonis
It is time to change trains, my friend, and it should be no surprise.
We ain't seen nothing yet.

Last comfortable train left on Monday.
Greenspan would never say R word unless it is authorized by HBB ;-)

Certainly a lot of downside potential for almost all assets, but I do think authorities will somehow manage to balance things.
Gold was down sharply as I did predict and posted at my gold blog.

It is really interesting the very high volume of VIX calls in the 18-20ish range (20,000-30,000), which today went up 10X in price. I wonder if they existed last week.

Notable weakness in the dollar but gold still dropped with all the unwinding and dumping by funds. As the dollar deteriorates further, gold should rise and appears to be opportunity IMO.

Asia down except Shanghai and Taiwan slightly up at this moment. For those interested in the Asian markets overnight here's the yahoo link:

http://finance.yahoo.com/intlindices?e=asia

Beware the Ides of March- Prechter is Bearish big time:

http://www.financialsense.com/fsu/editorials/swagell/2007/0227.html

"Prechter is bearish". He has been for 20 years. Doesn't mean he isn't right now, but remember he is a perma-bear.

Si02: I think the reason VIX calls are valued less than intrinsic value + premium is, I believe, because VIX options are european-style, and only exercisable upon expiration. Options on SPY seem to have gone up more today than the VIX did ... Nxt crash, I'll use options on the SPY.... Jock

Prechter is always right! He simply changes his counts. Wouldn't it be great if trading worked that way.

Jock,

Yes, it was a little dissapointing in that sense (valued less than intrinsic value + premium), but still up quite a bit. To me it looks like the buyers were not there. You are right about SPY too. I am still holding some SPY puts bought several months in a strangle (mentioned here too by OO). I paid about $4 for them back then, 2 days ago they were worth $0.05, now up to $1 or so.
My third and last option was on Goldcorp calls, those have been taking a hit. Keeping a close eye on them.