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Feb 14, 2012

1. Saudi Arabia’s top power brokers recently claimed they would not
allow oil to trade over $100. Click here now [5] to view the oil price
trading above $100 this morning.

2. The power brokers have already failed. How big their failure will
become remains to be seen, but things don’t look good for the oil
bears.

3. When any major market might be about to embark on a strong rally or
decline there are both bullish and bearish factors in play. The
market’s direction is ultimately determined by _liquidity flows._

4. Click here now [6] to view the seasonal trend for the oil price at
this time of year. At www.seasonalcharts.com [7] you can view similar
charts for all the major commodity markets.

5. The bottom line is that oil could rise strongly because of a new
MACD buy signal, a large head and shoulders pattern, tension between
Iran and Israel/America, and because it seasonally tends to do so about
now.

6. An oil price shock to the upside could cause major problems for the
stock market at a time when the European financial crisis is still
strongly on the “liquidity flow minds” of institutional investors.

7. Click this stock market liquidity flows [8] chart from
www.sentimentrader.com [9]. The picture painted by the liquidity flows
on this chart is _truly frightening_.

8. You can see that the commercial group of traders are piling on short
positions by aggressively shorting the Dow, the Nasdaq, and the Russell
indexes.

_9. _My concern is not that they are shorting the broad stock market,
but that they are shorting with this kind of size in such a short period
of time. The current short position of the commercial traders _is now
larger than at any point in the last ten years. _

10. Do they know that something very bad is coming your way? Are they
simply shorting to profit from an over-extended stock market rally that
has seen the Dow rally about 2500 points without any kind of serious
correction?

11. You can’t know the answer, but you can be as professional as they
are with your liquidity flows. High oil prices and a falling stocks are
ultimately very positive for the price of gold, but there can be a
substantial adjustment period before gold begins to rise.

12. When stocks fall hard the central banks tend to print money. Then
they loan that money to commercial banks. They urge the banks to lend
that money to institutions to buy stocks. That action is very positive
for the price of gold.

13. I also have a concern about what the commercial traders are doing
in the less transparent OTC derivatives marketplace right now. Are they
placing giant short-side bets there too? Are those bets fully
reportable, or are they “non-reportable”?

14. Click this Dow wedge chart [10] now. I would call that wedging
action, rather than an actual wedge pattern, because of the lack of
definition in the upper part of the pattern. Still, the wedge-like
action is a concern.

15. HSR (horizontal support and resistance) sits at about 12,300 and at
about 11,700. I have little interest in naked-shorting the Dow. There is
what I term a maniacal obsession in the gold community with “getting
the Dow”. Somehow, the Dow is view as a person who must be “made to
pay”.

16. I have great interest in accumulating the Dow asset about every
1000 points down that it goes on sale, and the HSR at 12,300 and 11,700
make decent first entry points. Sadly, an obsession with naked-shorting
the Dow could define you as a _dollar bug _rather than as a gold king or
queen.

17. Gamblers should buy at the 12,300 area, if it happens, and
investors should wait for 11,700. Operate in this crisis like Sylvester
the cat, rather than like Tweety the bird. Take from the weak, in their
moment of greatest weakness. The greater the price sale, the stronger
the buying hands are.

18. If you have not made money in the Dow by shorting it over your
lifetime, you should throw in the towel on further attempts to build
dollars of wealth by shorting it again. If you are long the stock market
now, you should be adding some strategic short positions into this
enormous price strength.

19. The dollar will not beat the Dow in a fight to the finish. The Fed
will adopt money printing as _official policy_ long before the Dow goes
off the board. The Fed will destroy those who get carried away with
making dollars by shorting the Dow.

20. The gold community is heavily invested in gold stocks, and most
investors don’t have the emotional strength to endure “another
2008”, let alone a long series of “2008 again” events. Prepare
yourself mentally to endure much greater discomfort, or you’ll never
make it to the end of the crisis rainbow. If your personal fear levels
are beginning to overwhelm reasonable thought and action, you may need
to consider purchasing put options on either the Dow and/or the
GDX/GDXJ.

21. Click here now  [11] to view the gold chart. Gold is entering the
weak season. It is trading in the “quicksand zone” right now. After
basting about $200 higher and out of a wedge formation a lot of weak
investors got renewed interest in the gold market. Since that
“breakout occurred, the price has stagnated. I highlighted the
Stochastics sell signal and the HSR in the 1670 area. Now the MACD
indicator has joined the “sell-side party” with a crossover sell
signal. A breakout from a large pattern like this bullish wedge is
normally followed by a pullback towards the supply line, but anything
can happen. Remain professional in your actions and don’t waste your
time trying to flip-trade your way through this crisis by buying
microscopic weakness with size. There’s nothing out of the ordinary
going on in the gold market as it enters the weak season.

22. I’d prefer that you view this time of year as “gold on sale”
season rather than “crash season” or “it’s all over, so
everything now!” season. Try to take a balanced view of both the gold
market and dollar markets. View a declining price of gold as a tool to
get more gold, and a rising price as a tool to get more dollars. If you
are over-concerned about a declining gold price the simple fact is that
you don’t hold enough dollars as an asset to break the addiction to
the view that a higher gold price makes you richer.

23. You get richer in gold when you buy more ounces, and you get richer
in dollars when you buy more dollars. Staring at the gold price as it
falls won’t make you any richer. My suggestion is to buy both dollars
and gold on sale, and hold the amount of dollars required to kill the
terror that springs to life when the price of gold declines.

24. Click here now [12] to view the GDX chart. GDX never broke out of
the wedge pattern upside. The GDX price is now approaching HSR at
$53.70. If you are starting to “flail”, then you probably need to
own more dollars as an asset. I’m a buyer at $53.70 and at $52, if
those prices happen. On the sell side, the intense negative sentiment
that has returned in the gold markets could see GDX spike to $56 or $58
and I’ll be a very light seller there, if it happens!

SPECIAL OFFER FOR WEBSITE READERS: Send me an email to
This e-mail address is being protected from spambots. You need JavaScript enabled to view it. [13] and I’ll send you my “GDXJ
Put Option Protection” report. I’ll show you how to use put options
to manage your fears and finances, and to use them to leverage your
upside too!

Thanks!

  _  _Cheers

  St

Stewart Thomson [14]

Graceland Updates [15]

Written between 4am-7am. 5-6 issues per week. Emailed at aprox 9am
daily.

_ _

_WWW.GRACELANDUPDATES.COM_ [16]_ _

Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it. [17]

MAIL TO:

STEWART THOMSON / 1276 LAKEVIEW DRIVE / OAKVILLE, ONTARIO L6H 2M8
CANADA

Risks, Disclaimers, Legal
Stewart Thomson is no longer an investment advisor. The information
provided by Stewart and Graceland Updates is for general information
purposes only. Before taking any action on any investment, it is
imperative that you consult with multiple properly licensed, experienced
and qualifed investment advisors and get numerous opinions before taking
any action. Your minimum risk on any investment in the world is: 100%
loss of all your money. You may be taking or preparing to take leveraged
positions in investments and not know it, exposing yourself to unlimited
risks. This is highly concerning if you are an investor in any
derivatives products. There is an approx $700 trillion OTC Derivatives
Iceberg with a tiny portion written off officially. The bottom line:

Are You Prepared?



Links:
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[1] http://r20.rs6.net/tn.jsp?llr=rv4uj6dab|+|amp|+|et=1103765099455|+|amp|+|s=0|+|amp|+|e=001hTTdHE6J6RAXgm4u09c-q75r9-hGbru-qwCuY5mgaURH7puxb1bnhD7fiaWL-QGrNLeCZk30oTCqmqK3PPZXOSSaALHk0603-Wn-l8e1fVdnOhFvC9CP9A==
[2] http://r20.rs6.net/tn.jsp?llr=rv4uj6dab|+|amp|+|et=1103765099455|+|amp|+|s=0|+|amp|+|e=001hTTdHE6J6RAXgm4u09c-q75r9-hGbru-qwCuY5mgaURH7puxb1bnhD7fiaWL-QGrNLeCZk30oTCqmqK3PPZXOSSaALHk0603b5nklMiP5QEAVta4oFOetQ==
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[5] http://www.gracelandupdates.com/images/stories/feb12/2012feb14oil1.png
[6] http://www.gracelandupdates.com/images/stories/feb12/2012feb14oil2.png
[7] http://www.seasonalcharts.com/
[8] http://www.gracelandupdates.com/images/stories/feb12/2012feb14stkmkt.png
[9] http://www.sentimentrader.com/
[10] http://www.gracelandupdates.com/images/stories/feb12/2012feb14dow1.png
[11] http://www.gracelandupdates.com/images/stories/feb12/2012feb14gold1.png
[12] http://www.gracelandupdates.com/images/stories/feb12/2012feb14gdx1.png
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[15] http://www.gracelandupdates.com/
[16] http://www.gracelandupdates.com/
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