Look, this is the stock market. You are not supposed to feel good. At least you are not supposed to feel good when it is time to be bullish (said the momo-phobic bottom feeder). I read daily of deflation but I see the Fed pathetically planning to monetize the country's long term debt obligations by incestuously buying long dated treasuries. Do you think that is inflationary or are you buying the 'bond market sees deflation' argument? Again, more to write on Bernanke's 'tools' this weekend in NFTRH11, but for now, I want to look at a chart of GDX instead of the usual HUI because it shows more detailed activity, like gaps and volume.Like I wrote, you are not supposed to feel good. Many readers sit sidelines and I say good for you. As I consistently produce those gold to miner cost ratio charts, I remain bullish even as market activity tries to bum me out. But that is me. Yes, I have shaken off the cobwebs and traded a bit lately (thank you TDF, AUY and SLW) but mostly hold in a comfort zone where I have enough cash to buy the downers, like KGC yesterday.
The GDX itself shows a fledgling daily uptrend, and some very nice divergence and momentum activity. I mentioned the other day that Monday's action got gold stocks filling some gaps and that is not a bad thing. But there is another gap down below and folks, it will not feel good to fill it but fill it we may, given a tax loss season in which investors may hope to one day make a claim against profits. Then of course there is the 24/7 fear factor and perhaps plain and simple end of year exhaustion to think about.
Another factor that I always consider is what I interpret as the collective psychological makeup of that market segment we call 'gold bugs'. These are different creatures than the normal market participants I guess because they are on the side of what is right (in their minds) and they have a strong tier of leaders (from the generals on down to the captains, buglers and finally messenger boys) who continually reinforce their convictions. So when they finally give up in disgust and self-hatred, it can get ugly for all of us. At least in short term price terms.
Bottoming is not fun. Just as topping can take an excruciatingly long time. The markets do not care what you think, how your gut feels or whether you are destined to win or lose. The markets flip you the bird and say "we are the markets and we is what we is... deal with it (or not)". I have been dealing with it and given that many people do not use charts but rather rely on hyperbole in the media, I can see why emotion holds sway and that is also why I can see us filling those lower gaps before the bottom process completes - or not. ;-)
