Martin Kronicle

Did you miss the $17 move in COMEX Gold yesterday? A lot of people I see around town ask me casually about gold or crude oil. Now that gold is over $1,000 everyone feels foolish buying it at these levels. They reason that they’ve missed the move and should wait for it to come back down. (Click on any chart to enlarge).

Feb COMEX Gold

A couple of big down draft days around Thanksgiving probably shook out the weak hands or stopped out the trend followers. Then you had the big pull back that everyone was waiting for. How many of your colleagues, family members, or friends who ask you about gold bought the pull back? My guess is not many. Everyone wants a deal – a baker’s dozen. Taking action is an emotional and self-awareness issue, not a financial one, and it’s hard to do when you don’t know what you’re doing or have doubts.

Below is the chart of the front month in crude oil. It looks like it’s been up for the last 10 days or so in a row. What is the probability of that? You can bet that there were plenty of speculators who sold short just on the assumption that if you keep flipping the coin, sooner or later you’ll get tails after a run of heads.

Feb NYMEX Crude Oil

The thing to remember about trends is that they are unpredictable. They last longer and can have a greater magnitude than market watchers can fathom. But the spectators love to talk about them!

A trader who acts like a trader will have Stops in before the market starts to move. Trading as a trend follower takes some faith and conviction. That’s why trend followers focus on process, not on outcomes. Most folks need and want more money and better returns, but they cannot overcome their emotions – especially fear and doubt. And the last thing that they want to happen is to look foolish in front of a person they need validation from.

Where do you think the chart below is headed?

How about this one?

A trend is a trend is a trend as Gertrude Stein might have said. Here is my article on Social Media trends wrt mobile platforms at the Huffington Post.

I read The Freeman regularly and get the daily feeds from FEE.

Here are some great articles worth reading in the latest edition.

How Dense Can They Get

When it comes to power, energy density is the key. Solar power, wind power, and ethanol are so expensive because they are derived from very diffuse energy sources. It takes a lot of energy collectors such as solar cells, wind turbines, or corn stalks covering many square miles to produce the same amount of power that traditional coal, natural gas, or nuclear plants can on just a few acres

The Long and Short of Short Selling

Short selling is a little-understood, much-maligned tactic by which traders can profit from their belief that a company’s stock is overvalued. (Editor’s note: it works for commodity futures too.)

Failure is an essential feature of free markets. Companies that suffer losses must be allowed to fail so that scarce capital can be redeployed into lines of business that better serve consumers. Short sellers, when they are right, hasten the necessary decline of the stock of a faltering company. In extreme cases, short sales can predict liquidation or bankruptcy. In other cases the stock of a generally sound company may have been driven to unsustainable heights by bandwagon psychology, and short sellers can help deflate those spikes and hasten a return to more realistic levels.

I have 3 Google Voice Invites left that I’m willing to give away to MartinKronicle readers who have downloaded my free e-book. First come, first served. I’ll need your email alias to invite you.

Download my e-book if you already haven’t from the homepage in the top-right corner. Then email me immediately and let me know if you want an invite – my email alias is on the confirmation page. It’s that simple.

The email service time stamps each email confirmation, so there will not be any ambiguity wrt who makes the first 3 requests.

Note that Google Voice is only available for sign up in the US. Users must have an established U.S. telephone service to activate Google Voice.

I’m sorry to my international readers. I’ll find something exclusively for you as soon as I can.