Gold & Silver Rebound Sharply

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Gold & Silver Rebound Sharply

Posted on 10/10/2006 16:52 PM | Link | Post Comment

As we indicated last week, it appears that Gold and Silver, Precious and other metals in general, may have put in an important bottom last week and as we suggested, there is a growing outside chance that we could be setting up a number of positive divergences and significant double or multiple bottom formations that could foment a surprising strong rally in the metals that could take us into years end and beyond. GM Sells off as Expected Good Morning: It seems as if our developing negative sentiment and comments on GM were well founded... Our only regret being, that we did not try to exit higher around $33.50 and actually sell the stock short at our suggested $32.75 for a quick trade. We're not quite ready to entirely write off GM at this point, as there is still and outside chance it could rally back some, this week. However, GM has put in a fairly reliable weekly reversal pattern, that 9 times out of 10 can be the death knell for a heavily traded Dow Component such as this. As we also suggested last week: This issue may have taken on a negative tone that might be hard to reverse, short of some kind leveraged buyout to take GM private, firing the board and CEO in the process and somehow instate Carlos Ghosn to take over the reins and perhaps instigate the merger plans that have been the theme of recent discussions. With a market capitalization of just $17 Billion, such a move could make sense, especially given the breakup, enterprise and intellectual property values that could be anywhere from $43 to $100 Billion, depending upon a number of influencing factors, including the proposed merger and perhaps the spin-off of certain divisions and other considerations. Market Sells Off Some and More On Thursday, MODAR elected to exit the majority of its long position a short time before Thursday afternoon's close, sensing a peaking out of most issues in the last hour trading which might have pre-empted a less than expected job creation report, which was our own view of the situation in any case and since the numbers came in weaker, we were very light on the buy side Friday and increased our shorter positions accordingly, however technical issues prevented us from maximizing on developing short side opportunities for most of Friday's session. Trade Well From the Desk of Savant