Good lesson in the difference between throwing in the towel, as I did with gold, and dealing with a bad day.
The day was awful and the losses incurred were very painful but the chart candle for the DOW stopped at the support line. So my nerve held. That doesn't mean that tomorrow the price may not break support and I will have to change my mind. But for the time being I'm holding steady.
Mood of the market
What does all this say about the mood of the market? First, lets have a look at this gold price dive. Normally when something like that happens the newsfeeds are full of "wise after the event" commentary. Not today. Everyone is keeping their council. All they can say is that there was strong selling pressure, there were big liquidations and bottom feeders are not out in force. Doah?
My best guess is that too much gold was being held by buyers who'd bought on margin and were unable to hold on as prices weakened. It was their panic that caused the collapse. Lets hope that the banks that lent them the money are not now looking at new holes in their balance sheets.
Bottom line. Nobody claims to know what went wrong.
The stock market was hit by the Boston news but not very badly. Why?
- Low body count?
- Well managed news releases?
- Unstoppable market sentiment?
Just one last little snippet. Have a look at the oil price chart. It does not inspire confidence in the future for the world economy. Sell in May? Almost certainly.