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Fri, Aug 26, 2011, 2:41 PM EDT - U.S. Markets close in 1 hr 19 mins
According to Merriam-Webster's dictionary ambivalence is "simultaneous and contradictory attitudes or feelings toward an object, person, or action." For Dan Fitzpatrick, the President of StockMarketMentor.com, it's all about the ambivalence-trade right now in the stock market. "There's no real conviction one way or the other," the former trader and hedge fund manager says. "There's just this ball of confusion going on where most traders are waiting for the next catalyst."
And if you're looking to Federal Reserve Chairman Ben Bernanke's speech on Friday morning from Jackson Hole as a catalyst, make sure you're positioned to the downside. "I don't think that anything that Ben Bernanke says will be by itself, a reason to buy stocks," says Fitzpatrick, especially if we have rallied before hand. "The worst thing to happen would be to rally right into Friday and the Bernanke decision, because almost irrespective of what he says... the market would sell the news."
While labeling the current investment climate as a really difficult time, Fitzpatrick suggests investors "zoom in on a few stocks or sectors that you know and that you really like because you're probably going to get a really good buying opportunity.'' And he says the same will soon hold true for gold, specifically if it dips to $1600 or less.
"I am one of those guys that says the long-term trendline will support the price of gold," adding that this "hasn't been a blow-off top." Fitzpatrick calls himself a "buy and never sell gold guy" who agrees with Louise Yamada, well-known technical analyst who discussed gold on Breakout last week. Both think gold is headed significantly higher; up to $2,500/oz. next year then upwards of $5,000/oz. longer term.
Nothing ambivalent about that call!
Finally, a note from my co-host Jeff Macke updating his "Sell Today and Go Away" column from yesterday:
In yesterday's column I discussed selling off my trading positions, not to be confused with long-term holdings. In my case, I refer to "core holdings" as names I've held for more than a year with fundamental stories which remain unchanged. I still think the bottom was put in at 1,100 on the S&P 500. But with the market over 5% higher than that point, the "easy money" trade may be done. The point is not that I have gone perma-bearish. It's that I believe the next 10% (or more) move higher or lower in stocks is dependent on facts that cannot be "gamed" through traditional methods. The rules by which investments are valued are changing at a rate not seen since 2008. I'm not comfortable holding anything that I don't have a long-term belief in, then leaving it unattended for even a brief vacation. Not in this environment.
In terms of names discussed on Breakout previously, I'm still long McDonald's (MCD) and I have exited the Gold ETF (GLD). I have bought and sold the latter several times over the last few weeks and have emphasized the lack of conviction I had on it in terms of the short-term. I owned it "because it's going higher," as I said repeatedly. I don't know if gold will retrace to the purple trend-lines I've drawn on so many charts of late but I know that trendline is some 20% below where gold is trading at the moment.
Gold may move higher but I'd rather miss the move than wake up on Monday to find that the gains I'd been lucky (yes, lucky) enough to catch by re-entering the GLD in the 170's had disappeared while I was tanning my head.
I'm out of gold entirely, in McDonalds for the foreseeable future, and will update you on additional trading notions as they occur to me when I return. As always, this is NOT advice; simply full disclosure. My agenda is never hidden: I want to make and keep money while hopefully helping others do so for themselves.
Breakout is Yahoo! Finance's new daily all-out, roll-up-your-sleeves, dive-in, interactive investing show, offering fresh segments throughout the trading day. If you love making money, if you want to protect what you have, if you're passionate about understanding these crazy markets, you're in the right place. Welcome!
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On the upside, he believes the coming economic situation will look familiar.
Technical analyst Peter Lee sees gold heading into the $2,000s.
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