I'll cut 3 government agencies....

As I sat at dinner with my dad last night I was disappointed to realize that I had forgotten to record the republican debate on CNBC. I understand that it might seem nerdy to be so entertained by these debates, but honestly, after what happened last night how can you not. I came back to see the already famous Rick Perry blemish where he vowed to eliminate 3 government agencies.... but could only remember two. O well, 66% is passing on most grade scales I am familiar with.

The first instinct we likely all have is "Perry is done"; its over. It seems hard for me to keep a straight face and say otherwise. But let us not forget, that there was a Texas politician who spent 8 years in the White house, with multiple blunders that can compete with the Perry brain freeze. "The legislature's job is to write law. It is the executive branch's job to interpret law". This George W. Bush comment in 2000 puts more doubt in one's mind  about his ability to pass government 101 than Perry's blunder might. Perry is not as affable as Bush, and doesn't have the political minds around him or family history that Bush did. Still, to say "he's done" given just how many painful forehead slapping moments we went through with Bush, might be premature.

I made my short term bearish call on gold 2 days ago when we were trading around 1790. As I write, we are 35 dollars lower, and made a low about 20 dollars lower than that during today's session. My technical expert friend told me this afternoon that we needed to hold above 1761 to see upside. Having climbed rather impressively from 1737 to 1763 during the session, we ended up settling 1759.6; right near his number. While letting your shorts run has been successful for the last few days, I would want to cover any shorts going into tomorrow's trading session. It is not that I think we are going higher. In fact I think we probably have some more room to the downside. But I have found that trying to trade on Fridays with expectation of similar market moves from the week is a solid losing formula. Volume tends to be lighter, and it is too easy to get stopped out in what generally becomes a rather range bound market. Flatten out, see how the day plays out, and see what the market tells you as the day goes on.

In a brief moment of speculation, I have to think that some rather large player may have been liquidating the last few days. The post settlement 20 dollar drop from two days ago still does not seem to have any fundamental basis. In today's action, we saw gold collapse violently to the downside, dropping over 50 dollars peak to trough on a day where the equity markets held in positive territory. Lessons to be taken? Whether or not it makes sense, moves like the 20 dollar drop the other day in an otherwise quiet environment have to serve as warning signals. Trying to "be right" about the market is a losing concept in such scenarios. Also, the fact that puts were catching a bid as gold approached new medium term highs (puts were catching a better bid than calls as we approached 1800 for the first time in 2 months) was a tip that it was better to place bets to the downside.