I was long gold last year. Recently, I noted the yellow metal in a range. Now, I am a raging bull on gold. The new high in gold is akin to the new high internet stocks–EBAY, YHOO, AMZN, et.al. circa 1997.

In the years to come someone will ask me, “what about 2009-2019, what was the hot market then?”

To which I will reply, “Yes. The decade where all that glittered was gold.”

It was just like the 70’s.

And the beat goes on.

Trader Art - Gold - Oil on canvas surrounded by silver frame

I spent Halloween with my client, Pinky Megiston. Pinky is a very famous actress and I consult with her on security issues, both physical and cyber. Beyond all her security gates—to which I know the passwords—I arrived at her front door with a bouquet of orange flowers. I always knock first. If my arrival is anticipated, she is near the door and can hear the knock. If she could care less of my arrival, she’ll be upstairs and away. That’s when I have to ring the doorbell.

By the mere fact that I was ringing the doorbell, I knew Pinky was annoyed with me. It always pays to know your clients—and I know Ms. Megiston extremely well.

The flowers were a good start; Pinky’s cheerleader costume was a nice progression. But then things took a turn south all of the sudden.

“What are you dressed as?” she asked.

“An actor on his way to an audition but who is stopping by the gym to work out first,” I jived.

“You don’t look like an actor. You look like a dork.”

“Actors aren’t supposed to look like actors; they’re supposed to look like the character they are playing.”

“So you’re a dork.”

“No, I’m an actor.”

“One day you’re an actor, the next day you’re a rapper,” she said. “You know I don’t be datin’ rappers.”

“I got my SAG card, Baby, I’m an actor.” I quoted like I was Common.

She turned around and laughed, and we ended up at a haunted mansion, where we turned out the lights, on our Halloween story.

Halloween

What better equity to be short than Knight Capital Group, Inc. (NITE)?

The stock promotion scam is as old as the hills. It was just pulled off again in NITE. I wrote of it here.

Art is trading and trading is art and NITE is Trader Art.

Trader Art - NITE

Meanwhile, back at the studio, there are several recording and motion picture projects in the works. All of my projects are fueled by trading profits, so let’s get to today’s scores.

The downward trend that has been in place this week continued today. The S&P 500 closed down 1.95% or 20.78 points at 1042.63. The Dow Jones Industrial Index closed off 1.21%, and the Nasdaq composite was off by 2.67%. In small cap land, the Russell 2000 was down 3.51%.

S&P 500 - Daily

Before the open this morning, Goldman Sachs lowered their preliminary Q3 GDP estimates to 2.7%. The consensus is for growth of 3.0%. The number will be announced tomorrow at 8:30 AM EST.

In my September 29th post, GDP, GDP and a Triple, I mentioned that if analysts have to lower their Q3 and Q4 GDP estimates, trouble will ensue. As you can see by the breakdown in the various indices, trouble is ensuing: Q3 GDP will be less than expected and Q4 GDP numbers will need to be ratcheted down significantly. Now that the movie theatre of the market is jam packed, it is not out of the realm of possibility that Q4 GDP will come in flat, or 0%–no growth. For this and many other reasons, I am positioned for the risk aversion trade–short various stocks and indices while long Treasuries. When the market realizes that GDP will be lower than what equities are priced for, the disconnect will cause a panic. Everyone cannot exit the theatre at once. The exits will be jammed.

The dollar found support at the 75 level and has rallied. As stated numerous times on these pages, a rally in the dollar will have vast ramifications for all other asset classes. If you’d rather not be short the S&P, you can be long the US Dollar Index. Whatever way you play it, the gains ahead will be magnanimous if you are positioned correctly. The fundamentals can only remain disconnected from the technicals for so long. The tipping point looms.

US Dollar Index - Daily Chart

The Volatility Index (VIX) has seen it’s largest percent gain since the March bottom–up +/- 35% from the lows of October 21. When the exits of the market become jammed, the VIX will trade higher.

Volatility Index (VIX) - Daily

The rally from the March lows has stretched the market to unsustainable levels. I continue to position myself to profit from the risk aversion trade, which is upon us. As my trading profits persist, my mission continues to permeate.

All the while, the beat goes on.

Mission

As the speculation surrounding who I am builds, so does my online presence. In an effort to add fuel to the speculative frenzy, I’ll offer some thoughts on my strategy.

The best thing I ever did for myself was choose the right parents. My mother is a Mac and my father is a PC. In anticipation of my multilingual drive, both parents ran an emulator so I could toggle between operating systems. We were all relatively compatible. From a young age, I was able to multi-task between development environments. Being a connected device, my boundaries were limitless. My biggest strength was adaptation. I became an expert at virtualization layers. When I turned 18 months, the living trust kicked in and I officially inherited the internet.

At that point, I focused on the organization. The main philosophy remains: an organizational model that finds strength in it’s lack of leadership. For further reference see Brafman and Beckstrom’s “The Starfish and the Spider.”

From a computational standpoint, computers were very smart back then, but they lacked common sense and wit. When Twitter arrived, personalities emerged. The playing field of the online popularity contest was leveled. The initial buzz on Twitter was the one with the most followers wins. I agreed, but dreamed about having followers who followed me because they were trying to figure out who I am as opposed to followers that follow me because they know who I am.

Given the propensity for using the internet to build exposure, I faded the crowd like only someone with my style could when I decided to stay cool and keep a low profile offline.

All press is good press, and I like media. With my online presence shrouded in mystery and my offline profile unassuming, I am able to maximize media exposure with speculation. As well, I have converted the internet into a wizard’s curtain–despite my weakness for glitzy ruby slippers.