When Equities Struggle, Go Long Gold?
An examination of both of these conditions shows a performance discrepancy. When taking a long position from 9:00 until 15:00, an excessive early morning loss in the spiders AND an advancing three-hour session in this fund, was the more profitable category.
The column chart signifies the condition with an excessive loss in the spiders along with an early morning advance in GLD. When these two conditions were present, it gave the knowledgeable investor 10 advances against one decline, resulting in $7.58 in profits. This analysis has one obvious shortcoming; most of these trading opportunities came in the summer of 2011.
note! The recent (Jun 21, 2012) meltdown in equities (SPY -$3.04) came after the opening bell; therefore, it does not qualify for this system. An investment in precious metals was not able to defray your loss, as GLD slid $3.95. (GLD -$3.95)
conclusion: Before putting your money on the line, always ask more questions about the previous trading conditions. Anyone who craves definitive answers is in the wrong business, as investors the best we can do is trade with the percentages. Anyone who seeks answers to questions, examines the numbers and is willing to modify his or her views is going to sharpen their analytical skills and increase their knowledge. And, ultimately it is knowledge that is the gateway to long-term trading mastery over the markets.
Dr Anthony Trogone can be contacted by email at Dr Anthony Trogone