This post was published earlier on ZYX Short Sell Change Alert
Yesterday gold broke a strong support at $1637 to $1641. From a fundamental perspective, it made sense because the auction is Spain had gone well.
Gold would have easily fallen to $1600 if it was not for the rumor of French downgrade. The rumor caused a rapid run up from $1632 to $1654. Many investors were shaken out of a good short position.
We were not shaken out for a number of reasons.
- We have 30 years of experience dealing with stock market rumors.
- The rumor did not meet the common sense test. France is heading into presidential elections this weekend. It would have been political suicide on the part of a rating agency to downgrade France right before the election. It is not to say that the rating agencies are not capable of committing suicide, but the probability of the rumor being true was slim.
- ZYX Change Method is designed to take emotion out of trading and not be shaken out of a good position for the most part on rumors.
