About 3 weeks ago, I said to expect a year end rally. Well, we have definitely got the rally. If it were a normal time, I'd think this rally may simply go ahead without much interruption into the new year. But this is not a normal time. With the ongoing Washington drama playing out regarding the so-called fiscal cliff, the market is very much like a schizophrenic patient, which can be up and down with a heart beat. But until now, the market is amazingly holding up well in the very unstable time period. What I'm thinking may likely play out is that the deal may not come till the very last minute, just like last time the two parties' fight for the budget ceiling. If this comes true, very likely the market will plunge significantly next week, the last few days before the year end. This drastic drop of the stock market may become a warning sign for the Washington politicians, who will then be under a huge pressure to finally get the deal done. In other words, I still think the fiscal cliff deal will still be made but at the expense of a significant market correction. However, this kind of correction may be a great buying opportunity.
Just a quick word about gold. It has plunged for a few days quite dramatically. Now it has broken through its 200 day moving average around $1650. This usually mean further decline will ensue. I think it may come down to around $1600 and if it does, it will be a great buying opportunity. I'm excited for this kind of opportunity.
By the way, we are moving this weekend. So likely I won't have time to write anything over the weekend. Wish you all a very Merry Christmas!
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