Downside Picture

Jean-Claude: You can't just run around tearing down Paris.
Bryan Mills: Jean-Claude, I'll tear down the Eiffel Tower if I have to!
--Taken

My sense is that the chances of a major wipeout our growing. Domestic markets today down 4% with some European markets (e.g., DAX down 6%).

Europe may be coming apart right here. The size of the debt problem is immense and it seems doubtful that Germany will shoulder the entire burden. Many euro banks down 10% today. US markets are a stone's throw from contagion.

Gold closed at another record high of $1827/oz. Investors are connecting the dots as the two options among sovereigns are boiling down to a) default, b) print money. The price of gold suggest folks doing the math are choosing b).

I've been rebuilding my short SPX position over the past few days and want to do more, but the volatility suggests prudence in spreading things out. Will likely use price to my advantage on rallies. The SPX seems to have room lower toward 1025ish.

Have once more started a GLD position although very hard to get large right here given the moonshot in price.

Frankly, silver looks more interesting to me right here compared to gold. Silver has not gone ballistic over the past two weeks like gold. Moreover, the charts suggest a bullish cup-and-handle pattern nearing completion.

A decisive move above 41 would be bullish.

positions in SPX, GLD, SLV