17 May 2012

Gold Daily and Silver Weekly Charts - Massive Short Covering Rally From Deeply Oversold

Facebook priced after the bell, 421 million shares @ $38 with a PE of 107 and a Price/Sales of 25.

This is "the largest internet IPO in history" (Ring Ring Ring).

It will start trading in the public markets, as opposed to dark pools and private deals, tomorrow after 11 am Eastern Time.  That will make share acquisition a bit problematic in Europe.

The wiseguys are geared up for a multiday pop and drop. The drop part may not arrive for a few weeks, and could mark a watershed event if it happens. More relies on Ben Bernanke than Mark Zuckerberg.  I think Facebook will place somewhere between Google and Groupon.  I would not buy at the $60 price I expect to see print tomorrow.  It will probably see sub 20 before it sees 100.

Shares for borrow and shorting may not show up in size until next week after the settlement for shares being sold tomorrow.  But I would not underestimate the 'special arrangements' that might be made for short selling into the close of trade on Friday.

Gold and silver soared today. I had intraday commentary in which I show the metrics I have been watching that showed gold at a major oversold condition that has marked at least short term bottoms for at least the last year.

So what next. Gold and silver must continue to diverge from stocks as a safe haven despite weaker economic news and troubles in Europe. I think that this is possible.

I thought the selling of the last three days was utterly artificial judging by the behaviour of the open interest which stayed steady and even rose! Gold and silver were passing from weak to strong hands in the face of blatant price manipulation designed to frighten the average investor.

Let's see how equities do tomorrow in the face of option expiration, and the uncertainty of Europe and the weekend.

Facebook may ring a bell. Let's hope that the nonsense in gold and silver is over at last.