Patience

If you bought the first dip (which I didn't), have a tight stop.
If you're trading this craziness (which I'm not), be very cautious.

First of all, I think its funny that CNBS is still breathlessly awaiting the FOMC minutes. As if it can't be all thrown out the window in light of current events. Here's why the Japan situation only further assures QE to infinity:

1) Japan must have cash to rebuild.
2) Japan will, undoubtedly, sell some treasuries to raise cash. This selling increases downward pressure on treasury price and upward pressure on rates.
3) Japan will then convert the $US it receives into yen. This selling of $ increases the downward pressure on the USDX. This buying of yen helps support value of yen against issuance of new yen to fund reconstruction.
4) Already 70%+ of the overall treasury market, the Fed is left with no choice but to not only continue QE but actually increase it.


One day soon, that realization will grip the PM "markets" and prices will shoot higher again. That day is definitely not today. It may not come tomorrow or next week, either, but that day is, most assuredly, coming. Perhaps, though, this is already being reflected in the USDX. Never, ever, ever in the past could a catastrophe like Japan happen and the dollar not rally. It is the safe haven! Well, apparently, not anymore. Look at this chart. The USDX should be up 100 basis points today. Instead, its flat to down.

With all of the continued uncertainty in Japan and with the PMs having violated their first, primary level of support, I doubt that the selloff is over. I fully expect another wave down...perhaps overnight and into tomorrow and Thursday. I have not done any dip buying today and I don't plan to. However, for me, there are some very clear entry points on the charts so I am patiently awaiting the opportunity to buy, if it comes. First, take a look at silver. This is where I'll buy first because the fundos are so overwhelmingly strong that even the slightest bit of sentiment change will send it charging back very quickly.

Around $32.50 is a point where I will be looking to buy.
In gold, the area around 1370-75 looks to be a logical entry zone.

Interestingly, those levels may be reached at roughly the same moment in time. Sort of like 1320 and 26.50 were struck in late January.

Again, first and foremost, pray that Japan is spared what could be the worst environmental disaster in recent history. Those poor people have been through enough.
If you are trading, I'd set a stop below this mornings lows and be very diligent and cautious.

More later this afternoon. TF