Still Surviving

by JDH on November 28, 2009

I am pleased to report that I survived my weekend with my boys; we had a great time, in fact. The most fun part of the weekend was on Sunday at around noon, as we walked into the Air Canada Centre in Toronto to watch the Raptors game. As I walked in my cellphone rang; it was a 1-800 number, so assuming it was someone trying to sell me something, I ignored it. About an hour later I got a text message from my wife saying “don’t worry, I’ve managed to re-activate the credit card.”

Apparently my wife’s weekend long shopping spree in Toronto attracted the attention of our credit card’s fraud detection department, curious as to why someone who lives and hour and a half outside of Toronto has managed to hit 20 different stores in Toronto over a 48 hour period, and spend what is, for us, a lot of money. They assumed our card had been stolen.

The irony is that my wife had no problem buying a fancy leather jacket, skirts, another jacket, numerous pairs of shoes, and a few Christmas presents for our boys. What finally pushed them over the edge was when she paid a visit to my clothing guy to pick me up a tube of shoe polish. The shoe polish was the last straw, and our card was declined. So there was my wife, in the men’s clothing and shoe store, on the phone with Visa, trying to remember my mother’s maiden name, and trying to remember how much money we have in the bank, and in RRSPs, and so on. Finally she told them to stop asking so many stupid questions and just re-activate the card, which they did.

We weren’t over our credit limit. There was lots of limit room to spare. I pay my balance in full every month, and other than a small mortgage I have no debt, so that wasn’t the problem. The problem was the store to store purchases.

On the one hand, I’m glad that my bank is keeping an eye out for fraudulent activity. That’s a good thing. I just wish they could come up with a better method for verifying our identity other than playing 50 questions. I guess next time my phone rings with a 1-800 number on a Sunday afternoon, I’ll answer it.

Here’s the thing: the bank was very diligent in watching for fraudulent activity on my credit card, and yet most banks have eagerly lent money to unqualified borrowers for the last few years, up until the credit implosion last year. Not allowing me to buy a $10 tube of shoe polish is one thing; allowing millions of unqualified borrowers to purchase over priced homes, thus precipitating the crash, is yet another.

Well, it could be worse. I guess I could be invested in Dubai. Must be scary for them to be reading headlines like Dubai in deep water as ripples from debt crisis spread. Or I could be Tiger Woods.

Enough chit chat. Where are we at? We are at the same place we were at last week, with the markets looking gassed.


The Dow lost 1.5% on a short trading day on Friday, and it could have been worse. I gradual drop to the 10,000 level would repeat the monthly pattern over the last few months, so a further drop over the coming weeks would be entirely expected. And yes, I realize that the channel I have drawn on the chart above is not useful for trading purposes. You can’t just buy at the bottom and sell at the top of the channel, because this pattern won’t repeat itself forever. I present it merely to illustrate the fact that the odds indicate a drop from here is the most likely short term outcome.


The above chart (you can see the full version at obviously shows a gold breakout. No surprise there. The real question is how sustainable is the rise? By the close of trade on Wednesday, prior to the American Thanksgiving Day holiday, the RSI on gold was up over 83, which is an historically very high level.


The last time the RSI was this high was in November, 2007, when gold was trading at about $825 an ounce. Gold then traded in a range from $775 to $825 until the beginning of January, 2008, when it promptly ran to over $1,000 by early March, 2008.

My prediction is that gold has temporarily run out of steam, and will probably consolidate over the month of December. A drop back into the $1,050 range would not surprise in the least. (A drop much below $1,000 would surprise me).

Therefore my plan continues as stated previously: I will remain 85% in cash in anticipation of further market weakness, and in December, or January, or whenever I will deploy that cash on weak days, in the hopes of catching the next up wave. The risk, in my mind, is too high to be fully invested, or even half invested, at this time.

Thanks for reading, and my apologies for the delay in posting this week (my home internet crashed during a power failure, so I had to resort to a trip to the office to get connected). See you next week.