MARCH 5, 2008: Commodities led the way again. The Nasdaq was up 0.6% making this 2 days of gains in a row for the markets. It appears that the index is headed up to test its 21-day moving average at around 2300.
Commodities continued their bull market run with oil shooting up $5 to over $104 a barrel on supply shortages and flat Saudi production. The spike in crude also sent gold and silver up to new highs. Gold actually hit the illusive $1000 an ounce milestone on the June futures contract today. The sinking dollar hit all-time lows again.
Solar, steel, metals, gold/silver, and oil/gas stocks were strong while banks, financial, and insurance stocks were weak.
JA Solar vaulted 9%. Sunpower, First Solar, So. Peru Copper, Suntech, and Yamana Gold gained 5%. Research In Motion lost 3%.
Here are the top 10 leading groups: Fertilizers, Gold/Silver, Oil/Gas Producers, Farm Machinery, Ores, Steel, Solar Energy, Agricultural Ops, Oil/Gas Drillers, and Mining Machinery. We have to ask ourselves if this is really a stock market rally or a commodities rally? Is inflation really taking off globally evidenced by soaring food, energy, gold, and raw materials prices. I think so.
The stock market indexes have tested their down trending 50-day moving averages from an ‘overbought’ position and failed. IBD has now switched from ‘Market in a Confirmed Rally’ to ‘Rally Under Pressure.’ Gold, silver, grains, and oil are all moving higher in very definite up trends. We may be witnessing a ‘disconnect’ between commodities and stocks.
It’s best to stay on the sidelines in stock markets like this and not get sucked into ‘leaderless’ bear markets. Patience, Grasshopper! More at www.goldenticker.com
FEBRUARY 6, 2008: Markets fell again on comments from Philly Fed President Charles Plosser who said that inflation is still a problem. This put a damper on traders hopes for further rate cuts. The Nasdaq lost 1.3% and made a new 16 month closing low. After the bell Cisco warned of slowing profits which could send stocks lower tomorrow. In the past 3 days most of the gains from last weeks historic run have been wiped out. This is the nature of corrections and bear markets as the bulls still hold on to hopes of higher prices. Stimulus packages, multiple rate cuts, bail-outs, etc. may have brought us a ‘counter-trend’ rally but have failed to change the direction of the markets, which is decidedly down. Counter-trend rallies during corrections are by no means a signal to jump back in the markets. Bear market rallies can be sharp to the upside and come back down even faster. It’s best to wait for a ‘follow-through’ day before committing money to the long side of stocks. Don’t forget that the banking system is in serious trouble, the housing sector is in ‘melt-down’ mode and the consumer feeling the pinch of higher inflation and less access to credit. More info at www.goldenticker.com
Zimbabwe – What 1200% annual inflation can do to a country.
FEBRUARY 1, 2008: The Nasdaq rallied 1% today and 3.75% for the week on improving volume. Small caps have been the strongest and the S&P 600 is approaching its 50-day moving average (see chart). Yahoo vaulted 48% on take-over talks with Microsoft in its effort to compete with Google. Intuitive Surgical, one of our favorites of the last rally, gapped up 20% in heavy volume on good earnings. Google fell further below its 200-day line in heavy volume after missing their numbers. The street was expecting 70,000 new jobs but non-farm payroll numbers showed 17,000 jobs were lost – a surprise hit. This was the first drop in 4-years. Traders are betting that this weakness forces the Fed to cut interest rates further next month. Stimulus packages, multiple rate cuts, bail-outs, etc. have brought us a “counter-trend” rally but have failed to change the direction of the markets, which is decidedly down. Counter-trend rallies during corrections are by no means a signal to jump back in the markets. Bear market rallies can be sharp to the upside and come back down even faster. It’s best to wait for a ‘follow-through’ day before committing money to the long side of stocks. Don’t forget that the banking system is in serious trouble, the housing sector is in “melt-down” mode and the consumer feeling the pinch of higher inflation and less access to credit. More info at www.goldenticker.com
Jim Rogers tells the Financial Times that “Bernanke has been a disaster.” (video)
Things may be getting really scary on the global financial scene, but always remember to smile no matter what happens.
JANUARY 25, 2008: The nascent 2-day rally could not make it a third day as all 4 major indexes staged a ‘bearish reversal’ but pulled back in lighter volume. The Nasdaq started out strong but lost 1.5% and was down 0.6% for the week. It’s hard to believe that the Fed did a ’shock and awe’ surprise rate cut of 3/4% this week. This is an indication that we are in a severe correction. Credit concerns got the blame again today for the fall. The light volume today may be due to traders staying on the sidelines ahead of next week’s Fed meeting where they are widely expected to cut rates further. Transports, fertilizers, and solar stocks were strong today. Finance, retailers, and computer related stocks were weak. Some leaders were SPWR +6%, MTL +7%. Notable losers were YGE -5%, RIMM -4%, AAPL – 4%. This latest rally has the feel of ’short covering’ and is by no means a signal to jump back in the markets. Bear market rallies can be sharp to the upside and come back down even faster. It’s best to wait for a ‘follow-through’ day before committing money to the long side of stocks. More info at www.goldenticker.com
Rick Santelli has been dead on during this current financial crisis. In this video he
critisises Ben Bernanke’s comments that a lower dollar does not affect prices at home.
Peter Schiff explains that the Dow has been in a “bear market” since 2000 and has lost ground based in Euros, Swiss Francs, and most other currencies including gold. Your purchasing power is being slowly lost.
According to David Walker, Comptroller General of the United States, we are technically bankrupt and facing a financial “tsunami.” This is scary stuff folks.
It’s great to see predictions a year later and see who got it right. Peter Schiff once again calls it right and “the most smartest investor” Ben Stein gets it wrong again.
The Inevitable Collapse of the US Dollar – A “must see” video.
January 23, 2008Peter Schiff has been a voice of reason for many years and now many of his dire predictions are materializing.
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