Markets Dodge a Bullet

March 17, 2008: The Dow shook off a 200pt sell-off this morning to close higher as stocks dodged a bullet after stocks fell hard in Asia. The Nasdaq fell 1.6% in heavy but lighter trade. The Fed stepped in before the markets opened with a 1/4pt cut and offered to lend money to the investment banks, something it has not done since the Great Depression. This all happened on the heels of the Bear Stearns collapse and the sale for only $2 a share to JP Morgan-Chase.

Financials got hammered again today with Lehman Bros. falling as much as 50% today but recovering to be down only 1/2 that. Former leading financial growth stock FC Stone (FCSX) fell 40% today. Other former leader Focus Media fell 27%.

Commodities got hit hard as traders took profits of sold assets to meet margin calls. Oil fell 5% and gold hit an all-time high of $1030 but fell to just above $1000. Silver and agriculture commodities also took some lumps. The dollar fell to an all-time low but recovered off those lows. The Yen was up 2% and the Swiss Franc advanced 1.3%.

Drugs and telecom stocks were strong, while banks, ores, gold/silver, and internet content stocks were weak.

If the Federal Reserve plans to bail out every major financial institution that’s in trouble this could well run into the trillions of dollars. With real estate prices collapsing 20% since this summer in southern California and sizable losses in other ‘bubble’ areas like Florida, Nevada, Arizona, etc., this is threatening to take down the financial system as we know it.

The Fed is also signaling that it will do what ever it takes and will add more liquidity if needed. Will this ‘tsunami of liquidity’ be enough to help the $11 trillion US mortgage market? Can it save scores of shaky banks, brokerages and hedge-funds like Carlyle Capital ($21 billion fund who used 32:1 leverage!) from imploding?

JIM ROGERS – “CENTRAL BANK GOING INTO THE LANDLORD BUSINESS”

Dollar Collapse Continues

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

CNN: The Next Great Depression Is On It’s Way!

WALL ST. RALLIES ON MORE RATE CUT HOPES

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)