We think that we are days away from a massive rally of 5% or more, or a correction of a larger magnitude. It will be interesting to see how it works out this time. In each case within the current rally, the dips have been bought, and bought good and hard. Each time the widely discussed correction was to occur, it never did because it was so expected that when all the shorts realized it wasn’t happening, they covered and created buying momentum. The real reason was simply that the rally had more to go before it was finished. Is that the case this time? We’ll find out soon, but the current market environment still feels a little like a one trick pony in that it always finds an excuse to melt up at the end of the day regardless of how the news flow was. It almost feels like certain parties make a deal every day like their a secret tree house club.
Do we dare approach the subject of GOLD? Here we go again headed straight for another bubble. Maybe it last another two weeks or six months, either way it will end and end badly just like all the rest. Let’s not forget, gold isn’t a real liquid market and when the unloading begins, gold bars will flying off the dock with nowhere to land. In the meantime, you can play this mania two ways, either buy holding one of the gold related funds like GLD or owning the gold mining or royalty companies. Tough call, because both will be under pressure when that market turns, but until then you may get more leverage from the gold stock side or the ETF GDX.
On the strange side is the fact that yields on treasuries continue to edge lower which is usually a signal of some sort. Mostly common sense, but in the absence of any we can use logic - If there is truly a long lasting economic recovery in the beginning stages, wouldn’t rates be edging up in anticipation of the fed coming off their zero interest rate policy at some point? Doesn’t the bond market usually sniff out a problem before the problem is widely known. We can’t be sure of another unforeseen financial event, but the yield curve is trying to say something.
Our indicators are pointing toward trend changes in many markets, but not all at once and at varying magnitude.
Why is Intel not participating in the latest rally? Hmmmmmmmm. Where are the telecoms? Did Oracles top line revenue grow? How is the advertising market? Is GE really worth 30% more than it was last month? Is the US Dollar really going down much farther? Is Gold really going to $1500 or more per ounce? Haven’t we read this book before?
Tags: bear market, broker, bull market, economy, fixed income, Gold, Investing stock market financial markets market timing, investment advisor, Precious Metals, stock market, stock picking