Saturday, December 17. 9:30 a.m.
Gold’s big plunge of $160 an ounce over the last week or so blind-sided many, including me. But it looks like it’s now at least a good trading opportunity.
Gold is short-term oversold beneath its 30-day moving average, and the short-term technical indicators are in their oversold zones from which at least short-term rallies often begin.
Commodities May Be Providing Clues For Other Markets.
Commodities in general pretty much topped out with the stock market at the end of April, and in spite of numerous attempts to rally, have continued to trend down.
That may be a negative sign for global stock markets and their chances of recovering, since it indicates the commodity markets don’t expect an improvement in global economic strength that would increase demand for commodities.
Meanwhile, crude oil had been tracking very closely with the overall down-trending trading band of commodities in general. Oil prices also topped out in April (at $115 a barrel and analysts positive it was headed for $150).
And as noted, oil prices then also tracked with overall commodities in the subsequent downtrend. That is, until early October, when oil broke dramatically out of its trading band to the upside.
But it stalled in November, and with its plunge last week broke fractionally beneath its 50-day m.a., not by enough to necessarily be fatal, but by enough to wonder if it isn’t the beginning of something more serious, particularly since the downtrend in commodities in general remains intact.Are U.S. Bonds Really A Safe Place to Park Money Right Now?
The return of the eurozone debt crisis, plunging global stock markets outside of the U.S., and extreme volatility in the U.S. stock market, has had investors in a panic over the last few months to find a safe place to park money. The panic has been similar to, and now exceeds the panic in late 2008 near the end of that financial crisis, when U.S. treasury bonds were also spiked up by wild demand.
The heck with trying to make a return of any kind on their money. Just somewhere where one can expect to get a return of the money – eventually.
And if that means lending it to the U.S. government for ten years at 1.9% annual interest, or for 30 years at 2.9%, so be it.
But are they considering that the risk is just as high in bonds as in the stock market (and real estate or any other investment) if they don’t consider the timing?
Bond yields are now at record lows (bond prices at record highs), higher even than at the peak of the panic spike-up in late 2008.
Bonds plunged 21% in their subsequent correction back then, as investors bailed out in almost as much panic as when they bailed in, plunging bonds back to their long-term trendline of value. And then no one was interested in buying them when they were back to being fairly priced.
Why? Because the stock market had launched into its next bull market in early 2009. Why park money in bonds at such low yields when double-digit gains were available in stocks again?
Sure, it seems at times of high fear and risk in other markets that bond-holders won’t have to worry about the ups and downs of bond prices while they’re holding them. As long as they hold them until they mature 100% of their money will be safely returned.
At times like this it just doesn’t seem like circumstances will ever change, and its difficult to picture the stock market ever again seeming to be the place to be, when one would be kicking themselves for being locked into low yield bonds that have dropped double-digits in value when they’d rather be in stock funds making double digit gains, or stocks in a downtrend so evident that double digit gains could be made in inverse etf’s.
U.S. government bonds just seem so safe to those who don’t look at charts and realize the history of their up and downs when they become overbought or oversold.
Perhaps they should pay more attention to what is happening to bond-holders in Europe, not only in the bonds of Greece and Italy, but even in the previously strong bonds of Germany and France, and then look at the overbought condition of U.S. bonds on the charts at a time when like Europe, U.S. government debt is also at record levels.
To read my weekend newspaper column ‘The Truth About Election Years!’ Click here.
Subscribers to Street Smart Report: In addition to the charts and updates in the ‘premium content’ area of this blog this morning, there is an in-depth ‘ Markets Signals and Recommendations Update’ in the subscribers’ area of the Street Smart Report website from Wednesday evening. And the new issue of the newsletter will be out next Wednesday.Yesterday in the U.S. Market.
A somewhat positive day on very high volume, 1.8 billion shares traded on the NYSE, in typical high volume quadruple-witching options expirations, the additional volume due to the expirations being meaningless.
The Dow closed down 2 points, not measurable as a percentage. The S&P 500 closed up 0.3%. The NYSE Composite closed up 0.3%. The Nasdaq closed up 0.6%. The Nasdaq 100 closed up 0.5%. The Russell 2000 closed up 0.8%. The DJ Transportation Avg. closed up 1.5%. The DJ Utilities Avg closed down 0.2%.
Gold closed up $21 an ounce at $1,598 an ounce, but down a big $113 for the week.
Oil closed up $0.07 a barrel at $93.94
The U.S. dollar etf UUP closed down 0.3%.
The U.S. Treasury bond etf TLT closed up 1.2%.Yesterday in European Markets.
European markets gave up earlier gains to close down going into the weekend. The London FTSE closed down 0.3%. The German DAX closed down 0.5%. And France’s CAC closed down 0.9%.Global markets for the week.
The U.S. market closed up the last two days of the week, but it wasn’t near enough to overcome the big declines the first three days.
So the U.S. couldn’t get a 3rd straight positive week, and global markets outside of the U.S continue to mostly be in sustained downtrends.
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In the premium content area this morning: Our outlook and charts on the U.S. market short-term and intermediate-term.
Next week’s Economic Reports:
Next week will be a quite heavy week for potential market-moving economic reports, especially from Wednesday on, including new housing starts, existing home sales, another revision to 3rd quarter GDP, and Durable Goods Orders. To see the full list click here, and look at the left side of the page it takes you to.
To read my weekend newspaper column ‘The Truth About Election Years!’ Click here.
Subscribers to Street Smart Report: In addition to the charts and updates in the ‘premium content’ area of this blog this morning, there is an in-depth ‘ Markets Signals and Recommendations Update’ in the subscribers’ area of the Street Smart Report website from Wednesday evening. And the new issue of the newsletter will be out next Wednesday.
I’ll be back with the next regular blog post on Tuesday morning at 9:25 a.m. Have a great weekend!
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