Thursday, May 6, 2010

Turbulent Tuesday Followed by TURBULENT Thursday

Beyond all the attention paid to the meltdown in the stock market today, what I am focusing on was the rally in the silver and platinum complex metal down, joining gold.
That they rallied to close up when stocks closed down big-time is impressive.

SLV's 200 day sma is 16.53; its 2008 high was 16.61 in August. Before that one has to go back probably to 1980 for such prices. Should silver hold up for another week or two, it will then have achieved what gold achieved last year. As for gold, no surprise in the melt-up. What this blog has consistently said is proving out. Gold stocks such as GG, NEM and ABX underperformed the metal. Gold mining stocks move more with the general stock market than with the metal. I exited my ABX with a modest profit. Am getting elemental here. Meanwhile, gold ETFs people really trust, such as the Canadian ones such as GTU and PHYS, traded strongly all day. No "fat fingers" depressing those prices.

Meanwhile, Treasuries followed their long period of hate with immense moves up in price, fueled by short-covering and whatever reasons one wants to provide.

As this is written, Asian stock markets are down 1-3%. In the real world, Gallup's ongoing polling is not showing a lot of employment growth and it shows absolutely no pick-up in consumer spending. This is consistent with my personal limited sample size. I'm not raising my sights above Dollar Tree, Ross Stores or TJX. Because of European exposure, MCD is a bit suspect, though simply as an income play it can be held given declining Treasury yields.

This blog has been warning for some time that the only financial assets one should own were those one was willing to hold during difficult times. That advice continues. There is much more downside potential in the markets, including new lows in the stock averages.

Copyright (C) Long Lake LLC 2010

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