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MV Weather Report: Ray of Sunlight for Gold Bulls?


Rain or shine, we review the day's biggest stock stories.

The bears won the battle today, as stocks sold off on comments made by legendary investors Marc Faber and George Soros. Both predicted the bear-market rally would come to an end as companies get set to report first-quarter earnings.

Speaking of earnings: Alcoa (AA) just reported EPS of ($0.59) vs. ($0.57) on revenues of $4.15 billion, compared to estimates of $4.08 billion. The company said it sees near-term and long-term catalysts that will help to improve the aluminum industry. Investors seemed to like the news, sending the stock up $0.20 in after-hours trading, to $7.99 a share (as of 4: 20 p.m.).

The S&P 500 has now pulled back for 2 days in a row. Since the rally started on March 10, the index hasn't pulled back for 3 straight days. I believe this is something to watch for, as a 3-day pullback would be seen as a healthy correction, and could be bought by the bulls.

Tomorrow will be a big day. Investors will focus their attention on the FOMC minutes, to be released at 2:00 p.m. Professor Lance Lewis buzzed a preview:

"Just a heads up… the more I think about it, tomorrow's FOMC minutes could potentially be market moving, especially for the gold complex. Normally the FOMC minutes would be a snoozer, but given the historic government debt monetization program that was announced at last month's FOMC meeting, these minutes have the potential to be a little interesting and potentially market moving if they give any more details on just how much future monetization the Fed anticipates doing.

Should the Fed give us more of an explanation as to just how much government debt it plans on eventually monetizing tomorrow in these minutes (which I suspect it will, and it will be much more than what has already been announced), we could see the dollar get hit pretty hard. Meanwhile, the bond market would probably also rally, as would the equity market.

"However, just like the March FOMC, gold and gold stocks would potentially rally the most, and as I've suggested, the strong outperformance of the shares vs. the metal since the FOMC suggest the next rally attempt in gold will in fact be successful in pushing the metal to above the $1000 level."

If you believe Lewis's argument, you may want to consider purchasing some gold stocks as a way to capitalize. The easiest way to gain exposure to gold is by using the gold ETFs: GLD or GDX. For individual names, consider Goldcorp (GG), Agnico Eagle Mines (AEM) and Royal Gold (RGLD).

All right, Minyans - have a great night!
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No positions in stocks mentioned.

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