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Buzz Bits: Dow, Nasdaq Climb

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Answers I Really Wanna Know... - Todd Harrison - 2:43 PM

  • Is the market acting "great" in the face of an 8% smack down in RIMM?

  • Or is this simply a "churn" under the fearsome foursome resistance of S&P 1450, GS 210, BKX 113.50 and HGX 218?

  • Isn't it awesome to see the savvy and sweet Stephanie Pomboy chime in with her always enlightening observations?

  • And aren't her thoughts consistent with what we noodled late last year?

  • Do you buy (sell) when you can rather when you have to?

  • Is the pink hue in the piggies (BKX) a sign of things to come into the close?

  • The car's here? (Yes, so with this, I'm off like a prom dress...)


R.P.

position in spx



I heard it here first... - Sally Limantour - 2:32 PM

The Global Financial Stability Report comes out twice a year and its 133 page April '07 edition is out. For a two page synopsis you can read this.

Basically I thought I was reading posts from MV. The IMF publishes this and stresses the concerns that have been mentioned here for months. The usual suspects – concern over deterioration in credit quality in the US subprime market, low interest rates spurring private equity buyouts, a rapid rise in capital flows to emerging markets which is all leading to increased vulnerability to "volatility shocks," This may be amplified given greater linkages across products and markets. Do you feel better now that they are seeing this too?

Lance's post on gold is right up my alley. We continue to see Asian banks buying gold as a way to diversify out of US dollars and Euros. I am not big into the conspiracy theories around gold, but I know good buying when I see it. This is the real thing.

Copper, while lower today has been on a tear. It was up 25% as China increases it imports. Copper rose to a seven month high as dwindling stocks and strong demand are leading to a case where the demand for copper is so strong that rising prices will do little to curb imports.

Positions in gold stocks, gold futures, copper


More and more of us are talking... - John Succo - 1:57 PM

It's not just me now. Some of the best traders I talk to are noticing the same thing: stocks are heavy and illiquid, yet indexes are well bid and liquid.

The bids I see in index ETF's are ridiculous for anyone trying to actually buy them intelligently (at the best price). I routinely (like today) am seeing massive bids advertised in the ETF as if the "buyer" wanted to buy them at the worst price possible. In other words, to drive the market up.

Eventually the weak stocks are dragged up kicking and screaming by index arbs.

I can only speculate as to why this is happening. Either "buyers" want overall exposure to the U.S. stock market and they do not care what price they pay, or some non-economic buyer is showing massive bids for some other reason.

As deflationary forces build and central banks run out of inflationary bullets, I can at least wonder at those charged with stimulating sluggish economies understand that if stock prices go down the game is up.


The Gold Show - Lance Lewis - 12:35 PM

I'm not sure it can be any more obvious than it already is that we're facing a stagflationary quagmire, and that's uber bullish for gold. Even the Fed inadvertently described a stagflationary environment yesterday in its minutes when it cited risks to both growth and inflation.

Still, it's hard to know in advance what exactly will be the catalyst for upside acceleration in the gold complex, but it's coming soon in my opinion. As a result, one has to simply be long and patient at this point I think.

Note the dollar index is testing its December 2006 low as we speak and is now just a couple points away from "the" low back December of 2004 at the 80-level. Upon a breach of that low, we'll be looking at a "different world" with respect to exchange rates, since this level on the dollar index has been support for the last 25 years (other than a minor breach down to 78ish in 1992...see the chart here). I'd also note that that trade-weighted dollar has already made a new multiyear low as of last week thanks to strength in the Asian currencies (see the chart here), except for the yen of course.

Once we're past the G7 this weekend and the G7 fails to express disapproval at the dollar's decline, the market will likely lean on the dollar even more next week. And based on recent comments from the US treasury and out of Europe, the G7 won't express any disapproval at the dollar's decline. In fact, if one listens closely to what has been said of late, the US actually wants a weaker dollar, and the rest of the world isn't complaining either. That's very unlike December of 2004, when the dollar index was last at this juncture, and Europe was crying like a baby about it.

Upon seeing the dollar break to historic lows, it's likely at that point that the gold complex is likely to see some upside acceleration, but that's just a guess on my part. It's a bull market, and one never really knows what will be the psychological catalyst for upside acceleration. But once gold rallies through its downtrend (see the chart of GLD here) and the HUI through its 363 resistance (see the chart here), we're likely to see new highs in both fairly quickly.

Importantly, one needs to be there before such a move begins, or you are likely to be left behind, just as many juniors like Golden Star (GSS) have already left people behind.

Positions in gold shares and GDX calls

No positions in stocks mentioned.

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