Buzz of the Street: Dip Buyers Keep Bulls Alive
Some of this week's most insightful and timely vibes.
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Monday, November 9, 2009
Respecting the Bull
While the dip buyers may be losing some vigor the bull is still very much alive. The 7% correction, the shift in sentiment and breach of the 50-day moving average seemed to be setting the stage for a more substantial pullback. But once again, enough good news, and possibly too much bearish sentiment, brought the buyers back to the table. This morning's higher opening should push the S&P 500 Index back above the 1080 which will now be support.
The chart has in place another higher low keeping the uptrend intact. So while internals might be weakening it appears that is was premature in calling any definitive turn in the market. The underlying tone may have indeed changed but the overall song remains the same.
Very bullish open as SPX gets back above the March trendline. Heads up on the SPX 10/26 gap close at 1084.03. EUR is not making new daily highs as we approach that target. It's all a bit too frantic this early on, so watch your step.
Support is now overnight highs for NQ (NDX futures) at 1748. There is an added strong confluence of resistance for ES (SPX futures) at 1086/1087.
Tuesday, November 10, 2009
Is Bearish Dollar really Crowded?
Below is an email I received from Minyan Megan F. I wanted to share it as I think she makes excellent points and I couldn't agree more.
Whenever I hear retail talking about how everyone is so bearish on the USD, no one reminds them about these monster 3 year $40B US treasury auctions that draw $130 bln of bids. Huge investors and central banks, far from being bearish, are in a bidding war to accept 1.4% to roll USD. Put another way, large investors only want a total of 4% return after 3 years for holding a currency that has fallen 7.5% this year. Hardly bearish, more like screaming dollar bullish.
The world will truly be bearish on the USD when the US has to pay a premium for perceptions of future dollar weakness in order to attract bidders.
So India bought $6.7B of gold. I would wager they put in for multiples of that purchase in this 3 year auction. The world is hardly leaning against the USD, just the opposite.
Editor's note: Lance has positions in gold, gold stocks
Eye on Silver
It should come as no surprise to anyone who trades or who has traded silver that it is much more volatile than gold. In fact, since yesterday's highs in the iShares Silver Trust (SLV) and the SPDR Gold Shares (GLD), the SLV has had a 3% correction whereas the GLD has had a sparse 1.2% pullback. Something we are going to have to get accustomed to in order to get the benefit of the approaching "silver catch-up" rally.
My near- and intermediate-term work continues to warn me to expect a powerful upmove in silver prices. The trick for me will be to "be there" when it arrives-- and to survive the whipsaws. Spot silver prices are set up technically for upside acceleration towards a test of its long-term resistance line, now at $20.10, which if hurdled should unleash a powerful catch-up advance that propels silver towards its 1980 area near $50.00.
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