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MV Weather Report: It's Raining Gold


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


Once again gold stole the spotlight as the yellow metal outperformed the sleepy stock market. Gold was up 1.58 % to 994.1 just off a high of 999.5, so close to breaking the psychologically important 1000 level.

Gold stocks were on fire today as investors chased Agnico Eagle Mines (AEM), Royal Gold (RGLD), Randgold (GOLD), and Goldcorp (GG) to almost six-month highs.

Gold is current scorching hot and it's starting to get a lot of attention in the mainstream media. I think it would be wise to see what Professor Lance Lewis had to say on today's Buzz and Banter.

"Just as a reminder, gold doesn't rally sharply like this (and especially not in conjunction with strong moves in both silver and the gold stocks) for "no reason." Nobody buys gold because they are "scared." It's not a comfort food or snuggly blanket. It's "gold." It's a currency and the ultimate reserve asset for central banks. Investors only buy gold for a couple reasons: fear of currency depreciation or inflation, which the former typically leads to as well for obvious reasons.

"The fact that the precious metals complex has rallied as sharply as it has over the past few days even as the dollar has basically gone nowhere is sending a very loud signal that the US dollar is about to have an accident, just as gold's rally in conjunction with the dollar's rally in January and February told you that the dollar would soon be peaking, which it did in early March. Likewise, on an even shorter term basis we saw similar action on Tuesday when despite the dollar's sharp rally gold closed higher. That Tuesday intraday peak in the dollar index has by no coincidence been the peak for the bounce this week too."

Surprisingly, the S&P 500 rallied into the close finishing the day up 0.85% to 1003. The index had been range bound for two days between 991 and 1000 before this afternoon's mysterious final hour break out.

Here is what Professor Branden Rife said on the current position of the S&P 500.

"Spot S&P resistance is at 1009-1013 (short term envelope there). Spot S&P support is at 996 & then the obvious 980 level. Those levels also happen to setup an interesting scenario for, dare I say it, a potential head & shoulders. Should we come down and test ~980 tomorrow --or Tuesday-- and then have a short term rubber band rally (standard oversold rally) back to ~1009-1013, it would form said pattern."

Tomorrow will be a big day, as this afternoon's rally was most likely traders covering shorts into the jobs number tomorrow morning. Before the bell at 8:30 am traders will be watching for the unemployement rate, expected to be 9.5% and then nonfarm payrolls which are supposed to come in at -225k.

Other than that market moving event, tomorrow should be pretty sleepy once the afternoon hits as traders ready themselves for a holiday weekend.

Have a great night!

Position in GDX

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