Sunday, May 22, 2005

A New Week

Last week was particularly hard on our portfolios with the markets up about 3% across the board. We don't believe the bulls have another week in them like last week but it is the last week of the month and next Monday is Memorial Day so there is a natural lift possible.

There are a few news items for the week, existing housing sales, new home sales, durable goods, a revised GDP for first quarter, and Michigan consumer sentiment. We will see how these can move the market.

Last Friday's options expiration delivered unexpectedly low volume, one of the lowest volume days of the year on the NYSE. Last week was definitely up but it was on fairly low volume. The 5 day upside volume, the indicator we like for pinpointing short term tops made a high over 1 billion shares. That's a number not often seen, especially on generally low market volume. We think the volume speaks volumes about the rally.

As far as gold goes, Friday was a good day for the mining stocks as the HUI declined much less than the metal. And, Friday's commitment of traders report was solidly bullish the metals with another subsantial drop in the net short position of commercials. Three weeks ago, the commercials were net short a phenomenal 169K contracts and this week they had reduced that position to less than 80K. This is on about 275K contracts outstanding.

I don't know how much longer we can wait for an opportunity in gold so we are going to be buying $5,000 of the BGEIX fund in the Cash account on Monday. We will keep some powder dry in case we get better prices.

Dow Industrials: 10471.91 -21.28

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