Sunday, July 31, 2005

GDP and Chicago Purchasing Managers

Happy Monday to you. Here, it is still Sunday evening and we are trying to remember what happened on Friday so we could report it. Now I remember, the GDP report came out which didn't have much impact on the market as it basically came in line with estimates. (I still think the deflator is too low "thereby", Erick, allowing an inflated GDP, such plays on words you can only get here at the Update.)

The two numbers that the market did concern itself with were the oil price rallying over $60 and the strong read from the Chicago Purchasing Managers. The bond market recoiled on that news and dropped hard fully retracing, and some more, the rally the day before (Thursday). So far, the bond market has held the lows set a few weeks back and we still think there will be a tradable low here, even though we don't really concentrate on the bonds for investments here at the Update. We still think the early June high will hold but as of tonight that is about 5% above where we are now and allows for a small gain.

Our favorite silver mining stock (which we own), PAAS, announced earnings on Friday and gave the stock a lift during the day but it didn't hold much of it. PAAS popped for about 5% during the day and closed up about 1.5%, still a nice day. PAAS has had a very nice run here in the past ten days from 14.50 to Friday's near 16.25. We have traded the stock three times and probably should have bailed out during the rally on Friday--some of us have to work. But, the mining stocks have done well since our entry point and we have been patiently waiting for some upside breakout which has not materialized to date. Meanwhile the traders' commitments were not very convincing last week either. We are near a point where we will pull the trigger and get out but for now we feel compelled to stay with the trade.

Monday is the first of the month again and we know that some strength may appear but we are again looking to the jobs report out on Friday to shed some light on the near term direction of the market. Our position is still that the market will be considerably lower going into October.

Happy Trading.

Dow Industrials: 10,640.91 -64.64
BGEIX: 10.90

Thursday, July 28, 2005

Market Pushing Higher Again

The stock market continues in its tantalizing ways, makes you want to stay in and see what happens tomorrow. That strategy hasn't been too bad so far but we want to be cautious for an abrupt turn. The complacency in the market is almost eerie. Here we are at new four years highs in several indexes and all time highs in others. Why should anyone worry about the stock market going down? At the moment, we are just waiting. The strength in the market is there but it is just not convincing.

Gold and silver were strong today but not the HUI which is troublesome. We are concerned that the upside break is not coming. Gold has its own resistance about $30 above here and seems to have a lid on it over the past several months. Silver is a dollar off its highs from last fall and rallied strongly today. We had suggested buying silver below $7 which is where it was for several trading days in July. We are looking for a good run here but are getting a little impatient even though we have good profits in our mining stocks.

We have recently mentioned that the bond market seems to be trying to form a tradable low and today it made a fairly strong move up. The Treasury market would be the only one we would suggest.

Oil made a move over $60 today after reports of a refinery fire in Louisiana. Doesn't is seem difficult to you to believe that all four of these markets were up today? Oh well I guess we wait another day.

Have a great trading day and we'll see you back here late Sunday night.

Dow Industrials: 10705.55 +68.46
BGEIX: 10.92

Wednesday, July 27, 2005

Durable Goods Surprise

This morning the durable goods orders showed some surprising strength, coming it at +1.4%, given expectations of a drop of 0.5%. That news didn't do to much to the market even though the Dow did pop about 30 at the open and then faded; but, by the end of the day, the market managed a solid gain. The apparent reason given was the positive undertones in the Fed's Beige Book saying the economy is strong and inflation is tame. The Dow managed to climb above that 10,600 again and, as CNN put it, the SP500 eked out a new four year high--powerful talk. Good selling opportunities around now.

Not much else to report today so I'll pretend it's Wednesday... The bond market seems to be searching for a tradable bottom and the Treasuries may try to rally back to the early June top we have mentioned here several times. I think the difference this time will be that housing will not respond so strongly to another drop in mortgage rates like it usually does. That would be a significant clue for us to know that the housing market and therefore the economy is ready for a correction.

The precious metals were trading opposite the dollar today, as they should. This morning the dollar started out rather strong and ended up weaker, also as it should given the tongue lashing it got from the Chinese this past week. The Chinese apparently entered the currency markets to stabalize their currency as they said they would like to keep it near its new target. Back to the precious metals, they managed to find some footing and rallied a bit into the close.

As mentioned in the past week, we are getting cautious the mining stocks even though there looks to be a pretty good rally coming in them near term. We are going to sell into this next rally if it is sharp enough. There should still be time to hold.

Dow Industrials: 10,637.09 +57.32
BGEIX: 10.96

Tuesday, July 26, 2005

AMZN Jumps on Higher Revenue

After the market closed, AMZN reported earnings that were basically in line with expectations but I thought one line was worth mentioning: AMZN's 2nd quarter profit fell 32% due to an income tax expense. Hey, what do you know, income tax is an expense. In reality, the stock pushed up 10% after the news, in fairly lively trading.

The market demonstrated the ability to crawl through another day today although there was a little more strength in the broad market today compared to yesterday's sleeper.

The biggest action today was right here on the blog with Erick, our prolific reader, making a comment. You all should read his comments and make sure you leave a comment of your own. Besides the fact that I had a good time reading it, I appreciate the comments on the media's spin on the unions. Indeed the media is bullish. I also have to agree about taking profits except for one thing--when the market drops this time we should see a pretty good drop and covering shorts on the way down will not make you happy either.

Both the stock market and the bond market were quiet today and we will be too. It is near the end of another month and we are trying to be patient with our next round of selling. The market should be rolling over here and looking at the trading over the past week, it seems to be. More tomorrow... We are looking at the QQQQ's around this 39 mark and are starting to get interested again--for a move down, believe it or not.

Dow Industrials: 10,579.77 -16.71
BGEIX: 10.94

Monday, July 25, 2005

Is it Yaun or Yawn?

Today's market was indeed a sleeper with light volume and a slow bleed into the close. What we can be excited about is that we are back into the 10,500's. Not. The Dow drooped to just under the 10,600 line with no particular conviction one way or the other today.

The existing home sales set another record today which begs the question "When will this housing boom be over?" The bond market did drop a little today but again with no real conviction that the Chinese might take the punch bowl away. Well, at least until they do, we should stay at the party, the bold bulls must be thinking.

We mentioned our near term angst over the precious metals market but didn't make a firm decision on what to do. We have some nice profits from this recent run up and we might want to be especially careful here. It looks as though the mining stocks are following somewhat to the stock market is doing, they are stocks after all. If you own any of them, you may want to be watching them, too. We like to say the mining stocks move before the metals and today we say a bit of a down draft in the stocks without much movement in the metals. It just makes you sit up and take note, which we are.

The big news today, other than housing, was the mass exodus from the AFL-CIO. This might mean something to the markets but as of now, I can't really know what that might be. Any thoughts out there??? Leave a comment for us.

Dow Industrials: 10596.48 -54.70
BGEIX: 11.11

Sunday, July 24, 2005

The Last Week of July

Here we are again near the end of another month and the market has continued to hold that 10,500 number we have discussed so many times. The longer the market holds, the longer the complacent stay complacent. We still believe in the market being overbought and destined for a fall into the fall.

Last week's announcement by the Chinese to revalue their currency against a basket of currencies should be taken to be an uncertainty in today's markets. Not at the corner of Broad and Wall. There we decided to have one down day to take care of some selling. After all, every dip is a buying opportunity (sarcasm). We see the futures are indeed up this evening and there are a barrelful of earnings coming out this week to entice buyers.

Moving over to the precious metals, we have become a little troubled by their performance lately. The commitment of traders report showed a modest improvement (slightly more bullish) but the trading in the mining stocks has become a little labored. We don't like to see this at this point in the cycle and are becoming more and more inclined to leaning out of our positions. We haven't made up our minds as of tonight but we need to see some upside pretty soon to be fully convinced we are going up.

While we have done fairly well in BGEIX, that doesn't mean we can just sit back and watch it go down. We want to protect our principal in this market including our precious metals/mining positions. We continue to hold for now but we will let you know what we think as the next move develops.

Dow Industrials: 10651.18 +23.41
BGEIX: 11.19

Thursday, July 21, 2005

China Sets the Stage

The market had a bit of a shock this morning as China announced it was finally revaluing its currency the yuan, or renminbi. The market initially thought this was a great thing until the announcement of another London bombing. Then the media picked that up as we watched the futures drop. The news out of China is something we have mentioned several times because of the hard shot it is against the US Dollar, implying all sorts of things.

Generally these things take quite a while to filter through the financial system, although not always because currency revaluations by the market can be swift; but, we think this is significant news and plays into our continuing belief that the stock market is going to be a casualty of the inevitable unwinding of the huge credit expansion.

The first thing that came to my mind on the subject when hearing the news was that we buy a lot of goods from China and, guess what, the price just went up. That is called inflation. And, the bond market kind of "got it" today as it traded down rather hard, meaning interest rates moved up. We have "pegged" (I had to) our turning point in the credit expansion to the June jobs report day when the bond market had its big reversal and tonight that date is looking better and better.

The second thing is "What does that imply for the economy?" We come back to the almighty ATM that many people live in--oh, yes, their houses--which have allowed them to spend more than they earn to buy those goods from China. You never know what is going to push the housing market over, but whenever it rolls over, the economy will follow suit.

I know you've probably heard about this news since it was out all day long today but it is something to take seriously. Even though it may not bring immediate reactions either in the stock market or the economy, this news has the potential to affect many areas of the global economy.

The Chinese have just given a little shove to push the dollar aside and give more credibility to other currencies when valuing their own. The Asians are the ones who have been supporting the US Debt binge, both private and public debt. Again I can't stress enough the importance of this news today. We'll continue to watch the bond market to see what it thinks of this development in the near term. Today, it viewed it as negative.

The other news is earnings news and the big one tonight was GOOG, one of the stocks on our watch list for shorting opportunities. GOOG has pushed above the $300 mark and the new targets have been raised to $350. Well, tonight it disappointed the market with its earnings news, which really wasn't too bad, and dropped about 6% after hours. This could have an influence on the market on Friday so that is also something to watch.

The stock market looks very tired of rallying. Be careful here.

Meanwhile, the precious metals are again mounting an unnoticed rally since we mentioned them as buying opportunities over the past week. They were some of the beneficiaries of the yuan revalution news due to the implications on the dollar. The last two days have been pretty good but there needs to be a strong up move fairly soon to confirm our bullishness in this sector. Friday we get another installment of the commitment of traders and those numbers have recently improved so we will see if they can improve again this week. Unfortunately, they are measured on Tuesday evening which was before the move of the last two days.

Have a good weekend and we'll see you back here late Sunday evening.

Dow Industrials: 10,627.77 -61.38
BGEIX: 11.15

Wednesday, July 20, 2005

Saw See

Today was another up day for the market even though it didn't start out that way with INTC and YHOO leading the way down. Those two stocks never did recover today but the initial decline in the stock market vanished to green by late in the day. INTC was down over 4% and YHOO was down almost 11.5%.

The headlines read "NASDAQ hits four year high". Yes, indeed it has but that six year high will be very difficult since we would need a rally of over 150% from here. At any rate, the market is finally up to its December highs as measured by the SP500 and the NASDAQ. What does that mean?

Well, to me, that means the market is at a crucial point trying to prove itself as a bull. I am a little skeptical, imagine that, when it comes to going along with this rally. I prefer to buy cheaper assets like the precious metals. And in that regard...

The dollar may have just hit the ceiling even with Greenspan's testimony today, that being that the economy is good and the Fed needs to continue raising rates. That should, and temporarily did, firm up the dollar and weaken the Euro but by day's end, that wasn't the case. Gold and silver were firm today along with the Euro. So, the tide may have turned negative on the dollar and positive on the Euro and the metals. We will stay in these assets rather than pay these enormous prices for other stocks.

So, we had IBM give good vibes to the market on Monday and popped the it on Tuesday. Then we had INTC and YHOO to bring it down this morning, as short lived as that was. And, tonight, we have EBAY up over ten percent. I don't think EBAY holds sway over the market like INTC or YHOO but we'll see tomorrow.

Like I said, the market is at a critical point here making basically a double top with the December highs. I never thought this could be possible but I guess I should be thankful for a little life in the market after the dulls over the past couple of months.

Dow Industrials: 10689.15 +42.59
BGEIX: 10.91

Tuesday, July 19, 2005

See Saw

What a day.

See: The techs ruled the trading day after IBM's announcement after the bell last night. The market bolted out of the gate this morning on its way to another four year high for the SP500 and a very healthy gain in the NASDAQ as well. The Dow was up but just barely recovering yesterday's losses.

Saw: After the bell tonight, the market didn't really like the news out of both INTC and YHOO, the latter being clocked for 10% after the bell with INTC only down about 4%.

HPQ (Hewlett Packard) decided it would ax 10% of its workforce, obviously in response to a strong economy--did I read that right?

Tomorrow should prove to be interesting given the response to the news after the bell tonight. With no one interested in selling stocks all day today, maybe we could see some change of heart on Wednesday. We'll see.

In our credit expansion watch, we noticed that housing starts for last month were unchanged versus an estimated consensus increase of 2.0%. All this news comes amid a monster rally on Wall Street today. Just some food for thought.

Gold has been trading in a range just above its June lows down around $416. We are fairly confident these lows will hold due to the way the mining stocks have been behaving, stronger than the metals. Nothing is guaranteed but this past week would seem to have been a good time to be buying the metals. Silver is still under $7 tonight.

Dow Industrials: 10646.56 +71.57
BGEIX: 10.85

PS Don't forget that tomorrow there will be no email version, come back here for further Updates.

Monday, July 18, 2005

IBM to the Rescue

With the new Harry Potter book out this weekend, it's no wonder that the market was having trouble today, everybody was home reading. Ok, maybe not everybody, I was at work enjoying another wonderful Monday...maybe not. But there were a few happy people there who were smiling about their Harry Potter experience over the weekend.

Today, the market traded low volume again. I guess after the lackluster option expiration volume, today was uninspired to trade much either. Today's volume was the least in a month at just around 1.2 billion shares on the NYSE. Volume like this is not the things bull markets continue to run on.

We keep a close eye on the interest rates of late due to the powerful nature of the credit expansion that has taken place locally and globally. Today the bond market fell again pushing the yields up on Treasury's to their highest level in a couple of months. We know that the bond market hasn't made a decisive move here but that move could come at any moment and we want to make sure we see it when it happens. Ideally, we would be able to recognize something long before the market would, I know, wishful thinking.

IBM announced earnings tonight and improved them from last quarter which were dismal. More importantly, the stock vaulted higher by about 3 points in the after hours market. The leadership of IBM has not been to the upside for a while but recently it has lead the charge higher. We aren't skeptical about that, of course not.

Lots more earnings coming in the next couple of weeks. Last week we heard from GE, not so good, and today we heard from another giant, Citigroup, that it wasn't too happy either with earnings. So, there are two big reasons for the softness in the market. Of course tonight we got IBM which is there to save the day.

Dow Industrials: 10574.99 -65.84 (Let's see, yes, it's in the 10500's again)
BGEIX: 10.83 (no change)

PS I apologize for not responding to one of the comments. So, here is what I say: The question was why low CPI and PPI aren't good for the market along with higher consumer confidence. My answer is that the CPI and PPI numbers are reported to be low but I don't believe them. Low inflation usually is good for the market but the actual rate of inflation has to be low, not just reported numbers. You know, we can't include anything that is actually going up in CPI, we might have to pay those senior citizens (I'm getting close-no comment, Trish) more Social Security.

Sunday, July 17, 2005

GE Subdues Forecast

Friday the market enjoyed options expiration--thanks for pointing that out to me PH. The NYSE volume was the lowest for the week. The prices seems to be drifting up but the punch is definitely gone. In fact, the SP500 and the NASDAQ have been up seven days in a row and, yes, they both made new highs for the move. The SP500 broke its March high which is a four year high so everybody should be happy. The last time the SP500 was at this level was shortly before 9-11. The NASDAQ has failed to break above its December high but it is close, about a percent to go. The Dow has almost 4% to go to make a new high for the move.

This upcoming week, the market is looking at earnings news for many companies. For the most part, the market is hoping for great news on the earnings front even though GE's forecast when it announced last week was not particularly robust. I don't know that companies will disappoint on the earnings front because obviously the big credit expansion is still in force. As long as people continue to buy on credit there is always a little more room for the liquidity in the stock market. But, we don't expect the party to last forever. Quite the contrary, we know that the credit expansion will be its own demise.

This week's market should provide some ability for you to unload some of those stocks with freshly painted high prices. For what it's worth, the market has continued overbought for the past week and trading last week was very toppy. Yes, it looked strong on the surface looking at prices but the underlying strength in the numbers was not there. I would say the mere fact that the market went up last week is a good reason for a drop this week. Clearly the prices advanced in part due to options expiration.

We continue to recommend gold and silver, the metals. Their prices have dropped to buying ranges again with silver just under $7. These could be excellent purchases for the road ahead. GLD itself is down near 42.

Dow Industrials: 10640.83 +11.94
BGEIX: 10.83 (good price to buy again with a good pullback last week)

Thursday, July 14, 2005

CPI Stuns

This morning's announcement of the CPI left me scratching my head as it so often has the last couple of years. Not to worry, the June CPI was 0 today and tomorrow we should get the PPI. The report said that, with the DROP in energy prices, the CPI was able to have a flat month. The stock market thought that news was great and proceeded on a quick up move taking the Dow above the 10,600 level.

Later in the day, oil managed to drop 5% but for some reason that didn't do much to the stock market. I guess it had gone up enough for one day. For the bond market's part, the CPI news popped it up a little early but even the oil drop failed to generate any excitement in the bond market today. The bond market closed down a trace today. Apparently the bond market has "known" about the inflation number for quite some time as it yawned and rolled over for a snooze after the news. We do think the bond market topped on day of the June jobs report with its key reversal that day and its failure to break above that number to date.

The gold complex couldn't get out of the way of Low inflation and falling oil prices as gold went down about $5 and the HUI was hit for over 6 points. This is not the type of ratio gold bulls like to see, remembering that the stocks move ahead of the metals. We will keep our eyes open for any further developments here.

In my favorite news of the day, in a CNN article today someone wrote that a flat to inverted yield curve doesn't mean that the economy is going to get weaker. It means that the Federal Reserve is getting weaker. In what might be considered the biggest effort to discredit the Fed's latest position on raising short term rates, this article is saying the Fed is losing its power of longer term interest rates. I believe this is in an attempt to convince people that the ongoing housing boom will keep going and that higher interest rates from the Fed will not be able to stop it. Did I read this right? I am amazed at some of the journalism out there today.

Dow Industrials: 10,628.89 +71.50
BGEIX: 10.98

Wednesday, July 13, 2005

First Wednesday Post

We mentioned in the Wednesday Update email version that we would write a blog out here every night including Wednesday so let's get to it.

The Dow managed another up day but the move looked a little tired relative to the performance of the last week. We are impressed with the market's ability to hold its gains of the past week but still believe they will not hold for long. We are here at 10,500 again today indicating that magnet is still operable.

The big news today and something we don't always mention here was the deep drop of the dollar index. Today it broke trendline support and dropped hard through it. This is after yesterday's drop down to the trendline. This should give temporary support to the gold complex but didn't seem like it today.

See you back here tomorrow.

Dow Industrials: 10557.39 +43.50
BGEIX: 11.29

Tuesday, July 12, 2005

Market Struggling To Get Higher

The broad market attempted another rally today and for the most part delivered with the retailers and the energy stocks leading the charge. This combination of leaders has a funny feel to it, that being inflation. We are buying as fast as we can at stores (credit to buy furniture) and driving energy prices up along the way(credit to buy Hummers) .

This rally seems close to over with the way the market traded today. Our indicators show vast amounts of overbought at this time but that doesn't mean it can't go up a little more. We just don't think this is a good time to be buying any non-commodity type stocks. Speaking of commodity stocks, gold stocks managed a little volatility today by making a new high for the move but closing a little lower, basis the HUI. The BGEIX did manage a small gain on the day, however.

There is not much for a bear to talk about in this market except that it seems to be a good time to sell into strength. Bulls tend to revel in the moment even though we are struggling to get back to the highs let alone bust through them. Yes, there are certainly some stocks breaking out, but does that mean market strength?

The market is attempting to get back to the June highs and in some indexes has succeeded. Since the move has gotten the media lathered up, the sell signal is growing very close indeed. Capitulation on the part of the bears is at hand and when that happens, look out below.

I realize that my October low theory is just that, a theory, and it seems to be outlandish at the moment but please "bear" in mind that the moment selling starts this time, there will be no one to sell to and prices will drop hard.

We have said in the past year that the stock market is dependent upon the credit market for excess liquidity, meaning as long as people can go to their personal ATM (yes, their house) there will be room for the stock market to hold. Once the stock market sees less liquidity out there, it will drop long before the housing market does. It's a lot easier to dump stocks than to sell your house. October is waiting for you and it's only three months away, can you believe it?

Dow Industrials: 10,513.89 -5.83 (Isn't 10,500 getting just a little dull?)
BGEIX: 11.37 (another relative high)

Monday, July 11, 2005

Dow 10,500 AGAIN!!!

Well, there you go, another chance to see 10,500. It was another glorious up day in the market today with all the major indexes up on the day. In "short", it was a good day to sell stocks again. We have tried to encourage readers to take advantage of price swings to sell into and to buy into. We have been cautious on the stock market for a long time due to the set up to a fall we have been watching for the last six months. The media is telling you to get on this bull ride. We have said that the highs for the year are behind us, at least in the indexes we follow. Today, the market has again gone into overbought mode. We suggest selling into this strength.

The Real bull market is taking place in the commodities and we have suggested to get on that parade since mid-May. Our original idea was that mining stocks had gotten way oversold and we were buying into that weakness. The HUI index closed at 205 today after trading at just over 165 in May, for those of you without a calculator, that's 40 points or almost 25%. Show me that type of gain in the stock market or the bond market in the last two months.

Our beautiful little gold mining mutual fund, BGEIX, has done very well, too, closing at a new high for the move today, albeit only a penny higher, at 11.34. If you remember, we got you in at 9.71 on May 23rd, just a week after the May low.

Dow Industrials: 10,519.72 +70.58
BGEIX: 11.34

Sunday, July 10, 2005

Here We Are

The stock market put in a tremendous upside day on Friday and caused bullishness around the world to go up even more than it's been. The NASDAQ Comp managed a new relative high along with Russell 2000 which made a new all time high. The Dow and the SP500 failed to confirm. So, those of you in Russell 2000 type stocks are having a good time along with those of you in the home builders and retails. Life could be better for us if the SOX would finish this little rally phase as it has been struggling to hold up for about year. We remain short these type of stocks, QQQQ for one.

The precious metals have taken another breather but if you look carefully at the mining stocks they have managed higher lows ever since their lows around May 16th. The mining stocks are reminding you politely to buy the metals especially since they pulled back slightly the last couple days of last week.

It's a new week and a new point for the market to try to balance itself on the pinnacle. We continue to think there will be a reason to sell stocks pretty soon. The backdrop is just right for a fall with the sentiment being so very bullish. Take precautions if you are in technology type stocks for sure. With interest rates continuing to move up at the short end of the curve and the oil staying above $60, it's only a matter of time...

Dow Industrials: 10449.14 +146.85
BGEIX: 11.12

PS I've added another wedding picture, sorry you have to have a look at me. I'm the one standing next to the bride, no not my son, the big guy.

The Five Stadings

The five Stadings Posted by Picasa

Thursday, July 07, 2005

London Subways Falling Down

Today was an unusual day due to the terrorist activity in London. Markets around the world initially reacted negatively, some very negatively, but here in the US the Dow managed a positive close. A day like today is one of those days when you look at the financial markets with a bit of a question mark. We abhor the violence inflicted today on innocent people but don't think it should affect trading as much as it appeared to have done. A market trader, like I have been, tends to say how can I make money today and sees an opportunity in a weak open. How many of you were thinking bullish thoughts as the markets opened this morning? We have often times talked about weak openings or strong openings as good times for a reversal due to the nature of those early morning trades, someone is obviously Reacting to news.

Our position remains that the big news of the week is tomorrow morning with the jobs reports and then we will see what the market wants to do. Tomorrow will be the official end of the bullish period we usually see around the end of the quarter or month. We do have earnings season upon us as well so there are several things out there to hold the market's attention.

We expect the market to continue its recent drop in spite of the relative strength today. The market has told us it wants to go down based on the ever lower highs it has been putting in this year. Today, don't forget that we had another new Low for the move and we are a ways from breaking the June highs. Rationalize all you want to, but make no mistake, until the market pushes above the June highs there can be no bullishness from the Wednesday Update.

To answer the blog comment, I have seen that AIG has gone up to around 60. Do you think it can go much higher than that???

Dow Industrials: 10302.29 +31.61
BGEIX: 11.15

Thanks to all of you who remembered my birthday today, much appreciated. And, yes, I have posted another picture on the blog just below. I don't know if you can see it or not, I can not see it at work but I do see it here at home so maybe you can too. Have a great weekend.

One More Wedding Picture

My favorite wedding picture Posted by Picasa

Tuesday, July 05, 2005

Fireworks to the Upside?

We had a comment today saying that "Prudential's chief investment strategist on Tuesday recommended that investors with the "appropriate risk tolerance" allocate 100 percent of their portfolio to equities." Well, that's just about as much as a good contrarian can take. There you have a great sell signal straight from Pru. Yes.

Indeed the stock market was up today but I think it had more to do with factory orders being up rather than Pru's statement. Then there was oil knocking at that $60 mark as well as bonds getting hit, a couple of poor backdrops for a rally. The media sure liked today's rally but the volume was a bit light again, summer volume levels.

Today gold and silver gave a little back along with the mining stocks. This should have given you all a great opportunity to act on the buying opportunity we mentioned in last night's post. We are going to continue to commit funds to this sector for those of you who want to be bullish on something.

Dow Industrials: 10,371.80 +68.36
BGEIX: 10.94

Look for the Wednesday Update email version, more thoughts on Pru's call.
[Editor's note: I didn't have time to spend on the wedding picture tonight.]

Monday, July 04, 2005

A Short Week Ahead

I trust you had a good holiday weekend. We capped ours off watching some great fireworks. The market is about to have some fireworks, too, so we better get to that. Before we do, I wanted to share one picture with you. Check the post just below this one: I finally have posted a picture of my son Jeff and his new wife Danielle from last weekend's wedding, proud father that I am. [Editor's note: I see that it's not showing up today, Tuesday 7-05-05. I'll try again tonight.] But, after that let's get back to the market...

I think the biggest news for the markets we follow was the trading in the precious metals late last week. Briefly put, on Friday gold was down over seven dollars and the HUI was up 50 cents. That reaction in the mining stocks shows strong underlying support and gives you good reason to start purchasing the metals with some confidence.

If you haven't followed our advice on buying mining stocks to this point, you may want to buy silver. Silver closed at 6.85 on Friday, down over two percent but PAAS closed about even on the day. Silver is under seven dollars and should be purchased and gold is near $425 and should be purchased under $430. The market is speaking and we should listen. (We recommend reading the True Contrarian as he has posted his beginning of the week message.)

The other stocks are trying to hold their lows but should fail miserably at that task over the coming weeks. The stock market is sitting here at the beginning of a month with a holiday weekend and struggling to hold on to lows. The market should be strong at the end of the quarter and the beginning of the month. We are expecting strength but in the other direction. a strong decline that has its roots in June.

The big news event of the upcoming short week is the all important Unemployment Report. We are looking at another Friday jobs report and we are going to be comparing it with last month's figures to see if there is some deterioration. I don't really think the news matters to much this month because of the downtrend that seems firmly in place.

Dow Industrials: 10,303.44 +28.47 (where is that 10,500?)
BGEIX: 11.19

The Happy Couple

Jeff and Danielle (Thanks CZ) Posted by Picasa