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
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