Tuesday, August 09, 2005

Extra Innings

A couple rate hikes ago, we heard from Federal Reserve Bank of Dallas President Richard Fisher that the Fed was in the eighth inning of their ballgame of interest rate hikes. This implied to many that the ninth one would probably do it and today we had the tenth. Well, I guess we are into extra innings and you know how these games can go. You just never can tell when the error is going to come but you know that it will.

That all said, the stock market came out smoking this morning. Well, you know it's been down several days in a row and we just can't have that. I don't care that the Fed is going to raise rates or that the oil prices are never going to back down, let's buy 'em and so they did.

I don't get too excited about days like today. The market needed to ease some of the recent selloff and create yet another opportunity for the bulls to misstep. Last week's highs are hardly a distant memory to most market participants but not to us. Those are our guideposts this week and we are navigating in these treacherous waters to see if ... you know, I can't come up with another metaphor to complete this obsurd sentence. But, we do think last week's highs will hold and the market shouldn't really even try to test them.

This rally today is designed to throw the bulls off course a little. The point is that the market can go up in the face of all these negatives out there. That is supposed to give strength to the bulls. Well, be careful with that thinking going into the fall. (I always like that, falling into the fall, it's the little things that please me)

Our main focus has been the precious metals and their stocks. The little downturn they have experienced over the past several days seems to have exhausted itself over the past couple of days. Usually interest rate hikes are bad for metals--you know the whole gold doesn't have "babies" or have dividends so it gets more competition from bonds when rates are higher and the dollar usually likes higher interest rates for the same reason, both pushing gold down.

Anyway, today the gold complex was firm and we are more confident holding our positions.

Dow Industrials: 10,615.67 +78.74 (I know, I know, it's over 10,500 again)
BGEIX: 11.40

1 comment:

Anonymous said...

Just as it seems to be the little things that bring a smile to our face, so do the little things have a way with kicking you in the p p. Can you tell I have 2 young boys at home? Why else would I us the pp word.

Anyways, I wanted to comment on a sentiment indicator I have devised and shared with Glenn in the past. Start with your favorite website (preferably a business/market site) and count the number of positive headlines on their homepage. Now count the negative. I've found that these tallies often coincide with rallies and downturns. As more and more "earnings increasing" pro stock market articles are written, it often has the ability in my opinion to push values for stocks above where they should be. When this pessimism/optimism ratio gets lopsided, I would usually step a few cubes down the hall and consult my local market historian. Wait, those steps have turned into hundreds of miles.

So, Glenn, please give me an update when you have time. Where are we in the grand cycle type stuff ala Robert Prechter?

Thanks and have a good second half to your week.

Erick

Shot a 46 on 9 at Eagle Valley. 8 over on the 1st 3 holes and then got knocked unconscious for the last 6 shooting a 3 over.