Tuesday: Merry Men from the Fed

I'm not sure what the stock market must be thinking at the moment. On one hand, there is oil at a new world record of $64 and, on the other, there is the Fed continuing to raise rates one notch at a time. Tuesday is one of those notches and the market will do everything in its power to buy the news. We think that the highs from last week will firmly hold any buying that may, or may not, happen after the announcement at 1:15 CDT.

With the incessant upward march of interest rates, the mortgage market will slowly heel to the lead of the bond market. The stock market, with its more less disciplined movement will continue to resist the tug of the bond market. As rates go up and stocks go down, there will be a natural tendency for people to move their money from stocks to bonds (no, we are not suggesting that anyone do this--our position is more to have CASH to buy selectively when the time is right).

Right now, there definitely seems to be a change in market sentiment overall. The stock market shows a fairly good top in place from last week's highs and we will watch that peak closely. The leadership has lost some direction and that may be too much for the broad market to handle. There is much time for the market to drop into October and, while a big drop is not imminent, it is looming. Prepare. Oh, and look for another 25 bps from the Merry Men at the FED.

The precious metals in general have done ok over the past couple of weeks but we thought they should do better given the surge in the mining stocks. Silver has gone under $7 again which may be shaking out some weak hands. Still, there is a nice profit in BGEIX and we want to be watching for more definitive signs of a reason to get out. The True Contrarian is quite bullish and for further insight on the market use the link. He didn't publish last week, so he was due, and he's a good read, so enjoy...

Dow Industrials: 10,536.93 -20.10 (Three down days in a row, and in the 10,500's)
BGEIX: 11.40 (pulling back from its recent run)