Normally, Monday’s show stock market strength but today we saw only dullness. The New York Stock Exchange volume turned in day much like Friday with fewer than 1.4 billion shares traded. For its part, the Dow Industrials traded in a narrow 30 point range for the day. We like to find something out about the market everyday but the last two days have shown very little in the way of new things. The market has the capability to turn down on a moment’s notice and we need to be aware of the slightest change.
The dollar continued its recovery today as it made a new relative high just over 92. The dollar index has fallen steadily from 2001 around 120 to its low late last year around 80. The recent corrective rally has taken the greenback up about 30%. The dollar may try a little more rally but in the end it will fail to get even close to that 120 of four years ago. With the massive twin deficits, we expect tough sledding (Santa Claus reference for you) as the dollar runs into some trouble right about now.
With the continued dollar strength, you would think that gold would be showing signs of weakness but it has been rather strong the last few weeks. We don’t expect these asset classes to move together for very long but we do think a gold correction is in the making. We continue to be patient; we’ve already had a good trade in this sector this year and we don’t want to be greedy.
Maybe we will get some information out of the stock market tomorrow. We will get the PPI, producer price index, tomorrow as well as retail sales. The sales number will get some attention tomorrow. I don’t think anyone really believes the inflation numbers so no one gets too excited about them. But, we will see…
Dow Industrials: 10,697.17 +11.13 (getting close to 10,700)
RYVNX: 19.46
TLT: 88.82 (maybe we are seeing a bottom forming)
BGEIX: 12.86
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