The Last Interest Rate Hike?

I received a call from one of our readers (thanks HZ) telling me that Cramer had touted PAAS on his after hours show and of course the stock continued its recent surge in after hours trading following that announcement.  Over the past week, PAAS has been on a tear jumping from below 19 to tonight’s after hours final quote of 23.73 on one source.  It’s great that Cramer came out tonight to tout a stock that now is over 23 (on its way to where???) that we were buying in the 12’s and, yes, selling around 18.  So, we left a little on the table but we are not now going to be following Cramer’s advice due to the Lateness with which it is offered.  We are now in a speculative blow off in the precious metals and one can never tell when it will reverse itself.  We have made some good coin on this stock and we will again but not today.  

I also received an email from another reader today (thanks CM and Hi to you and your family, too) sharing a technical article on the recent action in the market.  The author explained that the market has been giving head fakes and producing a Bearish chart pattern along with weak relative strength indicators.  We are very much in tune with those weak relative strength indicators in the stock market and we note that, in agreement with article, that ours are also not confirming the move.  These are called Negative divergences in the article, we call them Non-confirmations.  

We are looking at extremely high volume figures over the past week but that volume is not being confirmed by price action this time.  You may say, well, the price will catch up to it but we say and have said that Supply is meeting Demand creating higher volume.  We have speculative issues being bid up and of course energy stocks have held up the market almost single handedly.  

We mentioned that the market will face a few items that have the potential to move it, not the least of which is Greenspan’s Last Fed Meeting.  The market is all over this as it thinks that the baby 25bps interest rate hike we will see Tuesday will be the last and they are looking for confirmation of this from the announcement.  The market wants to ride this horse once more I guess.  We’ll see.

After that news, we get to hear the President tell us the State of the Union in which he will tell us that all’s well except for a laundry list of things that we need to fix and it won’t cost too much money, especially since we’ll just borrow it from the rest of the world and no one in the US will have to pay higher taxes for any of it.  Ok, maybe I’m a little ahead of the speech but we know that Health Care will probably be the core message in the SOTU speech.  Pay attention to How we plan to pay for it.  Hopefully we can address that issue in tomorrow’s post…

Until then, Be Careful out there and sell into this strength.

Dow Industrials:  10,899.92  -7.29
RYVNX:  17.90
RYAIX:  21.50
TLT:  90.42
BEGBX:  13.18