Weak Start to the Week

Top Line: We are waiting for a high in the market later in the month or possibly into February.

The market pulled back a little on Monday, not exactly what the bulls expected. After last week's rally, they wanted more this week. That is still possible but we think the best run up will happen next week just prior to the inauguration. We'll see about that.

The big moves in the market today were in banks, T-bonds, gold and oil. The stock market's moves by itself were mostly unremarkable. That's one of the reasons we have been trying to pay attention to several markets...for opportunities. As for the drop in banks on Monday, we have no position on them but since they were down about 4% we thought we should mention them.

As for the other three, we would like to comment on them. As for T-bonds, we are extremely bearish on them and they have not disappointed the past few days. As measured by the TLT, since last Wednesday morning the price has dropped from 122 to 113, about 7.5%. We think there is much more down side to come.

Gold fell about $20 causing a corresponding drop in the gold mining stocks but we will view this as a buying opportunity, certainly if they dropped even more this week. Since the gold stocks have been the leaders in this rally phase, a decline in them would probably mean the broader market will fall. Meanwhile, the oil price has rallied pretty much steadily since Christmas Eve.

The main movers in this market have been the commodities and their shares. Yes, we watch the stock market indexes but the main event is the commodities. We'll keep an eye on them over the next few days to see if there may be an opportunity.

Otherwise, we are looking to be sellers in the next few weeks.