Stock Market Eschewed

Rather than spend a lot of time discussing the trading day today, I thought I would concentrate on the comment we received from Erick (go back to yesterday's post and read it yourself). My central premise about the stock market continues to be that the end of the credit expansion will push the stock market over the edge.

I think it's important to understand that the ATM most people live in seems to be providing the ability for people to continue spending more than they earn. Today's report from Freddie Mac indicates that in the second quarter, 74% of their mortgage loans were cash outs compared to just 33% in 2003. The CNN article indicated that it was ok because most people were putting the money back into their homes by way of improvements, or they were using it for their kid's college education or to buy vehicles. There is some risk here.

There are other issues with mortgages like the ARM or neg-am or interest only loans that people are using to purchase homes. If rates go up, there could be a problem. We have indicated that the bond market seemed to be looking for a tradable bottom but so far that hasn't materialized and rates are indeed going up. We would be concerned about all those loans that will need to be increasing their payments should those rates go up.

One key point about the mortgages of today, there is little if any down required to purchase homes these days. Back in the 1920's, you needed to have about 50% down to buy a house and today...not much. But, the margin requirements on stocks is 50% now because of the 1920's rules that you only needed to put 10% down to buy stocks. If rates go up much at all, there may be a large squeeze on some of these mortgage payers. The unfortunate thing about all of this is that so many people are now dependent upon real estate for their financial lives, both their jobs and being able to use their homes as ATMs. We shudder to think what might happen.

Our advice has been and will continue to be, pay down your debt as much as you can. You are being given the opportunity to do so now but the temptation is to expand your debt. Be careful.

As for the stock market, we are waiting for Friday morning. The first week of the month is like this. Go take a look at the bigcharts on the links and use the symbol NDX for the NASDAQ 100 average and look at a five year chart, either daily or weekly. Tell me if you see anything that looks like a reason to be in stocks since January 2004.

See you tomorrow.

Dow Industrials: 10,683.74 +60.59
BGEIX: 11.11 (NEM and ABX were strong today)

ISM Manufacturing Index Shows Growth

Today the market found out that the ISM manufacturing index topped estimates and it is above 50 so it indicates growth. The bond market didn't like this number and the fact that oil traded at a world record price (on the back of the announcement of the death of King Faud of Saudi Arabia). Bonds (US Treasury) fell through last week's lows and are now back in the down trend line we have seen for the last couple of months.

The bonds should attempt a rally to get them back toward that June high but it doesn't have to happen. We think that the rates need to drop one more time and housing not to follow for us to see a pretty good sized crack in the stock market. That could be happening now. As I drove through my old neighborhood this weekend, I noticed there were many open house signs along the road. I wonder if they aren't selling quite as fast as they once did.

Not much to report in the stock market today which is why all the talk about the bond market. As you know, we think the sudden contraction in credit is going to be very damaging to stocks so we are paying particular attention to the bond market and the real estate market. We are hoping to get a whiff of danger from them although if we do see some obvious break there, the stock market will not like it one bit.

I noticed today that Ford and GM are going to be cutting prices on their 2006 models to be more competitive and give us value for our purchases. Do you suppose they are having trouble selling cars? That would be my guess but the "employee" discount program seems to have gone a long ways to unload some of their inventory; but, will their strategy to lower sticker prices without rebates be successful?

Dow Industrials: 10,623.15 -17.76
BGEIX: 10.98

GDP and Chicago Purchasing Managers

Happy Monday to you. Here, it is still Sunday evening and we are trying to remember what happened on Friday so we could report it. Now I remember, the GDP report came out which didn't have much impact on the market as it basically came in line with estimates. (I still think the deflator is too low "thereby", Erick, allowing an inflated GDP, such plays on words you can only get here at the Update.)

The two numbers that the market did concern itself with were the oil price rallying over $60 and the strong read from the Chicago Purchasing Managers. The bond market recoiled on that news and dropped hard fully retracing, and some more, the rally the day before (Thursday). So far, the bond market has held the lows set a few weeks back and we still think there will be a tradable low here, even though we don't really concentrate on the bonds for investments here at the Update. We still think the early June high will hold but as of tonight that is about 5% above where we are now and allows for a small gain.

Our favorite silver mining stock (which we own), PAAS, announced earnings on Friday and gave the stock a lift during the day but it didn't hold much of it. PAAS popped for about 5% during the day and closed up about 1.5%, still a nice day. PAAS has had a very nice run here in the past ten days from 14.50 to Friday's near 16.25. We have traded the stock three times and probably should have bailed out during the rally on Friday--some of us have to work. But, the mining stocks have done well since our entry point and we have been patiently waiting for some upside breakout which has not materialized to date. Meanwhile the traders' commitments were not very convincing last week either. We are near a point where we will pull the trigger and get out but for now we feel compelled to stay with the trade.

Monday is the first of the month again and we know that some strength may appear but we are again looking to the jobs report out on Friday to shed some light on the near term direction of the market. Our position is still that the market will be considerably lower going into October.

Happy Trading.

Dow Industrials: 10,640.91 -64.64
BGEIX: 10.90

Market Pushing Higher Again

The stock market continues in its tantalizing ways, makes you want to stay in and see what happens tomorrow. That strategy hasn't been too bad so far but we want to be cautious for an abrupt turn. The complacency in the market is almost eerie. Here we are at new four years highs in several indexes and all time highs in others. Why should anyone worry about the stock market going down? At the moment, we are just waiting. The strength in the market is there but it is just not convincing.

Gold and silver were strong today but not the HUI which is troublesome. We are concerned that the upside break is not coming. Gold has its own resistance about $30 above here and seems to have a lid on it over the past several months. Silver is a dollar off its highs from last fall and rallied strongly today. We had suggested buying silver below $7 which is where it was for several trading days in July. We are looking for a good run here but are getting a little impatient even though we have good profits in our mining stocks.

We have recently mentioned that the bond market seems to be trying to form a tradable low and today it made a fairly strong move up. The Treasury market would be the only one we would suggest.

Oil made a move over $60 today after reports of a refinery fire in Louisiana. Doesn't is seem difficult to you to believe that all four of these markets were up today? Oh well I guess we wait another day.

Have a great trading day and we'll see you back here late Sunday night.

Dow Industrials: 10705.55 +68.46
BGEIX: 10.92

Durable Goods Surprise

This morning the durable goods orders showed some surprising strength, coming it at +1.4%, given expectations of a drop of 0.5%. That news didn't do to much to the market even though the Dow did pop about 30 at the open and then faded; but, by the end of the day, the market managed a solid gain. The apparent reason given was the positive undertones in the Fed's Beige Book saying the economy is strong and inflation is tame. The Dow managed to climb above that 10,600 again and, as CNN put it, the SP500 eked out a new four year high--powerful talk. Good selling opportunities around now.

Not much else to report today so I'll pretend it's Wednesday... The bond market seems to be searching for a tradable bottom and the Treasuries may try to rally back to the early June top we have mentioned here several times. I think the difference this time will be that housing will not respond so strongly to another drop in mortgage rates like it usually does. That would be a significant clue for us to know that the housing market and therefore the economy is ready for a correction.

The precious metals were trading opposite the dollar today, as they should. This morning the dollar started out rather strong and ended up weaker, also as it should given the tongue lashing it got from the Chinese this past week. The Chinese apparently entered the currency markets to stabalize their currency as they said they would like to keep it near its new target. Back to the precious metals, they managed to find some footing and rallied a bit into the close.

As mentioned in the past week, we are getting cautious the mining stocks even though there looks to be a pretty good rally coming in them near term. We are going to sell into this next rally if it is sharp enough. There should still be time to hold.

Dow Industrials: 10,637.09 +57.32
BGEIX: 10.96

AMZN Jumps on Higher Revenue

After the market closed, AMZN reported earnings that were basically in line with expectations but I thought one line was worth mentioning: AMZN's 2nd quarter profit fell 32% due to an income tax expense. Hey, what do you know, income tax is an expense. In reality, the stock pushed up 10% after the news, in fairly lively trading.

The market demonstrated the ability to crawl through another day today although there was a little more strength in the broad market today compared to yesterday's sleeper.

The biggest action today was right here on the blog with Erick, our prolific reader, making a comment. You all should read his comments and make sure you leave a comment of your own. Besides the fact that I had a good time reading it, I appreciate the comments on the media's spin on the unions. Indeed the media is bullish. I also have to agree about taking profits except for one thing--when the market drops this time we should see a pretty good drop and covering shorts on the way down will not make you happy either.

Both the stock market and the bond market were quiet today and we will be too. It is near the end of another month and we are trying to be patient with our next round of selling. The market should be rolling over here and looking at the trading over the past week, it seems to be. More tomorrow... We are looking at the QQQQ's around this 39 mark and are starting to get interested again--for a move down, believe it or not.

Dow Industrials: 10,579.77 -16.71
BGEIX: 10.94

Is it Yaun or Yawn?

Today's market was indeed a sleeper with light volume and a slow bleed into the close. What we can be excited about is that we are back into the 10,500's. Not. The Dow drooped to just under the 10,600 line with no particular conviction one way or the other today.

The existing home sales set another record today which begs the question "When will this housing boom be over?" The bond market did drop a little today but again with no real conviction that the Chinese might take the punch bowl away. Well, at least until they do, we should stay at the party, the bold bulls must be thinking.

We mentioned our near term angst over the precious metals market but didn't make a firm decision on what to do. We have some nice profits from this recent run up and we might want to be especially careful here. It looks as though the mining stocks are following somewhat to the stock market is doing, they are stocks after all. If you own any of them, you may want to be watching them, too. We like to say the mining stocks move before the metals and today we say a bit of a down draft in the stocks without much movement in the metals. It just makes you sit up and take note, which we are.

The big news today, other than housing, was the mass exodus from the AFL-CIO. This might mean something to the markets but as of now, I can't really know what that might be. Any thoughts out there??? Leave a comment for us.

Dow Industrials: 10596.48 -54.70
BGEIX: 11.11

The Last Week of July

Here we are again near the end of another month and the market has continued to hold that 10,500 number we have discussed so many times. The longer the market holds, the longer the complacent stay complacent. We still believe in the market being overbought and destined for a fall into the fall.

Last week's announcement by the Chinese to revalue their currency against a basket of currencies should be taken to be an uncertainty in today's markets. Not at the corner of Broad and Wall. There we decided to have one down day to take care of some selling. After all, every dip is a buying opportunity (sarcasm). We see the futures are indeed up this evening and there are a barrelful of earnings coming out this week to entice buyers.

Moving over to the precious metals, we have become a little troubled by their performance lately. The commitment of traders report showed a modest improvement (slightly more bullish) but the trading in the mining stocks has become a little labored. We don't like to see this at this point in the cycle and are becoming more and more inclined to leaning out of our positions. We haven't made up our minds as of tonight but we need to see some upside pretty soon to be fully convinced we are going up.

While we have done fairly well in BGEIX, that doesn't mean we can just sit back and watch it go down. We want to protect our principal in this market including our precious metals/mining positions. We continue to hold for now but we will let you know what we think as the next move develops.

Dow Industrials: 10651.18 +23.41
BGEIX: 11.19

China Sets the Stage

The market had a bit of a shock this morning as China announced it was finally revaluing its currency the yuan, or renminbi. The market initially thought this was a great thing until the announcement of another London bombing. Then the media picked that up as we watched the futures drop. The news out of China is something we have mentioned several times because of the hard shot it is against the US Dollar, implying all sorts of things.

Generally these things take quite a while to filter through the financial system, although not always because currency revaluations by the market can be swift; but, we think this is significant news and plays into our continuing belief that the stock market is going to be a casualty of the inevitable unwinding of the huge credit expansion.

The first thing that came to my mind on the subject when hearing the news was that we buy a lot of goods from China and, guess what, the price just went up. That is called inflation. And, the bond market kind of "got it" today as it traded down rather hard, meaning interest rates moved up. We have "pegged" (I had to) our turning point in the credit expansion to the June jobs report day when the bond market had its big reversal and tonight that date is looking better and better.

The second thing is "What does that imply for the economy?" We come back to the almighty ATM that many people live in--oh, yes, their houses--which have allowed them to spend more than they earn to buy those goods from China. You never know what is going to push the housing market over, but whenever it rolls over, the economy will follow suit.

I know you've probably heard about this news since it was out all day long today but it is something to take seriously. Even though it may not bring immediate reactions either in the stock market or the economy, this news has the potential to affect many areas of the global economy.

The Chinese have just given a little shove to push the dollar aside and give more credibility to other currencies when valuing their own. The Asians are the ones who have been supporting the US Debt binge, both private and public debt. Again I can't stress enough the importance of this news today. We'll continue to watch the bond market to see what it thinks of this development in the near term. Today, it viewed it as negative.

The other news is earnings news and the big one tonight was GOOG, one of the stocks on our watch list for shorting opportunities. GOOG has pushed above the $300 mark and the new targets have been raised to $350. Well, tonight it disappointed the market with its earnings news, which really wasn't too bad, and dropped about 6% after hours. This could have an influence on the market on Friday so that is also something to watch.

The stock market looks very tired of rallying. Be careful here.

Meanwhile, the precious metals are again mounting an unnoticed rally since we mentioned them as buying opportunities over the past week. They were some of the beneficiaries of the yuan revalution news due to the implications on the dollar. The last two days have been pretty good but there needs to be a strong up move fairly soon to confirm our bullishness in this sector. Friday we get another installment of the commitment of traders and those numbers have recently improved so we will see if they can improve again this week. Unfortunately, they are measured on Tuesday evening which was before the move of the last two days.

Have a good weekend and we'll see you back here late Sunday evening.

Dow Industrials: 10,627.77 -61.38
BGEIX: 11.15

Saw See

Today was another up day for the market even though it didn't start out that way with INTC and YHOO leading the way down. Those two stocks never did recover today but the initial decline in the stock market vanished to green by late in the day. INTC was down over 4% and YHOO was down almost 11.5%.

The headlines read "NASDAQ hits four year high". Yes, indeed it has but that six year high will be very difficult since we would need a rally of over 150% from here. At any rate, the market is finally up to its December highs as measured by the SP500 and the NASDAQ. What does that mean?

Well, to me, that means the market is at a crucial point trying to prove itself as a bull. I am a little skeptical, imagine that, when it comes to going along with this rally. I prefer to buy cheaper assets like the precious metals. And in that regard...

The dollar may have just hit the ceiling even with Greenspan's testimony today, that being that the economy is good and the Fed needs to continue raising rates. That should, and temporarily did, firm up the dollar and weaken the Euro but by day's end, that wasn't the case. Gold and silver were firm today along with the Euro. So, the tide may have turned negative on the dollar and positive on the Euro and the metals. We will stay in these assets rather than pay these enormous prices for other stocks.

So, we had IBM give good vibes to the market on Monday and popped the it on Tuesday. Then we had INTC and YHOO to bring it down this morning, as short lived as that was. And, tonight, we have EBAY up over ten percent. I don't think EBAY holds sway over the market like INTC or YHOO but we'll see tomorrow.

Like I said, the market is at a critical point here making basically a double top with the December highs. I never thought this could be possible but I guess I should be thankful for a little life in the market after the dulls over the past couple of months.

Dow Industrials: 10689.15 +42.59
BGEIX: 10.91

See Saw

What a day.

See: The techs ruled the trading day after IBM's announcement after the bell last night. The market bolted out of the gate this morning on its way to another four year high for the SP500 and a very healthy gain in the NASDAQ as well. The Dow was up but just barely recovering yesterday's losses.

Saw: After the bell tonight, the market didn't really like the news out of both INTC and YHOO, the latter being clocked for 10% after the bell with INTC only down about 4%.

HPQ (Hewlett Packard) decided it would ax 10% of its workforce, obviously in response to a strong economy--did I read that right?

Tomorrow should prove to be interesting given the response to the news after the bell tonight. With no one interested in selling stocks all day today, maybe we could see some change of heart on Wednesday. We'll see.

In our credit expansion watch, we noticed that housing starts for last month were unchanged versus an estimated consensus increase of 2.0%. All this news comes amid a monster rally on Wall Street today. Just some food for thought.

Gold has been trading in a range just above its June lows down around $416. We are fairly confident these lows will hold due to the way the mining stocks have been behaving, stronger than the metals. Nothing is guaranteed but this past week would seem to have been a good time to be buying the metals. Silver is still under $7 tonight.

Dow Industrials: 10646.56 +71.57
BGEIX: 10.85

PS Don't forget that tomorrow there will be no email version, come back here for further Updates.

IBM to the Rescue

With the new Harry Potter book out this weekend, it's no wonder that the market was having trouble today, everybody was home reading. Ok, maybe not everybody, I was at work enjoying another wonderful Monday...maybe not. But there were a few happy people there who were smiling about their Harry Potter experience over the weekend.

Today, the market traded low volume again. I guess after the lackluster option expiration volume, today was uninspired to trade much either. Today's volume was the least in a month at just around 1.2 billion shares on the NYSE. Volume like this is not the things bull markets continue to run on.

We keep a close eye on the interest rates of late due to the powerful nature of the credit expansion that has taken place locally and globally. Today the bond market fell again pushing the yields up on Treasury's to their highest level in a couple of months. We know that the bond market hasn't made a decisive move here but that move could come at any moment and we want to make sure we see it when it happens. Ideally, we would be able to recognize something long before the market would, I know, wishful thinking.

IBM announced earnings tonight and improved them from last quarter which were dismal. More importantly, the stock vaulted higher by about 3 points in the after hours market. The leadership of IBM has not been to the upside for a while but recently it has lead the charge higher. We aren't skeptical about that, of course not.

Lots more earnings coming in the next couple of weeks. Last week we heard from GE, not so good, and today we heard from another giant, Citigroup, that it wasn't too happy either with earnings. So, there are two big reasons for the softness in the market. Of course tonight we got IBM which is there to save the day.

Dow Industrials: 10574.99 -65.84 (Let's see, yes, it's in the 10500's again)
BGEIX: 10.83 (no change)

PS I apologize for not responding to one of the comments. So, here is what I say: The question was why low CPI and PPI aren't good for the market along with higher consumer confidence. My answer is that the CPI and PPI numbers are reported to be low but I don't believe them. Low inflation usually is good for the market but the actual rate of inflation has to be low, not just reported numbers. You know, we can't include anything that is actually going up in CPI, we might have to pay those senior citizens (I'm getting close-no comment, Trish) more Social Security.

GE Subdues Forecast

Friday the market enjoyed options expiration--thanks for pointing that out to me PH. The NYSE volume was the lowest for the week. The prices seems to be drifting up but the punch is definitely gone. In fact, the SP500 and the NASDAQ have been up seven days in a row and, yes, they both made new highs for the move. The SP500 broke its March high which is a four year high so everybody should be happy. The last time the SP500 was at this level was shortly before 9-11. The NASDAQ has failed to break above its December high but it is close, about a percent to go. The Dow has almost 4% to go to make a new high for the move.

This upcoming week, the market is looking at earnings news for many companies. For the most part, the market is hoping for great news on the earnings front even though GE's forecast when it announced last week was not particularly robust. I don't know that companies will disappoint on the earnings front because obviously the big credit expansion is still in force. As long as people continue to buy on credit there is always a little more room for the liquidity in the stock market. But, we don't expect the party to last forever. Quite the contrary, we know that the credit expansion will be its own demise.

This week's market should provide some ability for you to unload some of those stocks with freshly painted high prices. For what it's worth, the market has continued overbought for the past week and trading last week was very toppy. Yes, it looked strong on the surface looking at prices but the underlying strength in the numbers was not there. I would say the mere fact that the market went up last week is a good reason for a drop this week. Clearly the prices advanced in part due to options expiration.

We continue to recommend gold and silver, the metals. Their prices have dropped to buying ranges again with silver just under $7. These could be excellent purchases for the road ahead. GLD itself is down near 42.

Dow Industrials: 10640.83 +11.94
BGEIX: 10.83 (good price to buy again with a good pullback last week)

CPI Stuns

This morning's announcement of the CPI left me scratching my head as it so often has the last couple of years. Not to worry, the June CPI was 0 today and tomorrow we should get the PPI. The report said that, with the DROP in energy prices, the CPI was able to have a flat month. The stock market thought that news was great and proceeded on a quick up move taking the Dow above the 10,600 level.

Later in the day, oil managed to drop 5% but for some reason that didn't do much to the stock market. I guess it had gone up enough for one day. For the bond market's part, the CPI news popped it up a little early but even the oil drop failed to generate any excitement in the bond market today. The bond market closed down a trace today. Apparently the bond market has "known" about the inflation number for quite some time as it yawned and rolled over for a snooze after the news. We do think the bond market topped on day of the June jobs report with its key reversal that day and its failure to break above that number to date.

The gold complex couldn't get out of the way of Low inflation and falling oil prices as gold went down about $5 and the HUI was hit for over 6 points. This is not the type of ratio gold bulls like to see, remembering that the stocks move ahead of the metals. We will keep our eyes open for any further developments here.

In my favorite news of the day, in a CNN article today someone wrote that a flat to inverted yield curve doesn't mean that the economy is going to get weaker. It means that the Federal Reserve is getting weaker. In what might be considered the biggest effort to discredit the Fed's latest position on raising short term rates, this article is saying the Fed is losing its power of longer term interest rates. I believe this is in an attempt to convince people that the ongoing housing boom will keep going and that higher interest rates from the Fed will not be able to stop it. Did I read this right? I am amazed at some of the journalism out there today.

Dow Industrials: 10,628.89 +71.50
BGEIX: 10.98

First Wednesday Post

We mentioned in the Wednesday Update email version that we would write a blog out here every night including Wednesday so let's get to it.

The Dow managed another up day but the move looked a little tired relative to the performance of the last week. We are impressed with the market's ability to hold its gains of the past week but still believe they will not hold for long. We are here at 10,500 again today indicating that magnet is still operable.

The big news today and something we don't always mention here was the deep drop of the dollar index. Today it broke trendline support and dropped hard through it. This is after yesterday's drop down to the trendline. This should give temporary support to the gold complex but didn't seem like it today.

See you back here tomorrow.

Dow Industrials: 10557.39 +43.50
BGEIX: 11.29

Market Struggling To Get Higher

The broad market attempted another rally today and for the most part delivered with the retailers and the energy stocks leading the charge. This combination of leaders has a funny feel to it, that being inflation. We are buying as fast as we can at stores (credit to buy furniture) and driving energy prices up along the way(credit to buy Hummers) .

This rally seems close to over with the way the market traded today. Our indicators show vast amounts of overbought at this time but that doesn't mean it can't go up a little more. We just don't think this is a good time to be buying any non-commodity type stocks. Speaking of commodity stocks, gold stocks managed a little volatility today by making a new high for the move but closing a little lower, basis the HUI. The BGEIX did manage a small gain on the day, however.

There is not much for a bear to talk about in this market except that it seems to be a good time to sell into strength. Bulls tend to revel in the moment even though we are struggling to get back to the highs let alone bust through them. Yes, there are certainly some stocks breaking out, but does that mean market strength?

The market is attempting to get back to the June highs and in some indexes has succeeded. Since the move has gotten the media lathered up, the sell signal is growing very close indeed. Capitulation on the part of the bears is at hand and when that happens, look out below.

I realize that my October low theory is just that, a theory, and it seems to be outlandish at the moment but please "bear" in mind that the moment selling starts this time, there will be no one to sell to and prices will drop hard.

We have said in the past year that the stock market is dependent upon the credit market for excess liquidity, meaning as long as people can go to their personal ATM (yes, their house) there will be room for the stock market to hold. Once the stock market sees less liquidity out there, it will drop long before the housing market does. It's a lot easier to dump stocks than to sell your house. October is waiting for you and it's only three months away, can you believe it?

Dow Industrials: 10,513.89 -5.83 (Isn't 10,500 getting just a little dull?)
BGEIX: 11.37 (another relative high)

Dow 10,500 AGAIN!!!

Well, there you go, another chance to see 10,500. It was another glorious up day in the market today with all the major indexes up on the day. In "short", it was a good day to sell stocks again. We have tried to encourage readers to take advantage of price swings to sell into and to buy into. We have been cautious on the stock market for a long time due to the set up to a fall we have been watching for the last six months. The media is telling you to get on this bull ride. We have said that the highs for the year are behind us, at least in the indexes we follow. Today, the market has again gone into overbought mode. We suggest selling into this strength.

The Real bull market is taking place in the commodities and we have suggested to get on that parade since mid-May. Our original idea was that mining stocks had gotten way oversold and we were buying into that weakness. The HUI index closed at 205 today after trading at just over 165 in May, for those of you without a calculator, that's 40 points or almost 25%. Show me that type of gain in the stock market or the bond market in the last two months.

Our beautiful little gold mining mutual fund, BGEIX, has done very well, too, closing at a new high for the move today, albeit only a penny higher, at 11.34. If you remember, we got you in at 9.71 on May 23rd, just a week after the May low.

Dow Industrials: 10,519.72 +70.58
BGEIX: 11.34

Here We Are

The stock market put in a tremendous upside day on Friday and caused bullishness around the world to go up even more than it's been. The NASDAQ Comp managed a new relative high along with Russell 2000 which made a new all time high. The Dow and the SP500 failed to confirm. So, those of you in Russell 2000 type stocks are having a good time along with those of you in the home builders and retails. Life could be better for us if the SOX would finish this little rally phase as it has been struggling to hold up for about year. We remain short these type of stocks, QQQQ for one.

The precious metals have taken another breather but if you look carefully at the mining stocks they have managed higher lows ever since their lows around May 16th. The mining stocks are reminding you politely to buy the metals especially since they pulled back slightly the last couple days of last week.

It's a new week and a new point for the market to try to balance itself on the pinnacle. We continue to think there will be a reason to sell stocks pretty soon. The backdrop is just right for a fall with the sentiment being so very bullish. Take precautions if you are in technology type stocks for sure. With interest rates continuing to move up at the short end of the curve and the oil staying above $60, it's only a matter of time...

Dow Industrials: 10449.14 +146.85
BGEIX: 11.12

PS I've added another wedding picture, sorry you have to have a look at me. I'm the one standing next to the bride, no not my son, the big guy.

The Five Stadings

The five Stadings

London Subways Falling Down

Today was an unusual day due to the terrorist activity in London. Markets around the world initially reacted negatively, some very negatively, but here in the US the Dow managed a positive close. A day like today is one of those days when you look at the financial markets with a bit of a question mark. We abhor the violence inflicted today on innocent people but don't think it should affect trading as much as it appeared to have done. A market trader, like I have been, tends to say how can I make money today and sees an opportunity in a weak open. How many of you were thinking bullish thoughts as the markets opened this morning? We have often times talked about weak openings or strong openings as good times for a reversal due to the nature of those early morning trades, someone is obviously Reacting to news.

Our position remains that the big news of the week is tomorrow morning with the jobs reports and then we will see what the market wants to do. Tomorrow will be the official end of the bullish period we usually see around the end of the quarter or month. We do have earnings season upon us as well so there are several things out there to hold the market's attention.

We expect the market to continue its recent drop in spite of the relative strength today. The market has told us it wants to go down based on the ever lower highs it has been putting in this year. Today, don't forget that we had another new Low for the move and we are a ways from breaking the June highs. Rationalize all you want to, but make no mistake, until the market pushes above the June highs there can be no bullishness from the Wednesday Update.

To answer the blog comment, I have seen that AIG has gone up to around 60. Do you think it can go much higher than that???

Dow Industrials: 10302.29 +31.61
BGEIX: 11.15

Thanks to all of you who remembered my birthday today, much appreciated. And, yes, I have posted another picture on the blog just below. I don't know if you can see it or not, I can not see it at work but I do see it here at home so maybe you can too. Have a great weekend.

One More Wedding Picture

My favorite wedding picture

Fireworks to the Upside?

We had a comment today saying that "Prudential's chief investment strategist on Tuesday recommended that investors with the "appropriate risk tolerance" allocate 100 percent of their portfolio to equities." Well, that's just about as much as a good contrarian can take. There you have a great sell signal straight from Pru. Yes.

Indeed the stock market was up today but I think it had more to do with factory orders being up rather than Pru's statement. Then there was oil knocking at that $60 mark as well as bonds getting hit, a couple of poor backdrops for a rally. The media sure liked today's rally but the volume was a bit light again, summer volume levels.

Today gold and silver gave a little back along with the mining stocks. This should have given you all a great opportunity to act on the buying opportunity we mentioned in last night's post. We are going to continue to commit funds to this sector for those of you who want to be bullish on something.

Dow Industrials: 10,371.80 +68.36
BGEIX: 10.94

Look for the Wednesday Update email version, more thoughts on Pru's call.
[Editor's note: I didn't have time to spend on the wedding picture tonight.]

A Short Week Ahead

I trust you had a good holiday weekend. We capped ours off watching some great fireworks. The market is about to have some fireworks, too, so we better get to that. Before we do, I wanted to share one picture with you. Check the post just below this one: I finally have posted a picture of my son Jeff and his new wife Danielle from last weekend's wedding, proud father that I am. [Editor's note: I see that it's not showing up today, Tuesday 7-05-05. I'll try again tonight.] But, after that let's get back to the market...

I think the biggest news for the markets we follow was the trading in the precious metals late last week. Briefly put, on Friday gold was down over seven dollars and the HUI was up 50 cents. That reaction in the mining stocks shows strong underlying support and gives you good reason to start purchasing the metals with some confidence.

If you haven't followed our advice on buying mining stocks to this point, you may want to buy silver. Silver closed at 6.85 on Friday, down over two percent but PAAS closed about even on the day. Silver is under seven dollars and should be purchased and gold is near $425 and should be purchased under $430. The market is speaking and we should listen. (We recommend reading the True Contrarian as he has posted his beginning of the week message.)

The other stocks are trying to hold their lows but should fail miserably at that task over the coming weeks. The stock market is sitting here at the beginning of a month with a holiday weekend and struggling to hold on to lows. The market should be strong at the end of the quarter and the beginning of the month. We are expecting strength but in the other direction. a strong decline that has its roots in June.

The big news event of the upcoming short week is the all important Unemployment Report. We are looking at another Friday jobs report and we are going to be comparing it with last month's figures to see if there is some deterioration. I don't really think the news matters to much this month because of the downtrend that seems firmly in place.

Dow Industrials: 10,303.44 +28.47 (where is that 10,500?)
BGEIX: 11.19

The Happy Couple

Jeff and Danielle (Thanks CZ)

Fed Raises Rate, Traders Lower Market

While we were not entirely surprised by the Fed's lack of originality, we did think the market might put in a little better performance since everybody was expecting rates to move a quarter point higher. That and the fact that today was the last day of the quarter, normally a strong time for the market. All of this is in addition to the normal strength of long holiday weekends.

As I'm sure you know by now, the Fed raised short term rates another quarter point today, the ninth such move in the last nine FOMC meetings. Does this mean that we are now in the ninth inning, or are we going into extra innings? Not that the bond market paid much attention to the Fed's potent (yes, I know, sarcasm again) 25 bps as it managed to rally strongly sending rates Lower on the day. Pretty soon we will have a flat yield curve with rates all across the Treasury curve being 3.5%, exactly the conundrum that Greenspan sees.

We think that the inflation numbers are not showing the true picture of the economy as yesterday's final first quarter GDP number was released showing 3.8% growth. Had inflation been higher, the GDP would have been lower, and what I am trying to say is that inflation was higher than reported. The GDP got a break from this and had a good showing.

The Dow dropped nearly 100 points today after the announcement and now sits under 10,300 again, its lowest close since May 16th. Right after the announcement the market did some minor volatility but then went down the rest of the day. But, of course, the over night markets are again showing strength. They may never learn but we can thank them because we get to sell to them.

The June numbers are in and they are like this:

Dow Down 192 (-1.8%)
SP500 Flat (0%)
NASDAQ Comp Down 11 (-0.5%)
NASDAQ 100 Down 49 (-3.1%)
HUI Up 15 (+8.5%)

Where did the Wednesday Update have you invested? Short the NASDAQ 100 and long the HUI, we all had a good month. We look forward to July.

Dow Industrials: 10,274.97 -99.51
BGEIX: 11.23

PS We did notice silver traded under $7 today.

Consumer Confidence Rises, Oil Falls

The market had one of those bounce days that we so often see after a solid selloff. The Dow had been down six days in a row and today decided it might try to go up. With little resistance, the Dow managed better than a hundred points today on good consumer confidence numbers and a big drop in oil prices. I still think that $58 oil is pretty expensive but the market rallied on that drop anyway. Bonds weren't too happy and dropped a little increasing rates by a little bit today.

I received a comment today regarding GM being dropped from the Dow Industrials. The comment was that with GM going down, an investment in an inverse Dow fund would not benefit from a further drop in GM. My thought is that GM has already dropped quite a bit and will be replaced by a stock that HAS gone up allowing a larger drop in the Dow. Any comments?

Gold and silver were both down today and silver itself is looking pretty close to a buy to me. Personally, I have been very patient with a silver purchase and the time is definitely close. The True Contrarian advises buying silver under $7 an ounce and today it closed at 7.09 down about 15 cents. PAAS was down during the day but recovered to close modestly up on the day, a very strong showing. (I own PAAS in another account.)

Dow Industrials: 10405.63 +114.85 (longing for 10,500)
BGEIX: 10.95

Say Goodbye to 10,500

The Wednesday Update blog returns and sees the Dow comfortably under 10,500, about at 10,300. After over a month at that 10,500 level, the Dow has finally dropped and is now having difficulty staying up. Of course, there are plenty of bulls out there to try to hold it up but they can only do that for a while.

There are a couple of comments out on the last blog providing some fresh air in an otherwise dull, maybe I should say nonexistent, blog the last week. Dullness was not the theme of the market the last several days, however, as the Dow has now fallen 332 points in six straight sessions from its high of 10,623. After a false breakout to the upside, the true move is emerging and it seems fairly strong to the downside.

You may be asking what has caused the drop and that may be important but it probably can't be determined by reading the news. Or, it may be. I was disturbed by last week's Supreme Court ruling that expanded eminent domain. And, that could have had a significant impact on the market--or not. I just saw that it coincided with the market dropping.

There are plenty of reasons for this market to drop, such as the price of oil and gas, oil carrying a six handle for the first time ever(meaning it's over $60). I was amazed by a report showing the "inflation" adjusted price of oil and how the price of oil is less than it has been in the past on that basis. Let's try to put a bullish spin on the high price of oil, shall we. Right.

The precious metals have shown some weakness in the past week along with the market and may show some more. This drop should provide another good opportunity for you to move into the complex. The HUI may drop another five or ten points from tonight's 196 with a powerful move up to follow. We will provide tighter entry points over the next few weeks.

All eyes are on the Fed as they will be announcing something this week on interest rates. I believe the announcement comes on Thursday afternoon so get ready. We have been thinking the Fed is starting to get into trouble with raising rates and have even predicted that they will not raise rates this week but it looks like they have to raise them. We will see, more on this in the next few days.

Dow Industrials: 10,290.78 -7.06
BGEIX: 11.06

PS My son's wedding was perfect.

New Week, New Decline Coming

Just wanted to remind all of you that the market has now finished with its option expiration ritual and we did have some typical quadruple witching volume. The market is now set for a fall and hopefully you have prepared yourselves for this drop.

Oil closed at a record high on Friday and may cause some strain in the market this week. The dollar has been struggling higher during 2005 but we feel some gravity beginning to tug at it. The Fed meeting is looming large next week and traders will be nervous in front of that, too.

Please read our link to the True Contrarian. His sort of regular Sunday Update for June 19th is specific about gold and the NASDAQ. We are in complete alignment with him at the moment.

Good luck and remember...

The Wednesday Update Blog will return next week. See you back here then.

Dow Industrials: 10623.07 +44.42 (What do you know, a close away from 10,500! Enjoy it while it lasts.)
BGEIX: 11.27

Gold Rocks

Gold decided to have a great day, going up $7 today. This led to a great day for gold stocks in general. We are very pleased so far with our choice of PAAS and BGEIX which were both up nicely today. PAAS was up 60 cents to 15.42 for a 4% advance and BGEIX was up 34 to 11.20 for a nice 3% move. So far BGEIX is up 1.49 from 9.71 for a 15% gain, not too bad for a trade we put on May 23rd, less than a month ago. And, it's a long position, most of you should like that.

The stock market continues to annoy me by trying to find everything bullish. Today oil closed over $56 a barrel and that is stock bullish because oil will fall and you want to be in stocks when it does. There was an article on CNN today with a title of "Oil set for a Crash?" A Morgan Stanley economist said that "I believe it [oil] could correct in the most speculative fashion--it could collapse." And, this after Goldman Sachs comment a few months that oil was poised for a move to $105.

Meanwhile, the Dow continues to keep that 10,500 handle and we are having a hard time staying awake for this. We were pretty sure that the intermediate top would come into sharp focus this month, but the focus is blurry at best. We still maintain that the highs of the year are in place and will NOT be broken in our four indexes, Dow, SP500, NASDAQ Comp, and NASDAQ 100.

As noted in our email version last night, this will probably be the last Blog until Monday evening, June 27th. If something truly awe inspiring happens in the stock market, I may have to post another blog.

In the mean time we are fairly happy with our positions especially our gold positions. We hope you were able to take advantage of that, too. We tried to bring you through the process to buy BGEIX over a few months. We picked a pretty good point to enter, we saw a clear bottom given our signals and we pulled the trigger. We may have been a little late but it wasn't very late. BGEIX hit a low of 9.34 on May 16th and we bought at 9.71 a week later.

Have a great weekend and a nice week off next week. Please come back after my Monday evening post on June 27th. I am hoping something happens before then, like tomorrow when we get quadruple witching. Maybe tomorrow we can get some better volume just because of that, something, anything, would be good.

Dow Industrials: 10,578.65 +12.28
BGEIX: 11.20

BBY is a Winner Today

Best Buy, BBY, provided some entertainment for the street today by announcing blowout earnings and then rallying 15% to an all time high. The comment in yesterday's posting tells it all. But, I wish to remind you all that in the Wednesday Update email version, we did point out that BBY was one of the winners. I know, I didn't really recommend it.

The market was fairly quiet, other than BBY, and Dow leadership came from GM, that's comforting to all of you bulls out there. The Dow continues trading near 10,500 in very dull trading. I usually say that dull markets don't stay dull very long but here we are with a stretch of 19 days trading near 10,500.

JPM, one of our shorts, announced that it would settle some of the Enron claims and pay a $2.2 billion fine. So, of course, that would mean that all the bad news is behind JPM--I am a little sarcastic this evening, sorry. We are only slightly down on this short (stock is up from where we shorted it) and would like to see some progress along with the market in the southerly direction.

Today showed last month's PPI, Producer Price Index, to be down 0.6% just the same amount it was up last month. This number "proves" that there is no inflation and the Fed can start thinking about slowing those nasty interest rate increases. For some reason the bond market was not buying it today as it closed down slightly, still showing fatigue after its big reversal day on Unemployment Friday. And, tomorrow brings us the CPI, Consumer Price Index, with expectations (before today's PPI at least) of a slight increase in the Core of 0.2% but no change in the all inclusive, we never pay attention to this number unless it is "good", CPI. Last month showed a worrisome 0.4% increase so one might think the number tomorrow might follow the PPI's lead and be down the same amount. I am so bad.

Gold and company moved down today and is trying to make me feel like selling our position. PAAS decided not to make a run at last week's high of 15.40 and instead dropped a bit today. We need to see a solid up day with a punch through that 15.40 to feel confident in the next up move. Looking at the HUI we see a similar pattern. The HUI is well above its low of 165.71 on May 16th and closing today at 191.39 down 3.37. The bullish pattern is very much in place. We would expect to see a powerful rally from the lows that develop over the next day or two.

Dow Industrials: 10,547.57 +25.01
BGEIX: 10.70

Dow Still Attracted to 10,500

For eighteen straight trading days, the Dow Industrials have traded at 10,500. Looking at the chart, it appears that we have a flat line Dow for almost a month. That could be the most exciting thing about today's trading.

There was a big rally in the morning and then stocks drifted down the rest of the day. I call this a distribution technique, push prices up fast ensuring a good bit of chasing to get in and then some buyers under the market to sell to over the course of the day. The market is just taking more and more captives as it meanders through treacherous water. Yes, many stocks have moved up a bit into this past few weeks highs but many have not.

We are still perplexed by the overwhelming bullishness in the market place. We believe that bullishness is misguided and will be reversed over the course of the next four months. You might say, "What can push this market down?" to which I reply what ever does. Today oil was up about $2 to over $55 and the bulls are now impervious to higher oil prices, they just don't matter to anyone. Anyone, that is, except companies like Northwest Airlines, NWAC, who need to pay for fuel and can't raise prices to cover their expenses. NWAC is thought to need a possible Chapter 11 to seek protection from creditors.

The precious metals were not very strong today with gold up a little and silver down a little. The mining stocks faired ok with PAAS a little weak. PAAS needs to run up strongly here in the next few days to we can feel more confident in our bullish position in these stocks. We continue to recommend these stocks and the precious metals themselves.

Dow Industrials: 10522.56 +9.93 (Is anyone else getting bored with this 10,500?)
BGEIX: 10.80

Start of a New Week

Friday was good to our precious metals positions as well as some of our shorts with the NASDAQ being down strongly; but, here we are facing a new week and new challenges. The stock market is uneasy and overbought. The top from two weeks ago is still well in place and we had a good nonconfirmation when the SP500 pushed to a new relative high but all of our other indexes stayed below the previous week's high.

Friday's commitment of trader's report (after the close) was not too bullish for metals but I think we are now into watching the mining stocks for further clues. The pattern is very much in place for further upside and we continue to recommend buying on weakness. Tonight gold is down and so is silver which could set up a nice pull back in the early trading on Monday. We are watching PAAS, well, maybe we should say trading PAAS with the full intent of seeing it cross to a new relative high against last week's 15.40. PAAS made a perfect low near 14 last week and now should move above 15.40.

The strength of the move over 15.40 should give us a good indication of the power in further upside. If it can't do much over 15.40, then we know to get out of our position. We think a move well above that number is possible--there are never guarantees however. We just want to follow what the market is telling us. Our main index, the HUI, hit a high of 195.73 last week and closed Friday at 192.07 up 7.33. We saw a nice pullback last week from that 195.73 high to 181.67 and now 195.73 is the number that should be exceeded, and fairly soon, for us to think the gold bull market has started.

In economic news this week, we will get to see some hint on inflation as the PPI, Producer Price Index, will be released on Tuesday and the CPI, Consumer Price Index, will be released on Wednesday. These are potentially gold and silver movers and we need to be careful as these reports come out. There are bond market and stock market considerations as well because this will give good clues as to what the Fed may be forced to do later this month at their rate setting meeting. We already think that the bond market topped the day of the Employment report, June 3rd when it decided to do a key reversal, with a big outside down day.

The market is also looking at triple, or quadruple, witching with options and futures expiring on Friday. That is always an interesting day and we all know where most of the players are, bullish this month. There could be some excitement this week, this being June and all. The next two weeks could be decidedly bearish given the market is overbought and the players are all bullish.

Happy Trading, be careful.

Dow Industrials: 10512.63 +9.61 (trying to hit 10,500)
BGEIX: 10.67 ( a new high for the move, we are in at 9.71)

Dow 10,500?

After the last three weeks of trading, I have come to conclude that the market is trying to close right at 10,500. Today it almost hit it right on the nose at 10,503. All participants were waiting for Greenspan to speak before any real trading could begin and of course his words were palatable to the market.

Tonight INTC had their mid-quarter update and raised revenue guidance a little bit. INTC has had a big run for the past month or so and going into the close it was having another good day. After the announcement there was a bit of a pull back in the price. We will see what tomorrow brings.

It's Friday and soft trading, both in terms of volume and price should occur. Not much to report tonight as nothing seems to be going on, again. Our assessment is that the market continues to be overbought and we remain extremely bearish.

We mentioned trying to get into PAAS again today and we did. PAAS dropped to 13.99 during the morning trading and we managed to pay a little bit more than that for it but are happy with our trade. Silver dropped 18 cents today, about 2.5%, and gave us a great opportunity to get back into PAAS. Our target price was in the low 14's and today it traded at 13.99, so far we are doing well since PAAS closed at 14.35.

Have a great weekend, talk to you next week.

Dow Industrials: 10503.02 +26.16
BGEIX: 10.32

Turn Around Tuesday

The market got off to a big start this morning and showed about a 1% gain in the first hour of trading. After that the market hit a brick wall--could it be last week's highs were holding? Well, of our three indexes only the SP500 made a new high today compared to last week. The other two, NASDAQ COMP and DOW Industrials did not make new highs. You guessed it, that's a big nonconfirmation. Looking at the rest of the day, the markets turned down and basically closed on the lows of the day, although the DOW managed a 16 point gain.

This is the type of market action that we are expecting and it does not surprise us. As the Dow traded over 10,500, AGAIN, we have to admit a little nerves but when it was over the market managed a big turn around to the down side. This type of day gives us more confident in calling last week's high the top. Of course, we won't know that until we see some further deterioration in prices and we are watching for that.

Tonight TXN, Texas Instruments, announced some good news, at least the market liked it and we are seeing some strength in the overnight markets; but, as we've seen many times in the past, overnight markets don't always mean and up morning.

The precious metals were mixed today with the mining stocks taking another breather pulling the HUI down to 184.75 well under 190. The next rally here might be pretty strong so we want to take advantage of that move. We put an order in to buy PAAS this morning but tried to get it for too cheap so we didn't get it. We may try again tomorrow.

We want to remind you that this market is very ready to go down and it will be very tricky. We have tried to give you a good warning about what we think will be the top, last week. Be careful with your assets.

Dow Industrials: 10,483.07 +16.04 (Dow got over 10,500 today but couldn't hold it)
BGEIX: 10.35

Another Dull Monday

The Dow barely registered anything during today's low volume session. No particular movement anywhere and looking for a pulse in most places. So, not much to report this evening.

The gold and silver markets were up today but the mining stocks took a bit of a breather dropping a little less than a percent. This morning's pop was quickly sold and we ended basically on the lows of the day. This is not particularly bullish near term and we continue to wait for a good entry, or should we say, re-entry point for PAAS.

Try to stay awake long enough to pay attention to the market's next move, which we think will be down into the end of June and then into October.

Dow Industrials: 10,467.03 +6.06 (still under 10,500)
BGEIX: 10.51

Monday Again

Friday's volume was light again and without volume there usually can't be sustained upside, not to mention the down day we saw on Friday. We are more and more convinced that this market is topping and that the highs we saw late last week will probably hold for some time. We remain very bearish considering the highs set late last week.

As far as precious metals and mining stocks go, we are much more constructive and encourage you to read the new post at the True Contrarian link to the left. He is making the case to buy the metal under $420 with a possible downside of $406, so keep that in mind. And, he says that mining stocks should be picked up if the HUI dips below 190, and maybe that will be here early this week since the HUI closed just over 190 on Friday. There are opportunities in the precious metals and mining stocks for those of you who want to be bullish on stocks. We continue to watch PAAS for another entry point, hoping for the low 14's.

June could see a swift downward correction of this rally of the past month and we are going to be happy to see it for our trading accounts. Tonight the futures are not particularly motivated in either direction, must be waiting until trading opens tomorrow like we are.

Last Friday morning we said something about the bond market being happy about the low jobs number and we should have paid more attention to that statement alone. We talk about morning pops in the stock market being good selling opportunities. Well, from the looks of the way the bonds ended on Friday that they follow the same pattern. Right after the news, they were up strongly and by the end of the day they were down, a nice reversal day and quite probably very bearish for bonds. Don't forget that as bonds go UP, rates go DOWN but when bonds go down, rates go up.

All in all Friday shaped up to be a nice turn around day but only time will tell if we are correct.

Dow Industrials: 10460.97 -92.52 (back under 10,500)
BGEIX: 10.57

Weak Job Growth

Quick note this morning: The jobs came in at 78K, far below the 180K estimates, and last month's 274K stayed the same. The bond market is having a good time this morning. The stock market was soft overnight and did bounce a little on the jobs report but is not going to produce the type of pop that we would like to have seen. That is not to say that today does not represent a good top, today is our pick for that as indicated in our writings over the past two or three weeks. If the market is finally putting things together, there could be a dramatic shift in market psychology, something we like to call a sea change.

The time to act is now if you haven't already. Cash is King and gold may be the best currency for you to have. Gold is trading near $424 this morning.

Have a great trading day and a peaceful weekend. We'll be back next week.

PS Don't forget to look at last night's post below.

Cheers to Unemployment Friday

Friday we get the all important Jobs report which can lead to some volatility in the market. This time the Wednesday Update is looking for a defined market top to form. This usually resembles a nice upside pop in celebration of the number, whatever it may be. The market seems to be whistling to its own tune the last few weeks and probably will come up with a reason to jump up with any number that comes out of the jobs report. If it's too big, the economy is getting stronger, if it's too small, the Fed won't need to raise rates and of course if it's just right, Goldilocks will appear. There are many out there who think Goldilocks is already here.

This morning the weekly jobless claims number showed a bit more weakness than was expected, with claims up 25K compared to an expected increase of just 2K. The jobs number is expected to show about 180K growth compared to last month's 274K. That number will most likely be revised and the market tends to look at the revisions to see a trend. And, as we always say, it doesn't really matter what the number is, what matters is the early reaction to it.

Ideally, we will see a good up move in the morning confirming half of our conjecture. Then it will be up to the players to see if that will be the peak for the move and the summer. You can never be sure, but the moment looks like it has arrived to us. Oil has moved up (not today), gold reversed course this week, the market is well overbought and WE are SHORT. Ok, maybe that last one is a little selfish but it's true.

I have been long PAAS however and that has done very well but today PAAS popped a little at the open and gave me cause to sell my position. I am looking for an entry point again. I have traded it twice in the past two weeks, bought it once at 12.60 and took 13.10 for it and then bought it again at 12.60 and sold it today right after the opening bell at 15.25 for a nice 20% move. Can you get it to go back down to 12.60 so I can do it again? Please?

Seriously, I don't think PAAS will get back to 12.60 so now I need to decide when to get back in. It seems too soon to think that if the market pops tomorrow that this stock would drop enough to let me back in. But, such is the nature of bull runs, they tend not to let you back in. The way I will try to trade this is to buy early weakness and that may be tomorrow. Based on normal corrective retracements, the stock could drop back to around 14 but that could be wishful thinking.

At the same time, gold looks like it might have reversed its course this week. Today it gave us a strong up move, about six dollars even with a strong dollar and a weak Euro after yesterday's Dutch no vote. So, all of a sudden the precious metals are beginning to pick up some bids. Friday we get the commitment of traders report which should be revealing.

So, two ways to travel, short the market on an strong opening or buy the metals or mining stocks on a little weakness. You do have some extra cash lying around after selling all of your stocks into this rally over the past week or so, right???

I apologize for the length of this tonight but Friday is an important day.

Dow Industrials: 10553.49 +3.62 (enjoy that 10,500 while it lasts)
BGEIX: 10.43 (managed a one cent gain)

Hi Oh... Silver

Today the market decided to go down, particularly at the end of the day, even though the dollar got a lift from the Euro's beating after the French declared they wouldn't ratify the European constitution. With the dollar's strength we thought gold would react negatively and it did, initially. Gold gave up about six dollars in the early going only to see a nice rebound in the middle of the day. Bonds were very strong today getting a boost from the dollar as well.

Silver was the star precious metal today after opening down about ten cents, it managed a gain of about 15 cents. In normal circumstances you might call that a pretty good day, allowing you to buy a nice drop in the morning. PAAS traded down to 13.21 early this morning only to end up 51 cents at 14.29. Not a bad day trade.

There was a comment on yesterday's blog asking for a comment on why anyone should buy precious metal stocks due to their poor valuations. My short answer is that mining stocks, like any other stock, need to be judged not on the past but the future prospects. For mining stocks, if the price of the metals go up, the value of the mines these companies own goes up. It's kind of like what might happen to GM if all of a sudden they could double the price of their cars, they might actually be able to stay in business :-) But, if you can guess at the amount of silver or gold these mines might have, you could say the company is worth what is in the mines less what it costs to get it out and sell it. If their costs don't rise, and your prices do, you have a winning combination.

That is one of the reasons I like the mining stocks and the precious metals themselves, you have more clues as to how the business is running. You have the interaction of the price of the metals with the price of the stocks. The more hints you have, the better you can trade.

Plus, based on the Price of these stocks the last two weeks, rising about 12.5%, their PE ratios have gone up some more. And, if you didn't buy last week you are having to pay higher prices this week.

Look for the Wednesday Update in your email. Lot's of other news tonight, like AIG finally got their earnings out and now we know who deep throat is--not that it's really germaine to the stock market. Too little time...

Dow Industrials: 10467.48 -75.07 (oh oh, under 10,500 again)
BGEIX: 10.20

The French Say NO

The vote in France was NO over the weekend and predictably the Euro dropped with a similar drop in gold due to the dollar's advance. This was the big news for the market we are currently following, gold. This should give a little pullback in the price of gold, as it is down overnight about $2.50. This drop could give the HUI, gold mining stocks, a bit of a breather after their stunning performance over the past couple of weeks.

The other gold news that we get every Friday evening is the commitment of trader's report that has shown bullish tendencies the last month. The commercials have decreased their net short position for the fourth straight week and have dropped another 20k contracts this past week. Remember, this is without much drop in the price of gold. Together with the news from the French this weekend, gold and silver will become better buys this week. We are watching.

The stock market is looking to Friday to see if the Employment report will reveal anything about the current state of the economy. With the report near we are thinking the top in the market should be either behind us or in the next few trading days until Friday.

With several days off in the market, we are going to be patient with any new positions and give the market a chance to trade a little before we make too many predictions.

Hope your holiday weekend was good.

Dow Industrials: 10542.55 +4.95
BGEIX: 10.29

Another Up Day

The market went up again today and is giving you opportunities to sell into this strength. We here at the Wednesday Update think that the time to sell will be now until next Friday, Unemployment Friday. The volume today continued in its lackluster ways and we wonder if there really is trading going on. Since the market is up on low volume, all of the trading is due to be tested to the downside. In the mean time there is a holiday weekend coming up and the market is in that lift type of mood.

We mentioned in the email that this weekend holds some importance for the European Community and that has caused the Euro to get a little less attention in favor of the dollar. And, that should have put some pressure on the gold but didn't really today. There was some weakness in the metals sector but not much. We are looking to next week to see what will happen in the currency/precious metals markets.

There was some talk today about a silver ETF in case you noticed some volatility in the silver versus the gold. We have been kind of looking for a silver ETF along with the gold ETF and if that does come about it would give us another vehicle to trade the precious metals.

Have a great weekend and we will get back to you next week.

Dow Industrials: 10,537.60 +79.80 (above 10,500 again)
BGEIX: 9.94

Dow Holds 10,500

Could be the last time over 10,500 for a long time.

The NASDAQ COMP now has eight straight up days in a row with almost a 100 point move in that time, about 5%. To me, it seems like a lot more than that. The market is plain and simple over bought at this point. You can't inhale forever and neither can the market go in one direction forever. The rally has been keeping many bullish but now is the time to unload some unwanted stocks that have not participated in the rally.

The market has given most of you a very nice gift here in the form of higher prices so those of you who STILL have not sold can have one more chance. This price high is lower than the price high of early March and that in itself is a bad sign. We are looking at the end of the month and wondering if the usual strength can show up again due to the previous week's strength. We think not. But, we recommend selling long positions by next Friday the first Friday of the month which is...you guessed it, Unemployment Report Friday.

We don't think this market can hold up that long but it is possible with the end of the month and the Unemployment Report due out. Either way, you can feel good about getting out at these prices and then you will be ready for a 25% rout in the major market indexes, we think by October with a lot of it coming in this first drop out of the high we are at now.

Our purchase of BGEIX on Monday has given us a good move in one day from 9.71 to 10.00. Today gold was virtually flat but the HUI was up over 4 points to 181.35, up ten percent in six days. In that same time gold has barely budged and we are fairly confident in our call. We recommend buying these stocks on ANY dips. The big move we have seen in this short a period is bound to be corrected somewhat, giving you ample opportunity to get into some of these stocks.

CNN Money published an article called "The Kevlar Housing Bubble". How appropriate for us contrarians! Today saw record existing home sales in April and Wednesday we get new home sales. It looks like Kevlar is the word to describe the housing "bubble". Wednesday also brings April durable goods which have been down for a couple of months, so expectations are for a 1.0% improvement.

Look for the Wednesday Update email tomorrow.

Dow Industrials: 10503.68 -19.88
BGEIX: 10.00

Dow Back Up to 10,500

Monday again brought a lift to the market, or as the CNN Money site said, another happy ending. Well, not to us. The market has managed two big weeks of price gains and on very little volume. Apparently the rest of the bulls want to buy stocks. We are waiting patiently for this market to find a top. It has moved up without much conviction and we don't believe that it can continue for long, but we have said that for a while now. But, here we are above 10,500 in the Dow. The March highs are still in place so we are continuing our bearish stance.

Since the lows of mid-April, prices have surged quite a bit and our Margin portfolio has suffered due to our not having buy stops to protect our shorts. We did put our shorts on for a good intermediate trade but we did not want to have to crawl up out of the cellar to find some gains. More tomorrow...

We recommended buying gold stocks in the form of the mutual fund BGEIX. The gold index, HUI, was up strongly today while gold was very subdued and hardly moved at all. This is exactly the type of action we were hoping for and are glad to be in a little mining fund for now. If prices drop a bit from here we may want to get a little more. The price we got today was 9.71.

Dow Industrials: 10,523.56 +51.65
BGEIX 9.71

A New Week

Last week was particularly hard on our portfolios with the markets up about 3% across the board. We don't believe the bulls have another week in them like last week but it is the last week of the month and next Monday is Memorial Day so there is a natural lift possible.

There are a few news items for the week, existing housing sales, new home sales, durable goods, a revised GDP for first quarter, and Michigan consumer sentiment. We will see how these can move the market.

Last Friday's options expiration delivered unexpectedly low volume, one of the lowest volume days of the year on the NYSE. Last week was definitely up but it was on fairly low volume. The 5 day upside volume, the indicator we like for pinpointing short term tops made a high over 1 billion shares. That's a number not often seen, especially on generally low market volume. We think the volume speaks volumes about the rally.

As far as gold goes, Friday was a good day for the mining stocks as the HUI declined much less than the metal. And, Friday's commitment of traders report was solidly bullish the metals with another subsantial drop in the net short position of commercials. Three weeks ago, the commercials were net short a phenomenal 169K contracts and this week they had reduced that position to less than 80K. This is on about 275K contracts outstanding.

I don't know how much longer we can wait for an opportunity in gold so we are going to be buying $5,000 of the BGEIX fund in the Cash account on Monday. We will keep some powder dry in case we get better prices.

Dow Industrials: 10471.91 -21.28

LEI Go Unnoticed

Today we saw the market move sideways for most of the day with a pop at the end of the day. There is really not much to report this evening except that the LEI, the Leading Economic Indicators, showed another month of decline and largely went unnoticed. The other news out on Thursday as every Thursday was the weekly claims for unemployment benefits. They were down but the four week average was up a little. Again, not much to report this evening. Friday is options expiration and this could be the end of the move. Today's volume was light again.

The gold complex showed weakness again today with the mining stocks dropping again. (There was some currency talk out of South Korea that suggested a loosening of the dollar peg.) We are waiting for a confirmation a good low is in place. Right now we are waiting to see if the lows in the HUI set this past week will hold. If so, we can begin to feel more confident about buying the mining stocks. Tomorrow we get another dose of traders' commitments and with gold dropping a little this week we should see more contraction in the commercial short position.

Have a great weekend.

Dow Industrials: 10493.19 +28.74 Dow is near 10,500--unbelievable!!!

The Snowman Speaks

If you look at the chart of the Dow for today, you see a distinct flat line of about 25 points range in trading until mid-afternoon when you see a vertical vault that lifted the Dow up about a 100 points. The primary reason sited for this rally was the good Secretary of Treasury, aka the Snowman in these parts. The Secretary did some sabre rattling at China to make progress on allowing a more flexible yaun. Well, one never knows if things like that can really move the market but it definitely seemed to coincide with the launch.

We are not sure that the US can make such demands on the Chinese. They hold and continue to buy many of our bonds supporting our desire for financing public debt at low rates. At the same time they would allow their currency to float, they would take a big haircut in the value of their bond holdings. (That's your homework assignment, figuring out why.)

Today's PPI increase was met with a yawn, not a yuan. The April number was 0.6% with core up only 0.3%, only. The Fed funds rate at 3% doesn't seem quite high enough compared to these numbers. Tomorrow we get the CPI, let's see what the market thinks of that.

Tonight we heard from two important tech companies, HPQ, Hewlett Packard (Compaq), and AMAT, one of our shorts. HPQ said their earnings were great and the new CEO, Hurd, said that the future was very bright indeed. So, in one short quarter this guy has turned the company around since Carley Fiorina left. The guy is truly amazing.

AMAT, on the other hand, said that earning for the quarter were down 18% and that revenue for next quarter might be down 10%. So, here we have the tale of two stocks. HPQ was up about 4% after the news and AMAT was down about 2%. We'll see how the market likes them in the morning.

As for gold, today was a good day for the mining companies as the HUI rose with very little net movement in the metal. This is the type of day we have been waiting for in order to trade into these stocks. The light is definitely turning from red to green--but we will wait a little while longer. You can do what you want.

Dow Industrials: 10,331.88 +79.59

Stock Market Up Again

Today the market decided to move up over a hundred points in the Dow but the volume was unconvincing at under 1.5 billion shares on the NYSE. On a rare day, the NASDAQ volume was slightly less than the NYSE volume, not by much but it was less. And, today the Dow managed to go back above 10,200 in what has become a very boring market over the past month with the Dow trading in a narrow 400 point range. We have seen these big days like today of over a hundred points with no follow through in either direction. So, for those of you trading every day, I hope you've been on the right side of your trades. For those of us waiting to see something move in one direction for more than a couple days, we have been waiting for a long time.

Unfortunately, this is not an easy market to make any money in and we suffer due to our leveraged short positions in the tech companies. We continue to believe that we are near the end of this boring period and we will finally see the market move down into the fall but we still are waiting.

Gold stocks continued to get blasted today with the HUI down another percent. PAAS closed well under 13 today at 12.35, near the low tick of the day. Last week this stock was over 14 so we have seen over a 10% drop in the price in a week. We are very tempted to buy this stock tomorrow morning. There is a fairly good opportunity here but we are going to wait another day to see what tomorrow brings. There should at least be an attempt to get back to the declining 50 day SMA which is about three points away at over 15. It's your call at this point.

Dow Industrials: 10,252.29 +112.17

DELL Pushes Up NASDAQ

Friday morning the Dow tried to put on a happy face and rally a bit and then dropped into the negative. The rest of the morning saw the Dow rally but by about midday, the market just nose dived, with the Dow down around 100 points late in the session. It managed a bit of a rally in the final hour and cut it's losses to about 50 points.

The NASDAQ, on the other hand, decided to follow DELL's lead and rally, although as the Dow was dropping so was the NASDAQ. It looked as though the entire market was about to fall out of bed when a late day rally pushed prices back up but left the Dow negative.

For whatever reason, the market has abandoned most stocks except the tech related stocks, particularly the ones we are short. Oh well, we will have our day very soon. We do have a little powder dry (too bad we don't have more with this incessant rally since the April 15th low) and would be ready to deploy it with any more rally.

We have been interested in the gold complex but Friday was another desperate day in precious metals land with the stock dropping more than the metals. The commitment of traders showed another healthy drop in the net short position of the commercials. That report is based on Tuesday's close and doesn't reflect the drop in gold prices the rest of the week. Anyway, we are probably getting very close to a buying opportunity here with the HUI closing at 168.05. The BGEIX fund closed at 9.48 and PAAS closed at 12.60. All of these prices are very tempting at this point. If you take a second to look at the True Contrarian link, you will find a very bullish article on the mining shares.

Dow Industrials: 10,140.12 -49.36

Gold Stocks Lose Luster

The markets were a little more full of zest today than the coma I have found them in lately. That's not to say it was a good day for the bulls, unless you call a little bond rally good for bond bulls. Otherwise, oil, gold and the stock market were down today. The NASDAQ stocks seem to have performed better than the Dow and SP500 stocks over the past few days.

Tonight DELL reported earnings that were in line with expectations with revenues below DELL's and analyst's estimates but still the stock was up a dollar in after hours trading. Tomorrow we will see if DELL can indeed hold the market up. Don't forget it's Friday the 13th.

We have been patiently waiting for the HUI index to go down less than gold. More specifically, we are thinking that gold will go down and the HUI will hold or go up. That is the signal for us to start to think about buying gold mining stocks. Well, today I checked the HUI during the day and found it down $8 near the end of the day, finishing down 7.12 at 172.83. So, I checked gold because with the big drop in the HUI, gold had to be down big. Well, it was down but only $6, again less than the HUI. Gold did break some support And, PAAS, was trading under 13 today before closing just above it at 13.02. We still need to be patient here with the HUI breaking below 175. The dollar continued its strength today closing at 85.49, above the April highs, and looking to move up to resistance in the 87 to 92 range. This should put added pressure on gold.

Like we said in the Wednesday Update, we need to reassess our position with this break of 175. It may be headed down to 163, at which time we would be inclined to take a harder look at it. But, remember our thought is that the HUI must not drop as much as gold, otherwise we are looking for more downside in both the metal and stocks. We'll be looking closely to see how the trader's commitments look on Friday evening. As we said the commercial's net short position dropped 30K contracts last week but the number was still large.

The stock market seems just about ready to be over with this latest rally phase. Today the Dow managed to close under 10,200 in a quick sign that the trading range of 10,200 to 10,400 may have ended today. (This in spite of oil dropping almost $2 to close at $48.54.) We should see confirmation of that tomorrow in order for it to be true. With DELL out tonight, the futures are indicating a positive opening but there is a lot of time between now and Friday's close. In any event, the market seems ready to drop right here. We will monitor the signs tomorrow and give you an update for Monday morning.

Have a great weekend and happy trading.

Dow Industrials: 10189.48 -110.77

Hedge Funds Drag the Market Down

Today's market decided to pay attention to various rumors about Hedge Fund trading. The rumor was that a large hedge fund needed to liquidate some major holdings even though these things really can't be confirmed. The fact that the market traded down on this news related item seems to present two different thoughts. The first is that the market wants to go down, it just needs a reason. The second is that the market is searching for a point of support.

The best I can say is that the market is not very strong and the players are not either. People made comments about how the market dropped today, like 75 points or so was devastating. This market has been nothing like a bull market but those who own stocks want this rally to lead to another bull run like we had in late 1999 and early 2000. Do not be taken in by this market, it will not turn out to be your best friend.

We promised a preview of CSCO last night. CSCO's earnings estimates were for about 22 cents. Actual earnings before items were 23 cents and after items were 21 cents. So, you could say that they beat estimates by a penny a share--please, not again.

Even the mining stocks took it on the chin today. I have felt that mining stocks would probably go the way of the general stock market on the next down leg, at least for a while. Today's move down in the mining stocks ran counter to the metals going up. This is not a good thing for those of us looking for the opposite: mining stocks going up when the metals go down. We continue to wait for a good opportunity.

Look for the Wednesday Update in your email.

Dow Industrials: 10281.11 -103.23

Monday's Should Be More Exciting

Not much to report this evening as nothing much happened. All I can say is that Monday's should be up normally as its the first of the week but this wasn't much of an up. I think it has to do with the basic nature of the rally we have seen.

Bull markets don't ever give you time to think about whether you should buy or not. They just go up and you have to either buy now or face higher prices later. This market is not doing anything of the sort. It is letting anyone get in whenever they feel like it.

Maybe something will happen tomorrow. Actually the market seems to be waiting for the earnings news out of CSCO and DELL this week. CSCO is tomorrow night and we will see what that brings. We will report the early results tomorrow evening. See you then.


Dow Industrials: 10384.34 +38.94

Employment Numbers Bullish???

Bullish at the opening, anyway. Friday's Employment data blasted the futures and the Dow up at the open, something we said would happen in any event; however, the bonds were disappointed in the strength of the numbers. The employment picture certainly looked brighter after the 100k better than expected number came out for last month and the two previous months had large upward revisions as well.

As expected the markets printed the high prices of the day near the opening with the SP 500 actually down on the day. The Dow and the SP 500 ended pretty much on the lows of the day with the NASDAQ 100 faring a little better than that. The bonds never recovered. The dollar was strong, besting its late April highs with a bullish chart pattern.

We were hoping to get on board the gold mining train this week so we continue to watch that market carefully. The possibility is strong that we are seeing lows in the prices of these stocks this month that may hold for quite some time. Finally the trader's commitments show a marked drop in the net number of short contracts, a remarkable 30k net drop. Gold seems to refuse to drop down much but we still feel the metal could go below $400 in the near term.

The Fed increased rates again last week with the possibility that it may be the last. Now, that is not what they said but what the Wednesday Update THINKS may happen. This is one good possibility for gold. The potential for higher interest rates have propped up the dollar for the Fed and Friday's Employment statistics also brought some strength to the dollar. As the economy gets stronger, interest rates should go up...at least that's how the market seems to interpret the numbers. If interest rates don't actually go up at the next Fed meeting in June, the dollar could suffer, enhancing gold's chances. The Fed knows this and is concerned about this possible outcome.

We will monitor the situation in the gold to look for opportunities and if you really can't wait, go ahead and watch some of the gold stocks to find good spots to get in. Again we recommend the BGEIX fund which closed at 10.37 on Friday. To take advantage of the potential drop in the stock market along with the possibility of higher gold mining shares, you could look at BEARX fund as well, closed at 5.44 on Friday. Both of these funds are good possibilities at the moment.

Dow Industrials: 10345.40 +5.02

Another GM Day

Today the market tried its best to move up until Standard and Poors downgraded GM's debt to Junk status and shortly thereafter said the same thing about F. The market immediately decided to sell off on this news and dropped nearly 100 points in a short period of time. Of course, they took care of all the worries about that and then bought the market the rest of the day only to end down about 44 in the Dow. GM fell on the news and traded around 31 most of the rest of the day, ostensibly due to Kerkorian buying shares at that price, yeah right.

One other news item of note was a bomb going off near the British Consulate in Manhattan just before the market opened this morning. And, by coincidence, the Brit's were having an election for Blair today, which he and his party won, but not with a big margin.

Tomorrow morning we get the monthly status on Employment which usually makes for interesting trading. I have been trying to think of a way the market could open down tomorrow and I can't come up with one. If the jobs are less than the expected 175K, the will buy them due to the Fed being able to slow down their incessant increases in the funds rate. On the other hand, if they are more than that, the economy is on the mend. So, the market should rally at the opening tomorrow.

We of course are interested in putting on more short positions but really can't justify a clear cut trade this evening. Maybe we can recommend a better trade on Sunday evening. Until then...

Dow Industrials 10340.38 -44.26

The Fed's Double Pump

Today's Fed announcement of a 25 bps increase in the funds rate was met like a nonevent. The Fed has accomplished what they intended, increasing rates without really bothering the markets, effectively losing the element of surprise. They did pull a little fast one at the end of the day by submitting an addendum to their earlier statement.

A short time before the end of trading today, they said they had inadvertently dropped a key sentence from their earlier announcement: "Longer-term inflation expectations remain well contained." This statement had appeared in their March statement as well. If you could go to the Big Charts link at the right and chart the INDU, for the Dow, on a one minute two day chart, you will see the quick burst of activity right at the end of the day. That would be about a 50 point ramp job into the close to bring the Dow back into positive territory for the day, up 5 points. There was some movement after the earlier announcement but not really very much.

I continue to be fascinated with the gold market especially on a day like today when the Fed is raising interest rates to prop up the dollar. This runs against the gold but gold managed an okay day while the mining stocks were up. Looking at the HUI index you can see a positive move all day today. This is the kind of action we are looking for in order to add some of these mining shares to our portfolio. We may be getting pretty close to doing that tonight. Stay tuned.

All Eyes on the Fed

Tuesday the Fed makes its announcement of the funds rate along with a statement that will be carefully scrutinized by the market participants. To me, the market seems to think it's a foregone conclusion that they will raise rates 25 bps, as previously mentioned in the Wednesday Update; but, their statement could be a catalyst for the market, one way or the other. My take tonight is that this week the market wants to move up and it will after the announcement. Between tomorrow's announcement and June's announcement there will be significant time for the market to draw another conclusion, a much more bearish one.

The Fed needs to continue to prop up the dollar and not scare the stock market (at least that's what it appears they want to do, who knows for sure what they think they need to do). By raising rates and hoping the whole yield curve moves up, the dollar can continue stronger. The fore warning they have given to raise rates has given the participants ample time to unwind any problem carry trades but at the same time the yield curve is flattening, to the dismay of the Fed.

The other topic we will continue to mention here is the gold market. Today we finally saw some tightening in the spread of the gold and the HUI. (For more information on this topic, please click on the True Contrarian link.) For the first time in a while gold dropped more than the HUI and the HUI actually moved up into the close. This marks the first whiff of a buying opportunity in the mining stocks like PAAS. We still are going to wait but as we always say, you are the captain of your financial ship.

AIG was up today on news that the company seems to want to become more transparent and will shed about $3 billion in net worth. The market needed to be assured that something was being done to shore up confidence in the stock. Now what???

... and That Makes 10

In the last Wednesday Update, email version, we commented on the Dr. Jekyll and Mr. Hyde type market we were in, one day up and the next day down. In that Update we said that the market had done that, in terms of the Dow, for eight straight days. Friday makes 10 straight days of back and forth action.

Tomorrow morning we should probably watch for a down day but Monday being the first trading day of month, that doesn't seem likely. We will see. Actually we are hoping for a little bit of a rally this week into Friday's Employment news so we can get some more short positions established. The market is prepared for the Fed's impending increase in the funds rate but they are all waiting for some news on the future course of rates. Our guess is that the market will cheer any news out of the Fed at this week's increase but time will tell. So, it's the beginning of the month and the bulls are happy. We don't know why exactly due to the poor performance in March, but who knows what makes bulls tick, not this contrarian.

We received our first comment to the blog last week, thanks. The reader asked about the possible signs of when to buy PAAS, our favorite little silver mining stock. We have been cautious on the metals due to the incredible drop in their prices of late, so much so that the 200 day SMA in PAAS has turned negative, a bearish sign indeed. See the comments for more info but if the Fed does decide not to raise rates, possibly have to wait for June for that, it would give us the first solid fundamental shift in the precious metals. But, for now, I don't think we need to get too aggressive here. I checked the commitment of traders for last week, very bearish as they increased their net short position by over 25,000 contracts.