With the above in mind:
U.S. Stock Market – I said in the weekend update that I suspected the bears would look to add to Friday’s drop today. They certainly did. But before one assumes this is the resumption of the major downtrend, I would like to point out today was not a complete victory for the bears. The bulls may be licking their wounds but they do have a few reasons not to commit suicide until at least the end of trading tomorrow.
If there’s such a thing as an orderly 250 point down day, today was it. There were a whole host of reasons to open sharply lower and we did. But much of the day saw limited waves of selling on lower volume. The final hour (the most important hour of every trading day) actually saw selling pressure dissipate and the market come off its lows. This is not something seen much during the severe decline. Yes, it’s only a crumb but to a starving and beaten bull, it can pass as a meal these days.
A distinct lowering of bullish enthusiasm combined with a dramatic increase in pessimism among retail investors (a much needed occurrence if there’s going to be any real bottom) is also an early sign all may not be as bleak this time around. One shouldn’t have been surprised that bulls raced to take profits after such a long and painful bear market. It’s like a game of craps (not that I ever been in one-lol) when after a long dry spell, a shooter gets hot and makes the longs a fair sum of money back. As soon as that hot shooter sevens out, most longs say color in (they cash in their chips and leave the table).
The difficulty remains an almost certain weaker employment number and horrendous 1st quarter earnings. The market is unstable at best and appears in no position to stand another shock and awe attack by short sellers on top of bad news. Bulls can only hope for a draw in the near term.
Oil – I truly don’t wish to offend anyone but I often wonder how some people will ever make money investing. Case in point; I started liking oil in late December at $36.50. The market was overwhelming bearish at the time. I kept emphasizing the long side despite perceived bearish news. While oil worked its way higher, certain people kept asking was it time to get in? When oil went to $54 last week, those very same people asked did they miss it. Today, they decided to have a one-day sale and what do those people do? Ask should they now wait to see if it goes lower. No offense but they would be much better off playing bingo or something.
We ran up 50% in just three months during a period when current fundamentals look like such a rise is unjustifiable. This may well be true but like I said in this weekend’s oil commentary, I believe the market has already discounted the present fundamentals and is looking at a much more favorable oil market down the road. If one concurs, one needs to use any real pullbacks as buying opportunities. The 50-day M.A. is in the mid 40s and I think that’s the worst case scenario as of now. It would not surprise me to see us snap back above $50. Wednesday’s inventory numbers are likely to have more of an impact this week than normal. Stay tuned.
Gold – A stronger dollar and talk of IMF sales-again, help push gold lower. It remains in a trading range.
Base Metals – Pullbacks are buying opportunities.
U.S. Dollar - any further rally up to the 88-90 area on the Index is yet another selling opportunity.
I have placed our debt clock at the top of the blob just in case anyone, including me, gets caught up in “happy talk”.
“Running into debt isn’t so bad. It’s running into creditors that hurts”.
(my NJ Devils 3-time Stanley Cup Champions outfit will be on for the playoffs) and see if I can keep getting lucky on my very sophisticated “guessing” program.
