Grandich's Blog

I’m hoping to pen a more detailed update to be released before next Friday. Please note I’ll be on “Market Call Tonight” next Friday night, May 1^st, at 7PM DST (www.bnn.ca)

U.S. Stock Market - My old friends in the bear camp appear to no longer have the upper hand. In fact, if I was them, I would be really concern for the first time in 18 months. Like it or not, the stock market is no longer listening to their growls. The hunters are slowly becoming the hunted. Yes, from a fundamental standpoint, one could easily argue that things are as bad as they were a few months ago (or even worse). But such a view is one of the two worse investment strategies IMHO:

1- Most times, markets have already priced in what’s known or what’s anticipated not far down the road. When the expectations are greatly tilted to one side, the assumption can be made most of those who are on that side have done what they’ve had to do. The danger then is if any real opposite news or a different perception begins to take hold, there’s usually a strong reaction the other way. The $64,000 question that remains is the staying power of the new move.

2- Hoping for things to change. Hope is a great spiritual gift but the worse investment strategy.

I said in last weeks update – “After giving me the biggest oversold reading in nearly 25 years just one trading day before the big rally, my technical work has triggered a short-term sell signal. This type of signal simply suggests that the market is vulnerable to some serious consolidation and/or correction. It doesn’t mean straight down Monday at 9:30AM, but it does suggest being careful on the long side for the next several sessions. The one fly in this ointment is the shorts are starting to get squeezed hard and each time it looks like we peaked, more shorting comes in only to be met by another leg up.”

The correction appears to have been Monday and the consolidation this entire past week. The fly seems to be real as many big bears were expressing frustrating that the market was not paying attention to “facts”. You’ve to start to ask yourself what it is going to take to get a true resumption to the downside (more on that in my next update)? The bigger question is what should I do if the market keeps rising?

If the DJIA and Dow Transports can get above their April 17^th highs by more than 1-2%, look out shorts. The only way my short term sell signal gets extended is if we close below last Monday lows. Stay Tuned.

U.S. Treasuries – Despite dramatic Fed buying, the 10yr. Treasury note is right back up against key resistance at 3%. While the only thing one can guarantee is death and taxes, I feel even stronger that my no-brainer bet for 2009 – shorting the ten and thirty year Treasury bonds, looks even better.

Precious Metals – Had a nice rebound off key technical support levels but they not only need to hold these gains, but add to them in the near term to eliminate any real fears of a much bigger correction.

Base Metals - Some profit-taking and consolidation was expected and is healthy. I would be even more bullish longer term on copper if we can correct back to around $1.85 first. I believe buying on any sustained weakness is now in vogue.

Oil – Again, here’s a market where the overwhelming view is one-sided (bearish) and the fundamentals appear to justify it (record current supply) but the price movement is heading in the opposite direction.

NFL Draft Fans – No matter who you root for, the next two days are always dreams of drafting that one low draft pick that turns out to be a superstar. It’s as rare as a blue moon and here’s who I believe was the best ever in this department. Klecko was drafted in the 7th round and ended up the greatest defensive player ever to wear the green and white.