Tuesday, March 1, 2011

Stock Suckers Swallow Hard; Silver, Gold Soar

The past two weeks have been good times indeed for holders and hoarders of silver and gold, but today's trade may just have been the best of the bunch.

Not only were the precious metals (you realize there's good reason they call them that) up substantially, but, on the heels of more lying dissembling testimony by Chairman Ben the Monkey Man - who steadfastly believes the economy is recovering and that inflation is "under control" - stocks took another well-deserved beating.

Sure, as famed investor Marc Faber pointed out in a recent interview that holding stock is better than holding corporate bonds because you at least have "something" to show at the end of a calamity, but for holders of those paper (now electronic) stock certificates, the calamity hasn't even begun. There will be casualties, even though the financial press, led by cheerleading morons on CNBC, won't bother to shed light on many details.

It was an enjoyable day for those sitting home in robe and slippers, relaxing as their gold and silver holding appreciated. Gold shot past its previous all time high of $1,421.00 en route to a fresh closing at $1,431.20, up a rock-solid $21.30. Silver, already having made a new 31-year high on Monday, eclipsed that mark with another gain of 61 cents, finishing in New York at $34.42.

The downside was that gold bugs and silver surfers will have to pay more to flee the country with their hoard, since crude also popped to new recent highs, with West Texas Intermediate up $2.66, to $99.63 on the NYMEX.

As for the stock suckers, read 'em and weep:

Dow 12,058.02, -168.32 (1.38%)
NASDAQ 2,737.41, -44.86 (1.61%)
S&P 500 1,306.33, -20.89 (1.57%)
NYSE Composite 8,315.85, -122.70 (1.45%)

Declining issues pounded back advancers, 4950-1638, a ratio of better than 3:1. On the NASDAQ, there were 96 new highs, 33 new lows. The NYSE saw 189 new highs and 17 new lows. Volume, as has been the case on all losing sessions, was elevated.

NASDAQ Volume 2,239,243,250
NYSE Volume 5,358,425,500

What really should be worrying the stock jocks at this juncture are three things: 1. economic data has been strong, but stocks haven't followed, suggesting that "good" news is already priced in; 2. the vix has taken a couple of enormous jumps on recent down days, and, possibly the biggest worry of all, 3. the Dow and S&P each experienced today a double engulfing day, in which the day's highs and lows took out the highs and lows of the previous two sessions. That scenario is a textbook indicator, chart-wise, for a directional reversal. If such is the case, the hints that something is not all right with stocks over the past two weeks is really foreshadowing for a classic 10-15% correction.

These indications are all occurring against the backdrop of insolvent banks, fiat money depreciation, global civil unrest and non-stop monetary stimulus by the Fed, the ECB and the CCB (China Central Bank).

Important data is dead ahead for marketeers. On wednesday morning, the widely discredited ADP Private Employment Survey for February is released, and on Friday, the laughable BLS Non-farm payroll report. Both data sets will be released upon the usual suspects prior to market opening.

Stay tuned. The fun has just begun.

No comments: