Stock indexes slightly higher, Commodities rebound sharply

Stock indexes rallied a bit today in a very choppy session. Refer to the QQQQ chart from the post yesterday and you’ll notice the rejection tail left on the candle, indicating support is holding, at least for now. Momentum also turned up from the oversold area, although the advance/decline line continues to deteriorate. There isn’t much evidence of a rally, but prices could see a little upside here, and sentiment is certainly negative enough. I’d watch the tail area on the candle from yesterday as prices could easily work back into that area and negate the slightly constructive picture developing.
Commodities rallied today, with gold erasing the large drop from Tuesday, and oil making a new high. Regarding some of the gold hype I’m hearing recently, both in the radio ads and analysts on CNBC, the projection of an inflation adjusted move to the old high from 1980 of over $2000 for gold is a bit silly. The price did hit over $850 early in 1980, but that was not a price where gold spend any time trading. There was a series of limit up days in both gold and silver, followed by a V shaped top and an equivalent number of limit down days. There was only a brief moment at the $850 level for gold and the $50 level for silver. It was a blow-off exacerbated by the Hunt brothers attempt at cornering the silver market and the subsequent change of exchange rules right at the top. The average price that gold and silver had been trading at through that period, or at least the price levels where trading activity was actually being facilitated, was at a much lower price, at we are trading in that range now adjusted for inflation. I doubt if any of these analysts knew the character of the market at that time as most of them weren’t born yet. I was there trading it.

Leave a Reply

Your email address will not be published. Required fields are marked *