Stock indexes dropped sharply today despite the euphoria over the new Obama administration. I thought for sure he’d take a few minutes off from the celebrations to sprinkle some of that magic pixie dust over the Fed and Treasury, and then all would be right with the world. Maybe he’ll do it tomorrow.
The inauguration cost over $170 million. You’d think with the economy in the toilet that a more modest inauguration would have sent a message that Obama is serious about change. Maybe that is change. It is the most expensive inauguration on record. A hundred and seventy million really doesn’t matter when we are talking about a trillion or more to prop up the economy, but it would have been a good symbolic gesture. The liberals are good at symbolism over substance, and this would have been a perfect opportunity. It’s like Algore wanting all of us to drive around in Priuses when he was driving around in big limos and flying in private jets. He knows how we should live, as long as he doesn’t have to comply. I recall many years ago when I was living in Hollywood during the height of the gas crisis in the 1970’s, there was a movie premier. All the stars were lined up, waiting to arrive at the red carpet, all in their big black limos. In the middle of the long line there was one little Pinto. And that’s not a bean. That was the name of a little Ford car for those who might not remember, as there are none left on the road to my knowledge. And out of the little Pinto comes Jane Fonda with one of her ex-husbands (I think Tom Hayden). Now I’m not a big fan of Jane Fonda, at least not as far as her politics and her antics in Vietnam, but at least she addressed the current crises and had the decency not to arrive in a limo that gets three miles to the gallon at a time when they were rationing gasoline. I think this is the only time I’ve ever said anything nice about Jane Fonda. Obama had an opportunity to show he means business, but instead chose the glitz. Perhaps he is trying to send the message that bad times are behind us, that all will be well, and we can all live it up and spend with abandon. Maybe so, but he needs to sprinkle that pixie dust first. I’m sure he’ll make time to do it soon.
The stock indexes are having a difficult time holding on to any uptrend when the financials keep getting hammered. That was certainly the case today. Trends, at least as defined by my moving averages, seem to be caught in a sideways to slightly down range. With momentum oversold I’m not in the mood to chase prices down, and I see little reason to be long, so I still sit and wait.
Gold is still looking constructive. The trend lines stayed positive even as prices dropped below them for a few days. The regression channel with a standard deviation channel is pointing upward, and mostly containing the swings, except for that recent drop, but now price are back inside. Momentum and trend are up for now on the daily chart. On my previous post I had a weekly gold chart that showed a long corrective channel down after the huge bull market of recent years. If that top channel can be broken maybe the next leg up will follow.
Check out this video from INO Market Club. They have a market timing system that I’ve been following for a few months and this video explains some of the results over the last few quarters in metals, oil, and grains. I’m not sure how well the system performs over a very long database, or over all markets, but from what I’ve seen so far the results on the daily charts on the active stocks and etfs are quite good. Just click the arrow in the middle of the video clip to start.