Da Friday Market Review

Da markets did not do so hot today. Well unless you were out of the wrong markets and into the right markets then you did just fine. The wrong markets to be in are stocks as they seem to be topping out. The rally is looking long in the tooth and any further gains will be minimal. The volatility in stocks this week means that traders are not too sure of what is going on. A read one market watcher posit that this is due to "churning" where fast money is moving in and out of different sectors trying to find something of value; stocks are also being shifted from strong hands to weak hands. Thus, the stock market is in a topping process. The next step after the topping process would be the "stocks are breaking down" phase. But we are seeing hints of that already as Goldman Sachs had a bad day today and is threatening to break below technical resistance. I don't have the charts out but it appears that you could get a faint hint of a head-and-shoulders topping pattern in the Goldman Sachs chart (ticker symbol: GS). The stock is off a good ways from its recent highs. So that one is breaking down. Oh, and all the other financial stocks were down some today too. They always say that the overall market doesn't weaken until the financial stocks sell off. Well, it looks like they are currently doing so. And Goldman Sachs could very well be this leg down's Bear Stearns. Ahh, why hedge? Goldman Sachs WILL BE the Bear Stearns-esque poster boy for Wave 3 down.

If I am not mistaken home building stocks were also down today (if they weren't then disregard this sentence). Two of da chicks on See 'n Be Seen (for those home gamers hooked into the inner-nuts go to Dubya-dubya-dubya dot See 'n Be Seen dot CON) said that the tax credit for new home buyers expires today. But I don't see the huge rush to go out and buy a new-and-imroved McMansions (new-and-improved McMansion is real-tee-whore-speak for old, used, and dilapidated McWalk-inClosetwithDoublePlusPropertyTaxes). It seems as though people are calling the banksters' bluff and continuing to rent and not get any more "over-extended" ("over-extended" is Bankster New Speak for 'not throwing good money they don't have after bad money they don't have). Houses will not clear the market in meaningful numbers until the price of an average house reflects what the average home purchaser can afford. Prices are still relatively too high as is the supply of houses. Also, most new home sales are foreclosures -- and I would guess that they are being bought up by 'specuvestors' and not actual would-be homeowners. "Rich Dad" types as opposed to "Genuine Wealthy Uncle" types.

Generally speaking, don't buy the FIRST bank-owned house in a neighborhood. Buy the LAST bank-owned house in a neighborhood. And, crazy, as it sounds my upcoming Tulip Mania Too Point Oh will coincide with a bottoming out of the Real Estate Market (REM).

The no-brainer investment of the year (Fiat Metals) is doing just fine. Go to your local bank teller and ask him or her about them. Pick some up. Better yet, pick a lot up. If you cannot pick a lot up then buy a gym membership or use Jim's membership, get your butt down there, and start working out dammit. Because the Spring Selling Season for Houses may be over, but the Summer Buying Season for Picking Up Women is fast approaching. It is called the Full Fiat Metals Full Body Workout. More on that later...

DOW 11,008. DOW is still above 11,000. But just barely. DOW below 11,000 is when the people are gonna start getting worried. Sell-in May and Go Away (And Don't Come Back 'til Judgment Day) is gonna get here right on time. Not enough upside in stocks and too much downside (DOW 3,256...) for me to advocate staying in. If the DOW and other indices have already put in their nominal highs for this Great Suckers' Rally then this bull-esque run could mimic the 1930 secondary top if it churns in May, sells off violently in June, bottoms out around the 4th of July then rallies into Labor Day somewhat before all hell breaks lose again. Basically, this market has too many warning signs to remain bullish. The next few weeks are very important. As is Monday's market action.

Gold had a good day. Up another ten bucks to around $1,179 an ounce. Gold bucked the downtrend along with silver. The VIX was up too. Not sure what the dollar did. It is sitting at 82 and it is in a trading range between 80 and 83 until further notice. Gold rising is not a good omen for paper money. Silver is running up nicely, going up 39 cents an ounce on Thursday. I wouldn't rule out a run at $20. As I posted in a gold thread on Da Message Board $1,179 GOLD is very important. As it could go either way. Well, now let's see which way it goes. What it does will tell us what we should do along with rounding out our core position in gold (if we have not yet done so) and continued buying schedule (every few weeks or whatever works). If gold continues to rally then we buy more silver. If gold's rally fails then the start to really back up the trucks on Fiat Metals. Craig Oxley thinks that the US will stop producing coinage in September. So between now and then will be "back up the truck" time for Fiat Metals. Starting in September it will be the 'last decent chance to get into physical gold' time. ... quickly followed by "the last best chance to buy physical silver" timeframe.

Short-term gold above $1,180 means that gold can run-up to new nominal all-time highs. We could see a mini-panic spike all the way up to $1,250-$1,300 until the next cyclical correction (quite possibly the last one before the next long bullish phase begins). A weak July for stocks could bring down paper gold prices, but as long as stocks don't completely collapse I can see gold having reasons to push higher in the month of May. I am thinking of doing one of these updates during Monday's trading session. I am also thinking of doing one of these overviews after the close every Friday. So stay tuned...

... and have a great weekend everybody!









da bear

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