Friday, December 4, 2009

The Big Unwind

Take your pick - gold, dollar, T-bonds - they all were ready for some sort of reality check. The problem with this is that the stock market ended higher Friday, shrugging off the biggest dollar jump in months. Wagging the dog, indeed!

Actually, the stock market jumped on the fantastically rosy employment data, where fully 0.2% of the population found new jobs!!! The Dow rallied 150 or so points and then collapsed back to zee-roe. Yes, a final rally into the close flipped the bears another finger. The strong finish, however, was not enough to negate the total intraday failure that preceded it.

I sold half my gold Nov 25, the day before the Dubai Dump, and had a good thanksgiving watching gold dump intraday, too. Then it came back to ruin my dessert. So, today I feel vindicated. My Marketwatch article ran Tuesday with the topic of - the dollar is due to bounce.

Needless to say, I am not breaking my arm patting myself on the back. The stock market apparently stopped following the dollar, short-term yields (the 2-year I wrote about in Barron's Online Wednesday) backed up so things are still too fuzzy to become complacent.

Now looking to get back into gold. Yes, this soon but not at current prices. Still needs to squeeze the shorts a bit more. And the dollar has plenty of shorts to squeeze too.

5 comments:

steven said...

Will the stock market continue to go up if the dollar rallies, as it did on Friday, in spite of the months-long trend of trading in (negative)correlation with the dollar? Talk about having your cake and eating it too!

joed said...

We're living in the land of False Breakouts and so we need to watch that DX closely but it seems to be behaving thus far, time will tell. Would like to see SP go to 1125/30area first before a spxu play!

Best of luck to all!!!!

Quick Takes Pro said...

Steve,

Will stocks go up as the dollar goes up? I think it won't, at least not yet.

Quick Takes Pro said...

joed,

best of luck indeed!

paulocuana said...

The current environment reminds me of the 1987 top. Specifically, after many rotations in leadership on the way up, at the top the high-yielding dividend stocks, especially the Utilities, were going to take the market higher.
We'll see what happens this time, interesting though to see the market pull back from S&P 1121, the 50% retracement level.
Paul O'Cuana