Stocks were going bonkers early Tuesday evening, presumably celebrating better-than-expected quarterly earnings from Intel. The chip maker announced after the close that business has been strong, driven mainly by back-to-school purchases of notebook computers. The news evidently had been leaked all over the Street, causing traders to push the chip maker’s shares to a 52-week high earlier in the day. However, DaBoyz waited until after the close to spring a trap on stock-market bears, gunning for thin offers in the illiquid markets that typically obtain at night.
Indeed, most of the round-the-clock issues we track were getting squeezed higher, threatening to send shorts scrambling at the opening bell Wednesday morning. Akamai (AKAM), for one, a stock whose purchase we recommended in August when it was trading for around $17, was hovering near 21.18, 38 cents above the day day-session close. And Google, still one of the best stories on Wall Street, was brushing up against 530 a share after settling on the close at 526.33. At this rate, the stock could reach the 553.87 target that we sent out to subscribers in mid-September earlier than expected. The Web-search Leviathan’s shares were trading around 488 at the time.
Gold Barely Flinches
Gold futures remained stolid in the face of this surge in bullish hubris. The Comex December contract was unchanged at $1065 per ounce as of 7:30 p.m. EDT on price oscillations too subdued to yield any hints of tomorrow’s mood. Earlier in the day, the Decembers had climbed to within less than $5 of the 1074.50 target we’ve been using as a minimum upside projection since early May. It’s taken longer than we might have expected to get there, but now that the futures are about to interact with the target, a “Hidden Pivot,” we’ll be able to determine with confidence whether they are feisty enough to get us to the next target, 1134. We’ve advised long-term bulls to lighten up at these levels, but it may not be for long if there is as much strength percolating beneath the surface as we suspect there is.
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{ 7 comments }
As to gold, I’m wondering if anyone noticed the deep drop in lease rates (on Kitco) right about Oct. 8th. Dropped for a few days and then bounced back up. What’s the meaning of this, does anybody know?
Could it have anything to do with what Rob Kirby recently wrote about? He said he had info about some late future buyers that demanded delivery, despite being offered a cash settlement over $200 over spot.
When lease rate infarcii happen, consider it as sincere a change in the wind as you would the widening of credit spreads.
I prefer to think of it in pictorial terms, where the Grinch is hanging onto a sled laden with booty at the edge of a precipice. It edges ever closer, the Grinch trying ever so much harder to maintain his grip.
I believe an inversion of interest rates may occur.
Gold should be trading on a one to one basis with Platinum, it has several hundred points to go.
Fransix:
TBT shot up hard today. How does that fit with your analysis? Not questioning the analysis, but trying to understand…are we watching gold and rates go higher? Is gold dragging rates up, as it did in the 70’s?
Question to FranSix
“Gold should be trading on a one to one basis with Platinum”
Can you provide some more info on that, I had always thought these two were relatively uncorrelated, Gold being seen primarily jewelry and investment metal, Platinum more as a non-jewelry industrial metal (cats, labware, etc)?
Just wondering about that tie-in!
We like DZZ above 15.83 with a 1% trailing Buy Stop…
If gold trades on a one to one basis with the S&P, nobody notices. But try to suggest that gold should be trading on a one to one basis with its real price in terms of commodities. Gold has lagged in its monetary price, the financial number we assign to an ounce of gold, for decades and is behind by several hundred dollars.
Its not inconceivable that interest rates on gold leases should invert much like a steepening of the yield curve in treasuries or the widening of credit spreads between corporates and treasuries.
I’ve been following yields on Brazilian, Japanese and Australian bonds for some time. The yields on some of the highest interest rates have declined in the last month by almost 2 percentage points, while Japanese bond rates remain glued to the lowest possible rates.
Yes, the spike up in gold has arrived and is getting close to Ricks number…1071?? or 1074.
Whatever the number is come Oct 22/23 it should correlate to the price level of the ES at 1126/1143…possibly 1160 and YM of 10314/10640. No Monthly close should be above 11339 and 1235 or hyperinflation has kicked in.
Given the above Gold/Silver all commodities will come down hard with ES to 420-380 and YM to 4200-3800 and US $$ index rally from 75-72 lows to 82-85 by next march/june/july period. Have not worked out the time.
Only thing going up will be US dollar, confounding all the gurus and stop running all the commodity bulls/Index bulls..till they are all broke. Then we start again.
Watch Goldmand or JP Morgan tell its time to buy the S&P 500 In end October , early Nov 2009. This signal to get out of dodge.
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You get the contrarian of the week award, Soc. RA
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