Wall Street closed mixed with only minimal moves either way. The market needs time so a short period of trading around the 2700 on the S&P is perfect. I had mentioned that the extreme volatility that we have had for the past few months might last till towards the end of January so rather hoping this is the case. Mind you if I am right about this period only being a waiting game for the next leg down of the bear market, then the extreme volatility is likely to return.
I have been asked what the odds are of having final melt-up in the US market. From where I sit the odds are not high – but I have learnt over the years to never rule anything out. All we can do is analyse what is put in front of us.
Looks as though I am going to get the correction I was looking for in gold. At the moment it appears as though it might have formed a little top pattern. I would like to see it back around $1300 – perhaps $1290. However, I must make it clear that I still believe we will ultimately see gold a lot higher. Silver found the rarefied air above $16.00 a bit much and did a quick retreat.
Wheat a feature again. It has gone on to form what looks like a lovely big base. Strength is probably more weather related than trade games. And crude firmed further as well. Watching to see if this market can confirm a base pattern.
In the wake of the disaster in Brazil, I am including a paragraph from the New York Times
“Tailings are the wet waste from mining operations, often laced with toxic chemicals. At thousands of mines around the world, millions of tons of the muck accumulate behind dams. The most common type of dam — and the cheapest to build — is known as “upstream,” made by piling up thick sludge and raising the height of the dam as the pond grows. At the mine where the accident occurred in southeastern Brazil, owned by the giant mining company Vale, the dam was 28 stories high.”
Had hoped that we might have got some sort of “rumours” as to the content of the Royal Commission report but so far haven’t seen a thing. One point that left me encouraged – the talk of how many shorts have been opened. Who is left to sell after the last few months of bad publicity? So maybe a bad result will only be short lived. But one point that really annoys me – releasing this report after we close so that international investors get the first go at it.
I mentioned some time ago that I was concerned that our 90-day bills were yielding more than 2-year government bonds. I saw this as possibly suggesting that the economy might not have been quite as rosy as the government would have us believe. Since then the differential has got even wider although now there are more signs that the rosy glow from politicians might not be quite as bright as had been suggested. We need to keep an eye on these figures as at the moment even the 10-year government bonds are only yielding a small margin over bank bills. This is not the way this market should work – well not when the economy is supposed to be bounding along.
(20min delay)
