New York continued higher with the technology section attracting the most attention. Banks still stuck in the sideways range of the past couple of weeks. I just need time here. One worry I have on New York is the way investors are chasing yield. The high yield Corporate bonds ETF (HYG) has exceeded its September 2018 high while JNK which, as you can easily realise, covers higher risk issues, is only smidgen from last year’s high.
Gold actually got below $1310 and then bounced slightly. Could this be the extent of the decline? Possibly but I don’t really think so. However, I must stress again that even though I was looking for some short-term weakness in gold, I still think that it is going to ultimately surprise everyone on the upside. This week is also made trickier by the holiday in China as I feel that the main buying at the moment is coming from that quarter. One plus for gold is my old friend palladium. It has led gold for the past few months and it was again popular with traders overnight.
Zinc popped up nicely and with the stocks so low on the LME should start to attract more attention.
The big test for the crude market is coming up. I would feel a lot happier about crude building a base here if natural gas wasn’t as weak. I have mentioned many times that the natural gas market tends to lead the crude price – something else that is difficult to explain about markets. Wasn’t happy about the way crude rolled over in the latest session.
It does look as though the findings of the Royal Commission in Australia has been well and truly anticipated as I suggested could be the case in my notes yesterday. However, I think the public’s attitude will be changed forever as the dreadful behaviour that has taken place in what was once a respected industry, was put in the spotlight. I still have difficulty not shedding tears for the people whose lives have been so devastated by the greed that has been highlighted. We need to keep in mind that the banks have been falling for over a year so it is likely that they can enjoy some sort of relief rally but I also think that once this rally is over and the shorts - who have been nicely scorched - have covered, the stocks are likely to come off again. Looking at the long term charts of the sector, I suspect that once this episode is out of the way, we may well see them a lot lower.
The painful story with our lithium stocks doesn’t seem to have found an end. GXY back below $2.00. I was rather hoping that the plunge this sector had early in the new year might have cleared the stale holders but doesn’t seem to be the case. I will risk my neck once more by commenting that while lithium stocks continue to be the most discussed on Hot Copper virtually every time I turn my computer on, then it won’t be the end of the pain. Bear markets don’t normally end that way – usually it is with loathing not with continued broken-hearted love.
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