Almost But Not Enough

Perhaps it was the looming downgrades (which were announced) or reappearance of that pesky pimple that is Greece, but the market’s attempt at yet another afternoon switch from negative to positive didn’t happen today.

Some highly rated companies continued their move up while others remained flattish. The dividend “bond replacements” were mostly flat, large cap tech was mixed with Microsoft up, Intel down big, IBM down, and Cisco flattish. The MLP’s – gas pipeline partnerships, continue to leak – they are losing favor and according to Oil & Gas Investments Bulletin newsletter writer Keith Schaefer, the increased extraction of natural gas in more localities (benefits of fracking) will lead to lead to reduced need to pipe the gas long distances. For example, the increased gas extraction in the New York state area means New England gas customers don’t have to ship the gas from the midwest. Perhaps investors are selling now rather than finding out later.

Gold and silver were down. Gold is in a 4 month downtrend even though the price regained the 50 day moving average. The silver chart is a disaster. Basically this means that buyers (which are needed to push prices up) will just be taking small chances and using tight stops on buys until the charts look better. Translation – continued choppiness until some currency disaster gives them purpose again (which I believe will happen). Though precious metals may be cheered by the fact that most members of the Fed Open Market Committee favor more monetary easing (CNBC story here).

Oil is still below 100 – I think the oil market wants to go down but there are enough people betting on an Iranian scenario to keep prices up. Just my opinion but oil would be lower without the Iran interest. I’m not smart enough to know what the price could be without an Iran situation going on. However, on the other side – commodities are trying to rally (witness copper) so oil might go up anyway now. I must refer you to yesterday’s rant on traders to figure this all out, because I won’t guess at the future.

I continue to recommend strong risk management – meaning a trading plan and careful about liquidity – and though the market seems calm, I expect some excitement soon. As a note, the futures look a little down, but I’m not sure how the retail investor will respond to the S&P downgrades, which I call “Epimetheus,” because downgrading Europe is an after thought.

At the time of this writing, I or my clients own the following investments mentioned in this column: Gold

Note: this article is meant to be some helpful thoughts to share and not investment advice specific to you. Please consult your own advisor regarding investment and financial decisions. See our disclosures page