Today, Wall Street had a grand day, the 8th largest single day ever with a 391.47 point gain on the Dow Jones Industrial Average raising it to 12,654.36. Because of the temporary confidence in the stock market, gold and other commodities fell sharply. What does this mean in the grand scheme of things? Not much.
The stock market's rebound over the last day and a half is just the market consolidating a bit since its decline started several months ago. Markets rarely move in one direction for too long before bouncing several times. This is one of those bounces.
Today's rise in the stock market is partially due to the perceived notion that the woes in the credit market are softening. I think this will be short lived. Also, Lehman Brothers wants to raise more capital for themselves offering 4 millions shares of convertible preferred stock. Their subscription for these shares was 3 times oversubscribed, indicating a strong desire by investors to put their money with Lehman. Another bank that did well today was Citibank, whose shares rose 11.3% to $23.84 per share. Again, I believe these gains in the market will be short lived. This is just another bounce.
Gold, silver, and oil all fell today. Gold dropped more than 3% to $884.30 per ounce. Silver dropped over 2% to $16.91 per ounce, and oil dropped to $100.77 per barrel. The US dollar index also gained strength because of the renewed confidence in the credit markets rising to 72.53. As I have pointed out in previous posts, stocks generally will travel in the opposite direction of precious metals. As one strengthens, the other weakens. The US dollar index will also go in opposite direction of precious metals.
As pointed out almost a couple of weeks ago, if you are still interested in getting into precious metals, now is THE time to BUY. This retracement is not likely to last long. The manipulators are setting everyone up for another fall in stocks and the value of the dollar. Just beware and watch it happen if you aren't convinced.
You who live by many waters
and are rich in treasures,
your end has come,
the time for you to be cut off. Jeremiah 51:13 (NIV)
If you have comments or questions, please feel free to contact me at the address below.
Email: DeltaInspire@panama-vo.com
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