Tuesday, June 15, 2010

Red Gold

No, it's not a new variety of the precious metal, just reflection of the general mood in the sector. Below is the GOLD Rotator and this is more red than we've seen in a long time. The lone holdout, LIHR, is in the midst of a merger with Newcrest Mining who has just completed their due diligence process. Over the past 2 weeks we've noted some arbitrage opportunities with GLD and NEM, but the future of those situations has lost it's shine for the near term.
GLD may resume its uptrend, having only stalled at the lower LR30 channel band and not broken through to the downside. If we do see a "kiss-off" of the channel that may be the time to be short. . .for now there are to too many unknowns and associated risks. Flat is the safest bet for now IMHO.
Now, you wanna talk oil spill?
Here's a little item by Anene Ejikeme on NewYorkTimes.com that makes the BP blowoff look like a Saturday driveway spill while changing your car's oil.
Meanwhile, Senate Dems want BP to pony up $10 billion to cover sprill damages (I said this number was volatile) no doubt providing at least part of the impetus for the intraday 10% drop yesterday.
And, before you get lulled into the mindset that the worst is over and that a market bottom is at hand, take a look at Monday's volume, which is more reflective of short covering than serious accumulation.

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