Wednesday, May 24, 2006

Chalk one up for the bulls

After some see-sawing action and a valiant push near the end, major indices all finished in the green. Volume was very heavy. Is this the reversal bulls have been clamoring for? It may well be, but some follow through is required now that the onus is on them. Again going back to September 2000, the S&P put in10-12 days of consolidation around the 200 dma before finally breaking. It remains to be seen what happens here.

I have been watching the action in PMs from afar. There are a bunch of targets in the low 600’s for gold. There are also two notable gaps in GLD at around $60.50 and $57.50. Anyone thinking of buying now has to be cognizant of potential hedge fund redemptions, many of which are restricted to quarterly. IMO, there may not be a meaningful low until well into June or even July.

I wrote sometime ago about my concerns with CME housing futures. Well, the trading started without much fanfare. The quote can be found here (registration and email maybe required). I’m still trying to make sense of the data. The May’07 price is slightly above that of Aug’06, but less than suggested by the risk free rate, which implies a small drop (maybe a couple percent). At least that’s my interpretation. The volume is so low as to make the data not very meaningful in my opinion. If you know anything about them please leave a comment.

Good luck and be safe!