Stocks opened lower yesterday but then climbed until just before the close when profit taking took a toll. Financial stocks were hit hard when the Fed refused to approve a boost in the dividend of Bank of America (NYSE: BAC). Also, new home sales fell 17% for February, which is another record low.
Daily Stock Market News
Dow: +67 at 12,086
S&P 500: +4 at 1,298
Nasdaq: +14 at 2,698
Volume & Breadth
NYSE: 877 million, decliners ahead 1.3-to-1
Nasdaq: 468 million, advancers ahead 1.1-to-1
Futures & Related ETFs
April Crude Oil: +$0.78 at $105.75; Energy Select Sector SPDR (NYSE: XLE) +$0.20 at $77.71
April Gold: +$10.40, settled at $1,438.00; PHLX Gold/Silver Sector Index (NASDAQ: XAU) +$7.71 at $217.46
What The Markets Are Saying
Yesterday’s bounce took the S&P 500 and Nasdaq back to Monday’s high but still below their 20- and 50-day moving averages. The Dow, however, did manage to close those barriers, but the bulls should take no delight in this since the volume was, again, very low and advancers barely beat out decliners across the board.
After slicing through support so easily from Friday, March 11, to Wednesday, March 16, it is not unusual for such rallies to easily bounce through the area of the prior decline since the decline leaves little resistance. Yesterday, however, the Dow pushed into an area of significant resistance late in the day but finding it difficult to make further progress it gave up 30 points in the last hour of the session.
The Russell 3000 (RUA) that was mentioned yesterday also failed to close above its major barriers. And the other broad-based index on which I rely, the NYSE Composite, also failed to make it through its 20-and 50-day moving averages.
Turning to inflation: Last week’s Producer Price Index (PPI) showed that inflation at the producer level jumped 1.6% in February. “This is the largest monthly increase since 1974 when the runaway inflation spiral of the 1970’s was underway.” according to Sy Harding of “Street Smart Report.” That period was not only characterized by high inflation but also low productivity and thus the term “stagflation” was born
Since the release of the PPI, commodities took off again with gold and silver leading the way. The iShares Silver Trust (NYSE: SLV) closed at a new high of $36.47 yesterday. Since January 1 SLV is up almost 20% and will probably run for another 20% before the end of the summer.
Inflation is now with us. Last year I warned repeatedly that inflating the currency had to result in an overall inflationary spiral of prices since no country has ever printed so much currency and avoided this most obvious negative impact. And yet anyone who dared to warn of the dangers of issuing cheap dollars was greeted with disbelief and even disparagement by politicians, economists, and even our Secretary of the Treasury. People who should know better but lacked the backbone to confront this most serious of all economic issues have weakened our currency, our economic security, and our standing in the world economic community.
Well, that’s my “rant of the week.” Now go buy some gold stocks.
My trade of the day today is Barrick Gold (NYSE: ABX). Read my recommendation of Barrick Gold stock here.
If you have questions or comments for Sam Collins, please e-mail him at samailc@cox.net.
