The week started out with quiet, tight range-bound trading, but the action has loosened up in the last two days following another large earthquake in Japan. The market was able to pare much of yesterday’s earthquake-induced losses, but today, after gapping up, the market has drifted lower. The Friday sell-off accelerated in the afternoon, plunging through Thursday’s low before finding some footing. The market tried to break out of the mini-uptrend several times during the week, but was turned away. Ascending channels often resolve themselves to the downside before the stock/index can work its way higher.
Leading stocks made nice moves earlier in the week, but pulled off hard starting on Wednesday. Most, however, are still holding their 10-day moving averages, a bullish sign. The story early in the week were Chinese Internet stocks Sohu.com, Inc. (SOHU), SINA Corporation (SINA) and Baidu.com, Inc. (BIDU), which led the market, breaking out to new highs with momentum. All now sit just off highs, and could be among the first stocks to get upside momentum if the market can recover from this afternoon’s sell-off.
For more market and stock commentary, watch the T3Live.com Daily Recap with Evan Lazarus (below).
The next eye-popping moves this week came from the precious metals. Silver continues to outperform gold. Silver opened at new highs on Monday and never looked back, extending to dizzying heights this afternoon. Gold is also making new highs into the weekend as, amid government uncertainty in the US and Europe, investors flock to precious metals. Mid-week mining stocks also made a big move. The Market Vectors Gold Miner ETF (GDX) outperformed the underlying commodity Tuesday for one of the first times during the metal’s run. At these levels its hard to add to gold or silver, but buying on each pull back continues to be the best bet. Back in 2008, the amusement of host Mark Haines, T3Live.com’s Scott Redler predicted on CNBC that gold would reach 1500 an ounce over the next few years. The rest, they say, is history.
Oil continues to be a concern that is weighing on the market, as turmoil in the Middle East looks like it will get worse before it gets better. A war with no end in sight in Libya, continued talk of unrest in oil rich Saudi Arabia. Oil over $110 per barrel will pose a real and psychological problem for the economic recovery.
*DISCLOSURE: Evan Lazarus has no relevant positions. Scott Redler is long GLD, RBY, AUY. Short SPY.
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