Blame And Thanks

Many financial pundits are saying that the nearly catastrophic decline in crude prices is at the heart of today’s steep drop in stocks. That steep drop is, in turn, responsible for a movement into gold, so goes the argument.

However, just as strong a case can be made for the continuing disequilibrium and lack of action in Europe, which refuses to actually institute a stimulus program although there has been much palavering about it. The Europeans, other than the Germans, Dutch and part of Belgium cannot stand up to the power of the German central bank. The lack of will is beginning to ruin Europe, and eventually will hurt the rest of the world.

Naturally, there is also very sluggish economic activity in Japan, China, Russia – for well-known reasons, Brazil and other parts of South America.

So, we can either give thanks or blame, depending on your semantics, to crude and/or the Europeans for today’s nice uptick. Pick.

On the more mundane level, short covering and bargain hunting should be looked at as the main source of the fever. Gold technically had to come off its earlier support at 1180, or head into a while new rend. A lot of individuals bet on its rising today, and it did not disappoint.

Another factor today is the return, and re-entry, to the markets of a lot of investors and traders who have been off for the better part of the last two weeks. Many are looking to “make trades,” to get into the game, so to speak.

We should note that equities are making an attempt to bounce off their lows for the day but failed. Commensurately, gold started to go the other way then regained its highs of the day and more. Oil, however, continues its death spiral. It will close below $50 per barrel on the day. 

Wishing you as always, good trading,