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Bank Stocks Strong, Signaling Market Up Move

Posted by Aadil on December 14, 2011 at 11:01pm


Presented by Gareth Soloway December 14, 2011 01:40PM

As the markets continue to trade lower on the day, bank stocks remain extremely strong. This is very unusual as usually downside is headed by the financial sector. Today, JPMorgan Chase & Co. (NYSE:JPM) is trading at $31.78, +0.49 (1.57%). Across the board, bank stocks are flat to higher. What does it mean?

With the bank stocks leading and the markets still lower, smart traders realize news may be on the horizon from Europe. This has been the case in the past. When the financial stocks start to perk up, it is due something coming that will cause the market to pop higher. Be alerted and watch the next few days.

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Related: Wells Fargo & Company (NYSE:WFC), Citigroup Inc. (NYSE:C), Goldman Sachs Group, Inc. (NYSE:GS) .

Gareth Soloway
Chief Market Strategist
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Gold Is Down But Not Out

Posted by Aadil on December 14, 2011 at 10:48pm

Gold Is Down But Not Out

 
Presented by Nick Santiago December 14, 2011 03:39PM
Anytime a stock or commodity rallies for 10 straight years it is due for a correction. It is still amazing how some investors can call gold a bubble. Gold is not a bubble, it is a currency. Recently, the U.S. Dollar Index has strengthened as the European Union disintegrates before our eyes. This is the main catalyst for the rally in the U.S. Dollar Index and the reason for the decline in most asset prices. You see, the higher prices in gold have been signaling inflation. Inflation is what has been occurring since 2001 when the former Federal Reserve Chairman Alan Greenspan lowered the fed funds rate to zero percent. This action by Chairman Greenspan caused the great housing and credit boom into the 2007 stock market top. Unfortunately, that credit boom also created the greatest bubble since the Great Depression.

Yesterday, the current Federal Reserve Chairman Ben Bernanke kept the Fed fund rate at zero percent. He did not announce or hint at another round of quantitative easing. This move by the Federal Reserve is much less inflationary than many investors are accustomed to hearing and this is causing gold to decline. The bottom line, the Federal Reserve has to allow the U.S. Dollar Index to strengthen once in a while. If they do not do this the dollar would eventually be worthless. Gold is really the Fed's worst nightmare. It tells the investing public how much money is being created. When money is created it is diluted and that causes inflation. Come on, this is just a correction for gold, nothing goes up in a straight line. 

The central banks will inflate the markets again. They will not do it anytime soon as it is in their best interest to save the silver bullets for a bigger crisis. After all, how many bullets do the central banks have left in the gun. We have already seen the Federal Reserve issue QE-1, QE-2, Operation Twist, and a Fed funds rate that has been at zero percent since December 2008. Traders and investors know more stimulus is coming in the form of QE-3, however, the Fed must surprise the markets and not implement it when everyone on Wall Street is begging for it. The only way this stock market rallies is if there is some form of artificial inflation. Gold will be back, it just may take a while. Traders should simply use gold as a trading vehicle until the next big inflationary wave occurs. 
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EUR/USD: Trading the FOMC Interest Rate Decision

Posted by Aadil on December 12, 2011 at 10:43pm

However, as Fed Chairman Ben Bernanke maintains a cautious outlook for the U.S., the central bank head may keep the door open to conduct another round of quantitative easing, and increased expectations for QE3 is likely to weigh on the USD as interest rate expectations falter.

http://www.dailyfx.com/forex/fundamental/daily_briefing/daily_pieces/trading_news_reports/2011/12/12/EURUSD_Trading_the_FOMC_Interest_Rate_Decision.html

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