"You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey
For several weeks now, financial TV has been touting Gold and Oil. These are great contrarian indicators, and I place a copy of short side positions for both on the trading website- tipstraders.com.
Both trades are working out well.
In the financial markets, everything eventually revert back to their mean. Stocks that are severely oversold (financials), and the severely overbought (commodities) have all traded to extreme levels.
Another contrarian indicator is the Tonight Show with Jay Leno. A few nights ago Leno mentioned Gold and Oil saying, "Even President Bush starting to get worried about this economy being out of control, you know. I mean, gold is over $1,000 an ounce, Oil, $1,100 a barrel, and Hookers, $5,000 an hour."
I remember Leno talking about how bad the stock market was in 2002, and that turned out to be the bottom.
Wilbur Ross was interviewed on CNBC the other day, and said speculators were responsible for 20% of the daily trades on oil, gold and copper. He suggested that commodities were in a bubble, and was quickly cut off as CNBC broke for a commercial.
In addition, another CNBC employee, Jim Cramer, said that gold was going to $1600 last week.
Today, stocks are zigging and zagging higher after the Philly Fed Index showed a lower than expected drop in manufacturing activity. Stocks took the news positively after the Philadelphia Federal Reserve said manufacturing activity dropped less in March than it did in February.
The first piece of news to break this morning was the Labor Department's unemployment report which came in at 22,000 to 378,000, the highest in nearly two months.
The most positive news of the day was lower oil prices, and a rally in the dollar.
The EIA released its inventory numbers for the week ending 3/14/08. Crude had a smaller than expected builds. Gasoline and distillate had a larger than expected draws.
Crude Oil: Up 133 thousand barrels
Gasoline: Down 3.447 million barrels
Distillate: Down 2.910 million barrels
Oddly, while you and I were paying record prices at the pumps, Gasoline inventories are at their highest levels in 5 years.
Today's option expiration is adding some volatility to the markets, and tomorrow the market's will be closed for "Good Friday" and the Easter Weekend. Happy Easter to all, I will Ft. Lauderdale for most of next week.
