MLR - PMP 2/12/14
Major market averages were up yesterday on higher volume with the S&P 500 closing above its 50-day moving average to join the NASDAQ Composite which has closed above its 50-day moving average for three straight days.
New Federal Reserve Chairperson Janet Yellen testified Tuesday, saying she would continue to stay the course that the Fed under Bernanke's leadership had set, and that tapering would depend on the direction the economy takes. She stressed that unemployment is still too high and that rates would be kept at current levels well beyond an unemployment rate of 6.5%. She said the unemployment rate is not the best gauge of the health of the labor market as workers out of a job for more than six months continue to make up an “unusually large” fraction of the unemployed and that many people working part time would prefer full-time jobs.
As for the Fed's continued tapering, she felt the recent weakness in the market was due not to tapering but to issues in China, Argentina, and Turkey. “Unlike last summer, there was little change in expectations regarding U.S. monetary policy during this time,” the Fed said.
That said, markets are forward looking so they may have used China, Argentina, and Turkey as an excuse to sell off when the underlying reason was realization that the QE party may come to a close by the end of this year.
Gold miners have been well outperforming gold bullion over the last several weeks. The Market Vectors Gold Miner ETF (GDX) had another pocket pivot yesterday, inching it closer to 200-day moving average resistance. That said, the GDX recently undercut lows in the 22-23 area and is bouncing strongly, implying the possibility it has found a floor. Gold and silver, meanwhile, are bouncing weakly, thus will gold miners pull up gold bullion, or will gold bullion pull down gold miners? We will continue to monitor both sectors closely for an answer.
This information is provided by Virtue of Selfish Investing, LLC (VoSI) is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. VoSI reports are intended to alert VoSI members to technical developments in certain securities that may or may not be actionable, only, and are not intended as recommendations. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change without notice. Entities including but not limited to VoSI, its members, officers, directors, employees, customers, agents, and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. Additional information is available upon written request. This publication is for clients of Virtue of Selfish Investing, LLC. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2016 Virtue of Selfish Investing, LLC. All rights reserved.