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January Blues

The Indexes

The U.S. indexes continued their slide this week with the Dow Industrials finishing at 12,606 down 1.51% for the week and 5% for the year. This is 4.75% below its' 50-day moving average and 5.75% below its' 200-day moving average. The price action has been quite bearish with a much anticipated bounce failing to materialize.

The S&P 500 held up slightly better. It finished at 1,401 down 0.75% on the week and down 4.6% for the year. This is 4.3% below its' 50-day moving average and 6% below its' 200-day moving average. Although managing to bounce on Wednesday and Thursday, Friday's 1.36% drop put the index in the negative for the week.

The Nasdaq 100 lost 2.58% for the week to finish at 1,912. This is down 8.3% for the year. Perhaps the most oversold of the indexes in the short term, the Nasdaq 100 is 7.6% below its' 50-day moving average and 3.9% below its' 200-day.

The Four Horsemen

The four horsemen of the Nasdaq continued thier descent from the heavens this week. Google (GOOG) was down 2.85% for the week to close at $638.25. Apple (AAPL) lost 4.09% for the week. Amazon (AMZN) dropped 8.68% on the week leaving me kicking myself that I didn't place my short. Research In Motion (RIMM) got clobbered for another 9.34% loss on the week to close at $93.70. As an aside, my coworker is convinced RIMM will bounce back to it's 50-day at around $110.00. I think the 200 DMA is a better bet at $81.50. I guess that's why they have a stock market!

Gold Shines

Unless you were in a coma, you're probably aware that gold gained 3.4% to hit $900/oz. this week. This continues a very impressive run from $650/oz. in July. Rising energy and food costs have been fuelling inflation fears, while the U.S. has a Central Banker known for dropping money out of helicopters. These two factors have combined to be very bullish for bullion. For those of us holding gold stocks, the good news is that the stocks are starting to catch up to the commodity. The HUI is up 7.1% this week and 16% for the year. The Global Gold Index (XGD.TO) jumped 8.25% this week. Of course, I'm kicking myself for selling HGU.TO early, but nobody ever went broke taking a profit.

SunTzu

By Suntzu at 2008-01-12 13:15 | Stocks | Suntzu's blog


SunTzu,Congratulations on

SunTzu,

Congratulations on your market performance comeback!

Your portfolio was down pretty low, but you rose from the ashes.  Great to see.

- Vooch
By Vooch at Sat, 2008-01-12 20:10 | login or register to post comments

Market Comeback

Thanks, Vooch!

I was too early with my nasdaq short and got killed because of it. Sometimes too early is just as bad as being wrong!

SunTzu
By Suntzu at Sat, 2008-01-12 22:09 | login or register to post comments

long gold vs. short nasdaq?

Hi SunTzu,
I understand from your posts (they are very informative and helpful - thanks!!) that you believe the bull market in gold is not in its final stages yet. Wouldn't going long in gold be a safer bet than going short in equity metkets? Thanks!  
By student1233 at Sat, 2008-01-12 22:31 | login or register to post comments

Long Gold vs. Short Nasdaq

Hi student1233,

I think both being long gold and short the Nasdaq are great bets for 2008. Both positions hold specific risks and I'm not sure which is "safer". Obviously, if you are not comfortable with short selling the long position in gold is a better way to go.

I try to use my Stokblogs portfolio to mirror my trading account. I have had a long term position in gold for years, but it is through a Canadian mutual fund that can't be shown on Stokblogs. That's why my Stokblogs account doesn't show a long position in gold.

As for the gold bull, it will probably last for a few more years. Gold is still ridiculously cheap in inflation adjusted terms. There will be ups and downs along the way, but that provides trading opportunities for those of us who like risk and buying opportunities for those who don't.

SunTzu
By Suntzu at Sat, 2008-01-12 23:07 | login or register to post comments