WASHINGTON, March 10, 2013 – Wisconsin representative, Republican Paul Ryan—Chair of the important House Budget Committee and longtime adversary of President Barack Obama—said on Fox News yesterday that a deal with the President and with Senate Democrats on taxes and spending may actually be possible. Ryan, who carries more clout now as a result of his 2012 Vice-presidential run, said that modest rather than dramatic moves are likely to be the result of upcoming negotiations.
That news didn’t seem to affect the market this morning, as it looked to take a bit of a breather after a torrid week in which both the Dow and the S&P 500 broke new ground. The NASDAQ, which has never recovered from the dot.bomb debacle of 1999-2001, did respectably, too. But the NAZZ still has a long way to go to meet or beat its Internet start-up bubble glory days. Given that it’s quadruple-witching week this week, however, we’d look for action to heat up—likely on the plus side—before the week is out.
Gold, silver, and precious metals continued to look anemic last week, making it seem as the heyday of those commodities, and the stocks associated with them, are also a thing of the past. Gold, however, ticked up just a bit this morning. Gold is trading at 1579.30 as we write this, up $2.40. Silver is trading at $28.825, down .12. Platinum is trading at $1598.40, down $5.50; and palladium at $778.20, down 4.55. Note the trend in the chart below:
Gold and silver have been trading generally down since the fall, as the Fed’s QE money-pumping activities are encouraging investors to put their money into riskier asset classes like stocks. Platinum and palladium, however, have remained somewhat more robust, due to their use in industry, particularly in catalytic converters.
Trading the market today:
This is likely a sit-on-your hands day. As mentioned above, quadruple-witching week usually gives the market a bullish cast, sometimes strongly, so a few good short term trades could be put on today. That said, we still fear an imminent correction, and the “sell in May” sirens are already singing out their warnings. So any trade here is likely to be short lived.
For now, we’re staying mostly parked in our boring but lucrative MLPs, REITs, and utilities. But we’re also looking to sample a couple of biotechs—as yet to be determined—or just take a position in the biotech ETF, IBB, which is a little expensive in dollar terms.
Banks may not be a bad idea here either after last week’s stress test happy talk. Although it’s been a bit unpredictable here, we still favor BB&T (BBT). Keycorp (KEY) is improving, and First Interstate Bank (Montana, FIBK) looks good although we wish it would pull back just a bit.
Preferred stocks, if their underlying companies and common stock are stable, could also be a nice bet here as long as interest rates stay low and as long as you can get them below their redemption value, often but not always $25 per share.
But that’s about it for this morning. We do expect things to get a lot more exciting as the week winds on.
Disclaimer: The author of this column maintains several active trading and investment portfolios and owns residential and investment real estate.
Any positions mentioned above describe this author’s own investment decisions and should not be construed as either buy or sell recommendations. The current market is highly treacherous and all investors travel at their own risk, so caution should be exercised at all times.
Illustrations, charts, commentary, and analysis are only the author’s view of current or historical market activity and don’t constitute a recommendation to buy or sell any security or contract. Views, indications, and analysis aren’t necessarily predictive of any future market or government action. Rather they indicate the author’s opinion as to a range of possibilities that may occur going forward.
References to other reporters, analysts, pundits, or commentators are illustrative only and do not necessarily represent an endorsement of such individuals’ points of view. If specific investment vehicles are mentioned in any ar500ticle under this column heading, the author will always fully disclose any active or contemplated investments in said vehicles.
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