Fools rally?
March 11th, 2009 by Cale McCulloch
Closing Data
| current | change | % | |
|---|---|---|---|
| Dow Jones | 6926.49 | 379.44 | 5.8% |
| NASDAQ | 1358.28 | 89.64 | 7.1% |
| S P 500 | 719.6 | 43.07 | 6.4% |
| FTSE 100 | 3715.23 | 172.83 | 4.9% |
| Nikkei 225 | 7054.98 | -31.05 | -0.4% |
| 0.0% | |||
| US Bond 10 Yr | 3.0053 | 0.1482 | 5.2% |
| US Bond 30 Yr | 3.7253 | 0.1593 | 4.5% |
| 0.0% | |||
| COMEX Gold - Apr 09 | 895.9 | -22.1 | -2.4% |
| COMEX Silver - Mar 09 | 12.56 | -0.39 | -3.0% |
| COMEX Copper - May 09 | 168.45 | 4.5 | 2.7% |
| WTI Spot | 45.68 | -1.33 | -2.8% |
Investors and traders alike were getting very nervous following not just the recent falls in the local index, but perhaps more importantly the failure to bounce after such a significant fall. After an anxious week the day has arrived, with the SPI pointing to a local open 100 points higher on the back of the biggest rally of the year to date on Wall St overnight.
Although there was no economic data released, the rally was sparked by news that Citigroup was having its best quarter since 2007, and has been operating profitably in the first 2 months of the year. This news lead to speculation that the worst of the banking crises may be over, and drove the entire financial sector higher with most banks climbing 20 – 40%.
The return to Financials meant a simultaneous sell off in Gold which continued its slide, falling another USD 22 an ounce to settle back below the USD 900 an ounce level. Interestingly though, Oil also gave back some recent gains, slipping just under 3% to USD 45.68 a barrel.
However, the return of sentiment to the markets. Flowed through to the base metals, which rallied across the board, and took with them the large miners of the world. BHP rose just under 10% in overnight trade. Today will be a perfect day to sell any remaining call options for March, given the likelihood that the inevitable return of gloomy economic data could put an end to this rally in the short term.
Look for strength across the board when the market opens, with weakness being found in Australian gold miners and oil producers. Bear in mind that as this is the first rally after significant falls and a number of flat days locally, there is the possibility the bearish investors will take advantage of the strength to reduce some of their holdings, sparking a bout of profit taking.
Contact your Freeman Fox Stockbroker on 07 3031 9960 or 1800 003 369 Ext 7.
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