The dollar continued to climb higher today and gold followed lower. Gold has come down about $100/ounce in 3 trading sessions, closing just around $1128/ounce from a high of about $1228/ounce last Thursday. GLD, the gold ETF, has faltered from a recent height of $119.54 to today’s close of $110.95. Gold miners have also fallen quickly: GOLD (from $90 to $79.52), ABX (from $48 to $40.51), RGLD (from $56 to $50.55).
While gold was falling, so were most other commodity-related sectors. Oil services were especially weak: RIG -4.64%, DO -2.54%, NOV -1.97%, SLB -2.22%. Financials still could not muster any strength. GS has fallen to below $162/share. We started a small downside play on GS.
On the other hand, however, health care stocks went higher: WLP +1.77%, CI +1.84%, AET, +1.94%, UNH +0.57%. This evening, the latest development on the health care reform was that Senate Democrats tentatively agreed Tuesday night to drop a full-blown government-run insurance option from sweeping health care legislation. We could see another pop in the health care sector tomorrow!
The Dow was down 104.14 points; SPX fell 11.31 points; Nasdaq lost 16.62 points:
Most sectors closed in the red today. XLF (financials) slid 0.9% while HGX (housing) fell 1.31%. GDX (gold miners) slumped 4.04%. Other commodity sectors were also weak: XME (metals and mining) -2.23%, OIH (oil services) -2.68%, XLE (energy) -1.70%. FXI (Chinese ADRs) slipped 2.22%.
SPX
SPX fell 11.31 points to close at 1091.94. It closed above the 30-day MA. The MACD was down.
Nasdaq
Nasdaq lost 16.62 points to close at 2172.99. It closed just above its daily MAs. The MACD slid slightly.
The market still could not find much strength as the dollar bounced and pressured the commodities. I don’t think the gold trade is over yet. After all, the Fed has already signaled its intention to keep the interest rates low for an "extended period of time" and that the inflation is contained. We had captured the recent gold run with our plays on GLD last month with nearly +200% gains. Now that gold has pulled back $100 in just 3 sessions, I think it is becoming "attractive" again. Gold may be range-bound for another couple of weeks, but, I think it will test that $1200 level by the end of the year or in early January again.
Good night and HappyTrading! ™
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