The highlight of today's trading occurred outside the Wall Street corridor where oil was the recipient of a two-dollar drubbing. Regular readers know that I have viewed the sharp gains of the last 4 weeks as simply a corrective bounce. Considering how neatly the black stuff retraced to its former trend line before turning down, I'd say this assessment was pretty accurate.
I am now looking for a drop that will wash out all the leveraged fund managers, thereby providing the best opportunity to purchase oil-backed assets since late 2001.
Unfortunately, the selling pressure in oil seemed to weigh on precious metals, as well. Gold and silver were down about 1% and 2%, respectively, with mining shares falling in tandem. Overall, though, the metals look to be in much better technical shape than oil, and my belief that they will presently break higher is still intact.
Equities were barely worth watching. The session had a very consolidative feel to it, but who knows who was doing the consolidating? Given the potential head-and-shoulders in the NDX, in addition to its solid close below its moving average today, I remain astutely prepared to load on the shorts.
Tomorrow brings us two more reports from chipland when we hear from Applied Materials and Nvidia. Given the ever-expanding overcapacity problem in this arena in conjunction with plummeting prices, I would be quite surprised to hear anything positive in the past-looking statements from these companies. However, as is the modus operandi these days, the forward-looking statements could be fabricated to suit the hoards of hopeful minds looking for signs of a tech spending boom.
Disclosure: Long AMAT, NVDA Puts