Remember that my role is to warn you of opportunities as well as dangers in the market. One possible opportunity, although it has been shaky lately is the mining sector. You see, some gurus think that safety is out of fashion, so gold will now do poorly. Of course the Fed critics say that as long as the Fed keeps the money presses operating, gold can certainly hold its own and should move higher over time. I favor the latter but believe you have to prepare for the possibility that gold could collapse as it did when the Fed began tightening due to the inflation of the late 70’s and early ‘80s. While gold, silver, and the miners likely have at least one last big move ahead of them, metal Bears would point out the negative long term signals in gold and gold miners.
The VIX has yet to break out to the downside or the upside. So the SP500 Index continues to bump up against resistance appearing reluctant to sell off. Watch as earnings season starts. If disappointments are taken in stride, that would be positive. If there are small misses or statements concerning future earnings that are mediocre, and the market responds badly, we are in for a correction in the stock market indices.
Munis may be a good buy here for three reasons: 1. The end of the Bush tax cuts will cause a lot of money to pile into munis if it happens. 2. There has been a bit of a pullback, so there is some room for a bounce. 3. If we are in for a stock market correction, Treasuries and munis will rally together. I bought some munis on Friday.
Enjoy your week!
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