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Quote of the Day

Wednesday, February 29, 2012

February 29, 2012 -- "The typical investor has usually gathered a good deal of half-truths, misconceptions and just plain bunk about successful investing." -- Philip A. Fisher

 

I have dreamed up a rule, which I call, "Russell's Law of Big Even Numbers." It runs like this -- if an item moves above and STAYS above a big even number, it is likely to advance to the next big even number. But if the item remains below a big even number, it is likely to decline to the next big even number on the downside.

 

Take the Dow. It closed yesterday above 13,000, but right after the close the Dow futures dropped below 13,000 again. I thought this was suspect action. Gold on the other hand has not been able to close above 1800. Has gold failed? I would give it more time -- say another month. If, in another month gold cannot better 1800, I'd say that it has failed.

 

It will be important to see whether the Dow is able on Wednesday to close above 13,000. It will also be important to see whether gold can or cannot better 1800.

 

Little numbers, but they can make a world of difference. After all, what other "crystal balls" do we have?

 

TODAY'S MARKET ACTION:

 

My PTI was down 6 at 6381. The moving average at 6346, so my PTI is bullish by 35.

 

The Dow was down 53.05 to 12952.07.

 

Transports were down 12.03 to 5153.16.

 

Utilities were up 0.45 to 451.54.

 

NASDAQ was down 19.87 to 2966.89.

 

S&P 500 was down 6.05 to 1365.68.

 

There were 1039 advances and 2006 declines on the NYSE.

 

There were 170 new highs and 11 new lows.

April light crude was up 0.52 to 107.07.

 

Total Volume on the NYSE and associated exchanges was 4.38 bn.

 

Bonds: Yield on the 10 year T-note was 1.97. Yield on the long T-bond was 3.08. Yield of the 91 day T-bill was 0.08%.

 

Dollar Index was up 0.56 at 78.83. Euro was down 1.19 at 133.39. Yen was down 0.96 at 123.21. Currency Prices as of 1 PM Pacific Time.

April gold was down 77.10 to 1711.30. May silver was down 2.56 to 36.64.

 

My Most Active Stocks Index was down 11 at 289.

 

The Big Money Breadth Index was down 4 at 1016.

 

GDX was down 1.93 at 55.40.

 

HUI was down 18.70 to 529.72.

 

CRB Commodity Index was down 0.69 at 322.43.

 

The VIX was up 0.47 to 18.43.

 

Permanent Portfolio Fund (PRPFX) was up 0.16 at 49.88 (previous day closing). YTD Return: 8.22%.

 

Late Notes -- Dow couldn't hold 13,000 and gold almost couldn't hold 1700; very bad signs. April gold, after trying over and over again, failed to close above 1800. Sad to say, weakness in both, but the big test will be whether weakness follows again tomorrow. A strong dollar today was gold's excuse.

 

China is now the world's number one producer and buyer of gold. I think China means ultimately to back the yuan with gold, making the yuan the new preferred world reserve currency. If the US loses the dollar as the world's reserve currency, it will be a disaster for the Dow.