Tuesday, July 5, 2011

Reign of the metals

8:11 am (Hawaii) Just up from a nice night of sleep. It's cloudy and somewhat cool in Honolulu, a day after the 4th of July. The real fireworks are happening in precious metals.

SVM is up 11.3% to 10.12 on massive volume. EXK up 10.2% to 9.03 on massive volume. AGQ up 8.8%, average volume. AG up 8.2%, massive volume. GPL up 7.1% on solid volume. NUGT up 6.3% on good volume. SLW up 6% on decent volume. EGO up 6% on good volume. PSLV up 4.6% on average volume. DBS up 4.5% on modest volume.

SLV, SIL, NGD, XG, FSG, GDXJ, GG, PAAS, DGP, UGL, WITE, ABX, GDX, GLTR, PSAU, PALL, DBP — all up more than 2%. Just about all are also off their highs of the day. Why such bullishness? Is it rumor that the debt ceiling will be increased (again)? Possibly.

73% of my Metals list is green. What's not working? ZSL, obviously. DUST also down big. REE is sinking, -5.4% after Japan released news of a major rare earths find on a nearby seabed. Getting all that up to surface is challenge, but the info was enough to hit REE and AVL hard. MCP is down "only" 1.1%.

Crude is up, the indices are flat. Metals up big. I remained heavy in cash going into this week. If we have already hit a bottom in silver and gold, if James Turk and other goldbugs are correct in predicting a monster run in PMs this summer, this would be the time to move in. (Actually, it would've been last week when spot silver was below 34.) But I'm still in wait-and-see mode. My favorite miners remain EXK and XG, but I've got no position in them. I won't be walking in at these levels. If anything, I'll start with a small position on a dip and see how the week plays out.

One thing is for sure: volume in silver is heavy today, for whatever reason. Maybe hedge funds are piling in because they already loaded up on stocks last week. That money has to go somewhere and the hedgies tend to move in packs.

Update 8:33 am (Hawaii) Between AAPL, AMZN and BIDU — big boys with growth — BIDU continues to move up with strength in volume. AAPL and AMZN are up today, but volume has petered out. Not touching any of these for now. BIDU could reverse any time and the flaky behavior of the indices seem to indicate that the bull run of the past week is slowing.

NFLX is up 6.8% on major volume, now trading at 286+.

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