Year End Brings Nervous Investors

gold crashMarkets opened up on fire Friday morning, after a much better than expected job report that came in for November. However, as a result, the dollar saw big gains, which as we have seen lately, caused for an adverse effect on overall trading, especially energy and commodities prices. Both gold and oil are traded down today as a result and most of the big gains which we saw when the market opened were given back by close.

The unemployment number came in almost too good to be true for economists. Just 11,000 jobs were estimated to be lost for November. Quite frankly, I am not that surprised. For the time being, we've seen a bit of stability back in the economy, and most businesses are not anxious to cut jobs in the middle of the holiday season. I expect December's number to be favorable as well. It will be very interesting to see what January and February brings, as I believe many companies will begin a new round of layoffs.

Gold really got hammered today (and even harder after hours). Lately, gold has been on a high. We may continue to see a push upward, but as soon as we see weakness in gold, it could come crashing hard. Foreign markets have been buying up gold quicker than they can get their hands on it, but that would stop as soon as the dollar found some strength. Oil would also most likely come down in price, in turn causing even more concern for deflation.

Manipulation still seems to be present. Even, with the 200+ point swings today, somehow, markets were able to close in the green. Like I've said before, during these low volume trading days, it can be a volatile storm.

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Options are becoming very cheap due to VIX levels dropping. I am finding prices for options very tempting. If indeed we see a next down leg, the VIX will be sure to spike, thus inflating option prices. Even 2011 options are reasonable at this point, which should not be a bad option. We could see this market take a turn for the worse even before year end. We are at very high support levels, and I believe this market can't handle it. The next few weeks should bring some fireworks. Happy Trading.

2 comments:

  1. Penny Stocks Says:

    Fantastic post. I like it.

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  2. QUALITY STOCKS UNDER 5 DOLLARS Says:

    Silver looks better than gold.