U.S. markets set to rebound, gold set for stunning bounce

End of the tunnel? Where's yesterday's doom and gloom?


WASHINGTON, April 16, 2013 – Yesterday’s stock market experienced its worst over all decline since last November, plunging spectacularly across all business areas with gold and commodities in general the hardest hit. Gold actually broke its longtime support yesterday in a sudden, violent reversal of a decade-long trend.

Making matters worse, around 3 p.m. EDT yesterday afternoon, the market got wind of the unfolding, likely terrorist-caused disaster at the Boston Marathon’s conclusion, picking up the pace of margin- and panic-led selling.

We braced ourselves this morning for a horrendous negative follow-through, with reported, literal  Middle East earthquake activity possibly adding to the fear and misery that marked both yesterday’s news and trading activity.

Naturally, however, Mr. Market decided to make the Maven and other prognosticators look like fools. Wall Street futures are hugely up this morning. The DJI is leading the charge, with futures up roughly 134 points before the open; S&P 500 (mini) futures up an impressive 13.75; and even the NASDAQ pointing up an impressive 26 points. Looks like there’s light at the end of yesterday’s dark tunnel. Or not.

Our mileage may vary today, as usual, but things are inexplicably looking good, except for oil futures, down again this morning, but only by about 31 cents at $88.40 bbl. for West Texas crude. That may keep the pressure on drillers, majors, and refiners. But it should cause at least marginally more happiness for consumers at the pump, since per barrel prices have plunged roughly $10 in just a week of trading, halting what was seeming to be an inexorable upward climb.

It’s probably still best to mostly occupy the sidelines today, for, as we saw just yesterday, one day does not necessarily a trend make.

That said, if anyone took on the double-short gold ETF GLL yesterday and had the sense to trade out of it near yesterday’s close, he or she would have made a swell profit in less than seven hours’ time. Unfortunately, with today’s rebound, those still holding GLL had better bail as quickly as they can this morning, although another whipsaw could happen either this afternoon or tomorrow.

Double-short ETFs are always a dangerous game, and you can only trade these volatile beasts, not invest in them. Lucky us—the Maven chickened out yesterday, not willing to chase this ETF when it opened like the proverbial bat out of Hades.

Short column today, tomorrow, and Thursday due to some previous commitments.

Meanwhile, while Wall Street and commerce trundle along, let’s pause today to remember yesterday’s tragic events up in Boston. Our hearts go out to the families of those runners, friends, and spectators who were either killed or severely injured or maimed by what clearly look like two terrorist explosions.

This horrendous, tragic event was a grim reminder that what nobody apparently wants to call the Global War on Terror these days is still alive and quite well in the minds of its perpetrators, recruits, and sympathizers. Whether such terrorists are domestic, foreign, or a miserably misguided combination of both, only maintaining a high level of alert will keep them at bay.

Disclaimer: The author of this column maintains several active trading and investment portfolios and owns residential and investment real estate. He intends to nibble on the preferred stocks mentioned above as the occasion warrants.

Positions mentioned above describe this author’s own investment decisions and should not be construed as either buy or sell recommendations. The current market is highly treacherous and all investors travel at their own risk, so caution should be exercised at all times.

Illustrations, charts, commentary, and analysis are only the author’s view of current or historical market activity and don’t constitute a recommendation to buy or sell any security or contract. Views, indications, and analysis aren’t necessarily predictive of any future market or government action. Rather they indicate the author’s opinion as to a range of possibilities that may occur going forward.

References to other reporters, analysts, pundits, or commentators are illustrative only and do not necessarily represent an endorsement of such individuals’ points of view. If specific investment vehicles are mentioned in any article under this column heading, the author will always fully disclose any active or contemplated investments in said vehicles.

Follow Terry on Twitter @terryp17

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