S&P
Most expect an Obama Rally next week. 854 then 865-875 and 900 serve as overhead resistance. Anything above that will likely spark some short covering. It does look like the market is setting up to re-test those lows sooner rather than later. Either way, the onus is on the bulls and I'm a seller of strength.
Jobs
Only 15 days into the year we've had over 120k job cuts announced by just a few of the larger corporations. Even World Wrestling Entertainment had to piledrive 60 people. Can you smell what The ROCK is cooking? The feedback loop has already begun as job losses accelerate. Less jobs means less money. Less money means less tax revenue. Less tax revenue means budget shortfalls. Budget shortfalls means cuts. Cuts leads to less spending and more job lossess. Rince, lather and repeat. The $10 trillion question is whether Ben will be able to soften the crash landing without sparking hyperinflation on the flip-side. The real booger here is how they're going to soak of the liquidity fast enough to prevent the USD $10,000 bills, but not so fast as to hinder the economic recovery.
I'm a fan of gold, but so far gold has not managed to get above the downward sloping trend line from the March 2008 high. If gold clears 850 that would setup a move to the 880-900 area, testing that trend line once again. My gut tells me it will not get above it just yet, but I'd love to be wrong. If it does break north of 900 then we could be in for the 1k dash. The Long Gold / Short Crude is still one of my holdings. If and when I see the gold/oil ratio get into the 30's I will consider the trade mentioned below.
Silver
I've heard a few mention a Long Silver / Short Gold trade, referencing it's long-term ratio averages. To me this seems to be a pro-recovery trade only, and a bit premature. If you believe there is a recovery on the way then this is not a bad trade. Nonetheless, Silver had a good day on Friday moving up 7%. I will consider the Long Silver / Short Gold trade when I feel it's time to speculate on a bottom in the economy 6 months out. Once it becomes evident of a recovery then any base metal is going to perform well along with just about every commodity. I do hold some SLV $11 calls, but that's viewed as more of a hedge to all my other shorts.
Oil
Crude has gotten to the point to where whipsaws will be commonplace. Reasons of course are OPEC, geopolitical tensions and the periodic "recession is almost over" nonsense. However, it doesn't appear to be very hard to push crude down towards $30 right now. The back of the board has continued to come in towards the front month and at some point there will be massive fuel hedging if there is even a chance of a recovery on the horizon. If there an actual recovery that follows then I'd like to be a buyer of the airlines this time around, assuming they hedged their jet fuel this time.
Euro
If the euro clears 1.337/8 that could setup the move up to the 1.35 and above that is 1.39 (with some resistance along the way). That would help gold to 865 next week. It is your author's humble opinion that the euro will not break/stay above 1.39 and will see 1.25 soon. The action in the Euro this week raised some red flags for me after the ECB cut rates. It only found a pulse after the Citi/Bofa/TarPoilet Paper news surfaced. If the Euro moves north of 1.40 then Gold will shoot towards 1000. Be warned, it's not a matter of if, but when the Euro currency starts to devalue relative to the dollar. Let's just say they are right about where we were 1 year ago, headed down the same road. However, if the market goes higher then the Euro will likely follow it providing there isn't something immediately out of the Eurozone like Deutsche Bank being insolvent (which they are I think) having the equivalent of 80% of Germany's GDP in assets (which they did). Or perhaps Credit Suisse, RBS, UBS and too many to list start having headlines like Citigroup, BofA (which they are)
Disclosure Edit: Thurgy is short of the EuroDollar, legging into the position.
