This will be a telling day for the markets.
On Friday I said the Nikkei is in for a correction and, as I am so widely read in Japan it seems, the market is dropping close to 500 pts today. This, of course, is panicking the European markets, especially as it is due to the very real catalyst of $65 oil, and we can expect our markets to follow suit, at least in the morning.
The real question is going to be: “Can earnings save us or will they be the stake in our hearts?”
I don’t think anything can save us from $65 oil other than a whole year where we prove we can earn money at that price. Q4 earnings were based on a $60 average so little credence will be given to good results – only great results will ease concerns!
Meanwhile, even with all this horror and destruction in the markets, gold pulled back from $560 so it may be correction time again if we can’t breach $560 in US trading today. GG and NEM have been on a real tear and could trade down into options if gold retraces to $555. At $560, BVN and NAK are gold stocks with room to grow.
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NAK is a buy on any pullback stock. They are just getting started on an amazing gold site up in Alaska that will make this company one of the World’s largest producers in years to come. I would consider $5 to be a gift on this stock, I’m not sure if we will get that much pullback and it may get away from us if the mainstream press discovers it. This is a long, long term hold.
On the flip side, NEM is having a bad run of run-ins with environmental groups which may slow a couple of projects. At a p/e of 60, they can’t really afford a misstep so I will be considering a short trade if gold breaks below $555.
AA is the latest company to slam the door on pensions. No new workers will be getting them and we can expect some terms to be renegotiated on the old ones.
Could we really be about to pass the asbestos fund? Friday’s move on OWENQ and GRA suggests so. Owens is probably the greatest value on the market if they can actually get out from under the cloud of lawsuits that has hung over the company all decade.
BCRX is moving again with a fast track status on their bird flu vaccine. This stock is a nice double since we called the bottom way back on 11/16!
I’m not ready to go short yet but our put on DIA is looking very good at the moment. Trade of the day is cash and we will have to wait and see if today is a disaster or if we have a magic turnaround in the afternoon. Without a pullback in oil below $65 a turnaround would be a real miracle indeed!
