..a race to 1050..SPX vs. GOLD

Our concluding takeways from Wednesday action played themselves out today.   Once again, the shorts disappointed by not pressing new positions to bring the Bulls to their knees.  Well, really it’s not a disappointment if you’re a Bull,  but it could be a lost opportunity for the Bears in the very short term.   We also discussed the failure of the Bulls to get an underlying bid going for a few days.   By end of day they asserted themselves somewhat.   Still, we think it was hardly conviction buying, but more of a technical driven bounce starting we said may occur before the weekend.   Considering ECO data has been a non event,  tomorrow's NFP will probably be more of the same and this should allow the market to bounce higher.  If we bounce off 1000SPX overnight a few times, it should signal we go higher tomorrow.   We said we won't get bullish unless we get over 1015, we can add now over low 1020's and we think it is inevitable we go higher than recent high cycle.    Still, let's not lose the conservative side of things and bearishly think we'll correct in September until we see those levels noted.

In the meantime, as said, we'd concentrate on sector moves  at this point, which means EPS plays are only going to work again if the market outperforms everyone`s expectations in September.  …"we'd be very aggressive in chasing any on a short term basis (China linked stocks is one we're watching closer today, followed by commods').   Gold's  move today, on the other hand is not something we'd want to get into just yet".     While the market meandered and flatlined on the major indicies,  the China stocks outperformed thanks to commentary out of officials overseas and commod`s (notably coal) are maybe going to be focused on some more as the 'ìnflation' buzzword has re-entered the market after the 2 ISM's this week.   One look at the final prices of the Gold-Silver  list we put up before open and it's quite evident this is where the current money flow is going.    In less than 48 hours, this is being made out to be the next bubble in the market.   We've despised Gold stocks in the past,  but if the herd wants to gather and storm and truly create a Gold rush, we have no choice left but to play some as well.  

If this is truly a one time/ breakout event over 1000,  we have to give some of the Gold stocks a feel,  but we don't want to get out of hand just yet as this could just be another fake signal.  If there is another group acting well like today in China... commods',  you really don't need to get into the riskier Golds.   Simply, we may have a race to 1050 with SPX vs. Gold and some money on 'both' sides is probably the best bet. 

Have a great long weekend..