BASIC MATERIALS AND GOLD LEAD FRIDAY BOUNCE -- DOLLAR FALLS ON RECORD TRADE DEFICIT
RECORD TRADE DEFICIT HURTS DOLLAR -- HELPS GOLD... Chart 1 (plotted through Thursday) shows the U.S. Dollar Index meeting resistance at its moving average lines and showing signs of rolling over to the downside. This morning's report that the U.S. account deficit for the first quarter hit a record high is pushing the dollar even lower today. That's giving a big boost to gold and gold shares. Gold bullion is jumping more than $6.00 as a result. Chart 2 shows gold climbing over its 50-day average and within striking distance of its 200-day line and the $400 level. A close over $400 would be a good sign for gold and gold stocks. Gold stocks are up more than 3% this morning and are the market's strongest group. The dollar drop is also boosting basic material stocks. One of the strongest stocks in that group is Freeport McMoran Copper & Gold which is benefitting from new strenth in both commodities. Chart 3 shows FCX rising above its 50-day average today. Newmont Mining is doing the same.
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MARKET AVERAGES ARE HIGHER... All the major stock averages are trading higher today. The Dow Diamonds are close to reaching a new high. The S&P 500 SPDRs and the Nasdaq 100 Shares are up as well. All are trading safely over their 50-day lines. Leading groups today are basic materials, technology, and industrials.
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