LIBYA TURMOIL RATTLES GLOBAL STOCKS BUT BOOSTS GOLD AND OIL -- GOLD AND ENERGY STOCKS RALLY AS AIRLINES DROP -- CANADA IS ONLY GLOBAL MARKET IN THE BLACK -- BONDS BOUNCE ON SAFE HAVEN PLAY -- S&P 500 IS OVERBOUGHT, BUT UPTREND STILL INTACT
GOLD AND OIL PRICES SPIKE HIGHER... As usually happens during a period of Mideast turmoil, gold and oil prices are spiking higher today. Chart 1 shows the Gold Trust Shares (GLD) trading at a two-month high. We've been reporting on the recent upturn in precious metal assets. Silver is trading at another thirty-year high today. The main focus, however, is on surging oil prices on fears that Libyan unrest could lead to an interruption in oil supplies. Chart 2 shows the United States Oil Fund (USO) jumping more than 5% today. Not surprisingly, gold and energy shares are the only two market groups in the black. Airline stocks which are especially sensitive to fuel prices are taking a 3% hit. Chart 3 shows the Airline Index (XAL) nearing a test of its 200-day average. Most of today's commodity gains are coming from gold and oil. Copper, which is more sensitive to economic trends, is down sharply. Most global stock markets are falling today with some of the biggest losses coming from Asia. One of the few markets bucking the negative trend is Canada. I recently wrote a message explaining that Canada's ability to produce oil, combined with its distance from the mideast, gives that country a competitive edge. The Canadian Dollar is also up today.
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Chart 1
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Chart 2
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Chart 3
S&P UPTREND IS STILL INTACT -- BONDS BOUNCE... Despite today's pullback in stocks, the major uptrend for U.S. stocks is still intact. Chart 4 shows today's S&P 500 pullback still well above its 20-day moving average (green line). It is of some concern that RSI line (above chart) for the S&P 500 is once again in overbought territory over 70, as is the fact that the daily MACD lines are in danger of rolling over. So far, however, no serious chart damage has been done. The profit-taking in stocks is boosting bonds. Chart 5 shows the Barclays Bond iShares bouncing today. Daily MACD lines have turned positive. We'll keep an eye on how these trends play out throughout the day and week. Oil is big wild card here. Any serious spike in that crucial commodity might be enough to stall the global stock market rally. We've already seen that happen in many emerging markets. At the very least, recent events call for a more cautious stance on stocks over the short run.
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Chart 4
