What a Week for Financials and Precious Metals

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...Commodities/materials have been the last pillar of this market, if they were to fall, should there be a renewed concern with the financials, absolutely nothing could prop this market up...

This past week was undoubtedly one of the most schizophrenic in recent memory, and given how 2008 has unfolded that's saying a lot! I have been calling for a break of the January lows before moving higher. Now that the first part of that prediction has come true, the pressing question is "How durable is this low going to be?"...

As mentioned at the start of this post, I have grave concerns about the decline in commodities, should it progress further from here which would suggest something more sinister than profit-taking, hedge fund margin call, or a concern with broker liquidity. Some would character it as sector rotation, but to me sector rotation occurs within the framework of the existing market trend, which is bearish. Commodities/materials have been the last pillar of this market, if they were to fall, should there be a renewed concern with the financials, absolutely nothing could prop this market up...

In my last post, I mentioned the possibility of a post-FOMC decline in the PM complex, but its ferocity still amazed me. Gold lost about $115/oz in a span of four days! As gut-wrenching as this drop may be, gold and silver simply fell to the bottom of their respective up trend channels...Assuming those trends remain intact, this is another buying opportunity...

In summary, I believe there is still some ways to go in this Precious Metals bull leg yet, and I've been taking positions accordingly...

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