Market Update

Last week was great for investments, with every category showing nice gains. The biggest winner was copper, up 5.7% for the week, followed by the Canadian Dollar, up 5.3%. The weakest was the Amex Gold Bugs (HUI), which only rose 0.6%, and crude oil, which was up 1.2%.

Platinum was up as well, just tickling the underside of parity with gold on Friday at 31.05 grams/oz. I still think platinum will trade at a significant premium to gold eventually, so I consider it a good buy at these levels.

The US Dollar finished the week up 4.1%, about in the middle of the pack. Despite the strong showing this week, the USD is down 7.8% for the year to date, and remains 2.3% below it's 200 day moving average, and 8.2% below it's half-life curve:

Half-life curve of the US Dollar

Looking back further, the only category worth more gold than it was a year ago is long dated US Treasury Bonds, as measured by TLT, up 12.7% for the last 12 months. Every other index tracked here is down from its level a year ago. The biggest losers for the last year are cotton, down 64% and coffee, down 37%.

Weekly summary for 2-Mar-2012

Would I still buy long term US Treasuries today? That's a tough call, but from a technical perspective, a good case can be made. Look at the chart below, and note how the 200 day moving average seems to be providing a level of support to a rising channel:

TLT in gold since 2008

I think we have a good entry point for a short term trade here, as TLT has just bounced off the lower edge of the channel again. There are also plenty of fundamental reasons waiting in the wings to push Bonds higher, including potential surprises from Europe, the Middle East and China, any of which could trigger a so-called "flight to safety".

If you decide to try this trade, track it carefully with and be ready to bail out if the 200 DMA is violated. Also be ready to take profits if the price nears the upper edge of the rising channel, at about 2.5 grams or 0.08 ounces. This is NOT a long term investment, but a risky speculation with good profit potential. Careful money management will be critical.

Filed under Bonds, Commodities, Stocks by  #