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S&P Sits It Out

S&P 500 Incex

The S&P 500 is sitting right on the 50-day moving average as you can see in the chart above. The market has increased a huge amount over the past two years, so its not unusual if it wants to sit on its laurels for a bit, particularly given the economic news today.

> Jobless claims were 412,000 vs. expectations of 385,000
> Producer Price Index came in at 0.7% vs. expectations of 1.1%
> Core PPI came in at 0.3% vs. expectations of 0.2%.

its all a bit confusing and conflicting – we’d been told that unemployment was getting better, but jobless claims rose, previous PPI’s showed significant inflation was bubbling under the surface but last month was less than expected, yet the core (ex-food and energy) came in higher than believed. The news is all backwards, so its no wonder that the market was basically flat on the day and sat on the 50-day moving average like the goose that is nesting on the bank’s roof sits on its eggs.

However, the precious metals keep rallying in spite of the miners lagging severely. Gold and silver were up big today reaching an all-time record for gold and a multi-decade high for silver – but the miners have severely lagged the metals, not even reaching their December highs.

Generally these types of differences between the commodity and the commodity producer mean that we will either see a big pullback in the commodity or a big rally in the producers. Divergences are scary, so I’m glad we took some money off the table last week – long-term, its the place to be, but near-term anything can happen as the price can head to the mountain top or the wasteland.

Remember, bulls and bears make money but pigs get slaughtered.

Mark