The DOW, Oil and Gold

Today was a fun day observing the markets! Lots of chatter about the 13,000 level on the Dow being reached. Even it made on Drudge Report tonight:

Behind the scenes, as it were, the story was slightly different:

The Dow traded higher in the early hours before bouncing right off the 13,000 level and heading ~70 points lower and into negative territory for the day. Fortunately, the plunge protection team showed up and painted the tape in the last hour...just kidding!

Perhaps the sellers up at 13,000 Dow sense that the US consumer is still struggling. Evidence of which came today in the CFO conference call today for WMT. Wal-Mart CFO Charles Holley stated, "We still see the customer under pressure." Wal-Mart reported a 15% decline in fiscal 4th quarter earnings, citing higher costs, and traded 3.86% lower on the day. One of WMT's competitors, AMZN, also has a stock price that is unwell. Amazon topped out at $246.17 this past October:

Headlines on Drudge are at times a reliable contrary indicator and it will be interesting to see if it is this time too. One thing to at all times remember is that the Federal Reserve, the ECB, the BOJ, and the Bank of England have all substantially increased the size of their balance sheets in the past 6 months. This added liquidity in the system is certainly constructive for stocks. Moreover, it is never wise to try to pick market tops, nor does it seem to pay to short a market with the Bernanke put under it. It is, however, prudent to be patient and not get caught up in hype and headlines. It is also difficult to buy into a market rally while on the same day there is a gas price spike in California and the WTI chart looks like this:

I'll close tonight's comment with a glance at Gold:

Gold found sellers at the $1764 angel early in the month and traded sideways thereafter; it tested and held the 144 day MA twice during this time. As a prelude to the coming battle at $1,764, Jim Sinclair wrote a brief note on JSMineset this evening. Failure again at this price may portend to a more meaningful correction. If gold can close above, I suspect it will rally higher and have an 18 handle shortly. Gold has been much stronger than I had anticipated, perhaps a modest correction to $1,635 in now finally in order! Likely not, and simply more wishful thinking on my part.


Sources:
WSJ: Wal-Mart 4Q Net Falls 15% On Higher Costs; Comp Sales Up
BPT