Thursday, March 1, 2012

Bernanke Slush, Gold Crush

Gold smashed $90 last night, -5% after Bernanke comments that Fed will refrain from offering more monetary stimulus; this will add more pain to the gold equities trade, a trade that was seeing massive underperformance from NCM, KCN, ABG - all for their own operational reasons; namely, NCM problems with lihir, KCN capital raising at 7.1 and ABG missed earnings.  I have since closed NCM, KCN and still holding ABG; but my bias towards Gold left last week.

Oil continues to be an intriguing play - namely coz of economic data last night revealing increasing supplies, but price reacting negatively at first, but recovering most of it's lost ground; still grounds for a bullish hold.  I've reduced my position in WPL and cautiously looking for an try point in the oil ETF USO tonight.

The flavour of the month seems to be the US homebuilders - we've seen a non stop rise in the XHB homebuilders ETF since last year October - a rise from 12.5 to 20.16 - the index has already taken out 3 year highs, and coming off such a low base from the we could see an easy ride up to 25, before any reasonable correction.  It seems hard to fine a good entry price here, but consolidation at the 19 level with stops just below may be a way to ride the momentum.

As for the Insurance sector looking favourable, we saw QBE announce a equity raising and price stabilise and actually rise - this is a bullish sign given the weakness in the overall market and the reactions to equity raisings in the past month to equity prices.