Market Overview

Metals, Not Stocks Shine Post-Jobs Report (GLD, PALL, TBT)


March 9, 2012 will be known for a lot of things. The anniversary of the death of rapper Notorious BIG. The third anniversary of the March 9, 2009 market bottom and for those with critical memories, today will go down as one big disappointment.

In economic news, the Labor Department reported the addition of 227,000 jobs in February and that the January and December numbers were revised up. Sure, the unemployment rate remains uncomfortably high at 8.3%, but this jobs data really should have been enough to lift equities to more than just marginal gains. In fact, the major U.S. indexes spent much of the afternoon wilting into the close.

More inspiring gains were found in the precious metals complex as the February jobs number may be the latest sign that gold is more risk asset than safe have these days. Let's look at opportunities among precious metals ETFs.

SPDR Gold Shares (NYSE: GLD) About $5 billion has flowed into commodities ETFs since the start of 2012 and fair bit of that has gone to the SPDR Gold Shares, the world's second-largest ETF by assets. Gold, and by virtue GLD, experienced a glum week last week. GLD turned things around this week with a gain of half a percent.

These days, GLD's story is somewhat misunderstood. Investors typically get involved with gold as a safe have play, but gold is proving to be just as risky an asset as equities or oil. Simply put, the yellow metal benefits from positive U.S./Chinese/European economic data and suffers when that data is bad. GLD needs to hold $170 and then break $172 to get more buyers in the game.

ETFS Physical Platinum Shares (NYSE: PPLT) More expensive than gold and probably more volatile, there is platinum. PPLT is an ETF we've liked for a while. Sentiment here has changed dramatically. Last week, PPLT's chart looked like it was breaking, but buyers stepped in to save the ETF from a test of the $155 area.

PPLT was able to clear horizontal resistance at $165 today and if it can make of $170 next week, the upside becomes really compelling, particularly if the news from Greece is good or non-existent. Remember, platinum has industrial uses, one of which is in the catalytic converters of diesel cars used by Europeans.

ETFS Physical Palladium Shares (NYSE: PALL) PALL, really the only useful way to get involved with palladium outside of the futures market, was showing signs of breaking down last week as well, but like PPLT, PALL got its act together this week. Palladium is cheaper than platinum and gold, but the white metal is not an inflation fighter like gold. If Ben Bernanke and friends engineer legitimate inflation, that would likely crimp auto sales and that would be terrible news for PALL. As for a move to bonds...

ProShares UltraShort 20+ Year Treasury (NYSE: TBT) It may be a tough pill to swallow for the risk lovers out there, but as the Wall Street Journal reported this election year might be good for bond bulls. If the trend of wilting Treasury yields in the summer months of presidential election years holds up, than TBT's trend of wilting will continue as well. As it is, TBT is getting close to reverse-split territory.

Posted-In: Long Ideas News Bonds Broad U.S. Equity ETFs Short Ideas Specialty ETFs Futures Technicals


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