Chart of the Day: Is The Run In Gold Over?

Below is the chart of gold. Over the last few days, gold prices have plunged and taken out some long-term support levels. You can see in the chart below that the gold etf (GLD) has now broken below its 200-day moving average. We have not seen this support breached in years.

If the 200-day is recaptured quickly, it could mean a shallow correction for gold. But if that key moving average is not recaptured in short order, it likely means gold prices are in for a longer, deeper correction process.

Gold prices often move inversely to the U.S. dollar, so that is a wild card in this scenario. In recent days, the euro has been very weak and there has been a flight-to-safety into dollars. If the debt situation in Europe continues to deteriorate I would expect the dollar to continue to act as a safe harbor. But I also wouldn't rule out EU officials making more announcements about "plans" to deal with the crisis which could continue to prop up their currency.

The next chart is the longer-term chart of the GLD going back to 2009. You can see that this is the first time that the long-term moving average has not held as support going all the way back to the early breakout in gold in 2009. So the recent price action is meaningful and as such I plan to keep the GLD front an center on my screens for the near-future.

For the time being, we have not trimmed any of our positions but will likely lighten up on future bounces.

long GLD

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The Euro Is In Charge

In recent months I have mentioned from time to time that if you want to know if the market is up or down on a given day, all you had to do was ask how the euro was doing. For the last few days, the euro has been under pressure and that has been weighing on the market.

Today, the euro is breaking down further and nearing a one-year low. Results from debt auctions in Germany and Italy failed to inspire any confidence. And the credit gauges in euroland have been deteriorating for weeks. I hope EU officials develop more of a sense of urgency.

The weak euro has pushed the dollar higher and led to a sharp selloff in commodities. Metals are down across the board today, led by silver. But gold prices are also getting hit hard and are now well below the $1600 level. Oil prices have also fallen down to the $96 level, a big drop from yesterday's rally to $100.

All of the 10 major sectors are lower so far, led by energy. Healthcare and utilities are down the least. Interestingly, REITs are actually mostly green on the day. Growth stocks are down the most relative to value stocks.

The 10-year yield is lower to 1.92%. It sure didn't stay above 2.0% for long. As for the VIX, it is up +7.7% today to 27.37, but still well below last weeks highs and yesterday it briefly dipped below 25 for the first time in months.

Trading comment: I have been trying to remain constructive on stocks, but this latest euro plunge is garnering all of the market's attention this week. The market is no longer overbought, and soon will be back to oversold levels. The SPX has broken below its 50-day average near 1226 and is currently trading near 1210. I don't want to see this 50-day average become resistance, so we need to see it recaptured in short order. Also, keep an eye on leading growth stocks, which had been looking okay but today are taking the brunt of the selling. I am watching our recent trades like RVBD, SCSS, TSCO, and ULTA closely.

long RVBD, SCO, SCSS, TSCO, ULTA

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Research Groupthink.

I recently sat in on a research group. There'd already been home testing and diary writing. Now there was a discussion about what the product/service category meant to the assembled group and, lastly, there was an element of further testing. It was a long, informed and opinionated session. And then they left the building and went home.

The research company will, no doubt, host other groups, write reports and make presentations that the client will digest, consider and have meetings about. But these engaged, informed and interested users will probably hear nothing more.

What a missed opportunity. One I've seen repeated by innumerable businesses employing a variety of external agencies throughout the process of product development and market research that make no attempt to leverage the enthusiasm of the potential customers they ultimately view solely as "participants".

Just think what might be unleashed by sending them a trial subscription or samples and discounts once their project finally gets to market. They're invested, they're interested and they're primed to promote and yet nothing happens because of the increasing compartmentalisation of marketing and its separation from product development.

Or, perhaps, the enthusing of a handful of people is not seen as a sufficiently grand gesture to feature on the marketing plan. A marketing plan that will pay lip-service to the importance of "lighting lots of small fires" but will ignore what's right in front of its face.

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Dip Buyers Surface In Early Trading

The market is higher in early trading, as buyers have stepped up to buy the latest dip that was yesterday's selloff. There isn't a whole lot in the way of positive news, but that hasn't gotten in the way of this morning's agenda to put some money to work.

The FOMC meets today and while there is some rumors of the Fed announcing further QE initiatives, I think the most likely scenario is to hear more of the same and that the Fed remains accomodative.

In corporate news, Best Buy (BBY) reported earnings that missed consensus estimates and its stocks is getting hit.

In economic news, retail sales were up 0.2% in November, which is less than expected. The combination of this report and poor BBY results is weighing on the retail sector this morning.

Asian markets were lower overnight, while Europe is getting a bounce this morning on little new news. There was some encouraging data out of Germany, but the euro is lower on the day so far.

Commodities are mixed. Gold prices are up a bit near $1670. Oil prices have been up the most, above $100 earlier, as news leaked out that Iran was looking to shut the Straight of Hormuz in some sort of military operation. But as news has come out that it remains open, oil has eased back from its highs.

The 10-year yield is getting a nice bounce near 2.05%. I think it would be a big positive for sentiment towards the economy if the 10-year yield could lift a little more. It did get up to 2.40% in October, but that rally was short-lived.

Probably the biggest suprise today was when I came in and saw the volatility index (VIX) down 9%. The VIX got as low as 23.27, although it has bounced from there. I actually bought a little VXX for a daytrade as these morning drops in the VIX never seem to stick for the entire session. But it is still a big positive if it can close below the 25 level.

Trading comment: Stocks are already off of the earlier highs as I finish this blog post. I expect trading to be relatively quiet until after the FOMC announcement when the fireworks usually begin. I don't expect any big surprises, but the market could still rally afterwards. Yesterday the SPX got down close to its 50-day support before bouncing. So the index has been squeezed between its overhead 200-day and its 50-day below. While the credit indicators are still flashing caution, I still believe we will see another push higher before year-end.

long SCO, VXX

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Want more customers? Fill your car with balloons.

So yesterday while driving home from nearby Enumclaw, Washington, I was winding my way along familiar back roads and slowed when I caught up to a white sedan driving just under the speed limit. While normally this might irritate me and my lead foot just a tad, yesterday, it didn’t. The car had only one occupant, a guy, but was also filled with red and green helium-filled balloons.

It was kind of obvious that he was looking for an address, because he kept slowing up at the crossroads. After about a mile, he turned off on a side street and I found myself wanting to follow him.

I wanted to know where he was going with all of those balloons. I’m guessing he was headed to a holiday party, and I am positive that any party that was going to play host to that many red and green bouncy balloons, straining to be released from their earthly tether, was going to be a good one.

Those red and green balloons promised me a good time.

When it comes to your business, is there anything about you or your team members that makes people want to follow you in to your business?  Attend your events?   Book appointments?   Is there anything about your website, Facebook page or email newsletter that promises a good time?

How can you become the man with a car full of balloons?

***

Elizabeth Kraus is the author of 365 Days of Marketing.

To build a business which provides the maximum when it comes to customer and employee engagement as well as profitability, change the way that you  understand and use marketing.  365 Days of Marketing is available on amazon.com or save $5 off the list price when you use the Code USH9VPJG and purchase on my site at 12monthsofmarketing.net.

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Monday Morning Musings

The markets are down sharply in early trading. So much for that bounce on Friday. As of now, it looks more like that was just a reprieve to the selling that started in earnest on Thursday. But let's see how the day shapes up.

Increased skepticism with Europe's latest "plan" has led to yields in countries like Italy and Spain rising again. Other credit metrics are also deteriorating today. Europe's stocks markets and the euro are all lower this morning.

The drop in the euro is boosting the dollar and hurting commodities. Oil prices are down to $97.65, and gold prices have plunged all the way to $1661. Copper and silver prices are also down sharply.

Asian markets were mixed overnight, with Japan higher but China down again. Some numbers out over the weekend suggested that growth decelerated for China in November.

Here in the U.S., Intel (INTC) lowered its outlook for the current quarter and that weighed on the tech sector and the overall market. INTC is blaming it on disk drive shortages (Thai flood), but most think it is also related to overall PC demand.

The 10-year yield is hovering just above that 2.00% level at 2.01%; And the VIX is up 4% so far near 27.45, but still well below last week's highs after that sharp move lower on Friday.

Trading comment: Selling has picked up again as the choppy trading since hitting the 200-day average continues. The lows on the SPX from Thursday are near 1231. So far today we have not broke below those levels, but if 1231 gives way we could see selling pick up steam. The enthusiasm over the can kicking from the EU summit last week seems to have faded quickly. I have mentioned that I thought most folks would be in dip buying mode into year end, and I still think that is the case. But I acknowledged the likely possibility of a pullback and more consolidation before the SPX made another stab at taking out is overhead 200-day resistance. I think that is what we are seeing now, but I still think buyers will step up again. So I will be patient and look for stocks that are holding up well to add to into this decline.

long SH

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The Little Things that Cost Your Business, Big Time

I love football. I’ve been an avid fan since I was young, mostly of college ball, but now that I’m married to a bona fide ‘cheese head’ – a native of Fond du Lac, Wisconsin – I’m watching a lot of pro ball too. During one of the games I watched today, a team (thankfully not the Packers) made several very fundamental mistakes which resulted in yards and yards of lost ground for their team, on offense and defense. I told my husband that if I were their coach, those guys would be running basic drills and running lines all next week. They'd be going through the basics until they had them down to the point that they occurred automatically, without mistakes, each and every time.  

Football is hard enough—what with 300 pound linemen trying to kill you, wily, veteran linebackers looking to pick one off, tacklers coming in trying to strip the ball and the like. With so many “big” things to worry about (like those linemen) it’s critical that your team doesn’t make things that much harder for themselves by missing small details or making little mistakes like jumping ahead of the snap count, lining up wrong or failing to get extra people off the field before the next play starts.

It’s the same when it comes to your business: The competition wants to crush you; in this sluggish economy, you have to make every ‘play’ count. 

You can’t afford to screw up on the basics—things that should be pretty much automatic because they’ve already been drilled in to your employee culture to the point that individual team members don’t have to think about them to get them right.

Things like friendly greetings and good attitudes. Things like a culture where employees are encouraged and empowered to go out of their way to accommodate customers, to solve problems and make sure people get connected with exactly what they need and want.

Things like making sure that your building’s exterior and signage, entry, waiting area, lobby and rest rooms make people feel welcome, comfortable and clean.  Things like arriving on time, opening on time, keeping appointments running on time and being convenient for your customers.

Things like scripts for prescriptive products clients should be using at home and add-on products and services.  Things like preventing traffic jams or long waits during the appointment-making, check in or check out processes, or on the phones. 

The last thing you want to do is beat yourself.

Take some time to think about things that you take for granted will be part of your customer’s experience, each and every time they do business with you or interact with your business. Do all your team members agree, and do they fully understand and know what these are? Double check to be sure that your team members don’t need a refresher on the basics and to determine whether it’s time to craft some new basic ‘plays’ to add to your business’s playbook.

***

Elizabeth Kraus, author of 365 Days of Marketing and the 2012 Small Business Marketing Calendar: Little White Marketing Lies.

Dispel all the little white marketing lies that might be holding your business back - check out the 2012 Small Business Marketing Calendar: Little White Marketing Lies on amazon.com.  With hundreds of marketing ideas laid out for 2012, you'll get into a marketing groove and build a bigger role for your business in the lives of your clients!

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