US markets juggernauted on to new highs this week once the midterm elections were out of the way leaving the Republicans firmly in control of the Senate and Congress. After that there was no looking back as Mario Draghi offered little surprise on Thursday with the ECB interest rate decision unchanged, and the Friday jobs report showing continued improvement, with the jobless rate at a 6-year low, although companies were hiring fewer workers. Alibaba (BABA) continued to soar to record highs, closing in on the $115 level after a breathtaking two-week run leading into earnings. Hard to believe this was only trading in the $82s during the mid-October correction. I surmise this rally has been partly fueled by short speculation that the stock would drop back below its IPO price of $68. Once again the chatrooms and boards showed the desperation of some unfortunate put holders and short positions as every $0.10-0.20 pullback in the SPY was greeted with proclamations of collapse, ‘rug pulls’ and ‘bull traps’. Quite the opposite, as every dip was bought back fiercely as we closed near all-time highs in the last minutes of Friday’s session.
On the commodities front, gold and silver both hit new year lows, hitting $1,131 and $15.04 respectively, before bouncing back sharply 3% (+$34.80!) and 2.26% by the end of the day on Friday. This helped stem the hemorrhaging in the gold miners ETF GDX and its leveraged cousin NUGT, which had fallen off a cliff since the official announcement of the end of QE, but now enjoyed a massive dead cat bounce of 8% and 24% respectively. Crude oil also continued to slide before bouncing off $77.19, but what really got my attention was the huge squeeze in Natural gas – going parabolic from a low last week of $3.62 all the way to $4.49. I was tempted to nibble a little at the 3x leveraged Natgas ETF UGAZ, which jumped from $10.02 to a high of $18.75 on Friday, but alas, it had already surged past levels I was comfortable with in such a short span of time. I can’t help but think there’s a commodities desk blowing up somewhere.
Thanks for stopping by, enjoy your week, trade well and stay disciplined!