Speculators on the Run………When to Buy Stocks

I am impressed.  The Fed’s Twist program is having a quicker effect than I thought possible.  To a certain extent the past years QE2 program’s lean towards speculation in stocks and precious metals is being unravelled.  That is good.  Now a little reality can come into the forefront.  Obama and Congress have to solve the structural employment and growth problems, and the stock market will make it easier to have change as it is not going to paint a pretty picture based on the zeal of the speculators financed by Fed funny money. 

The S&P 500 is down to its short term trading base at 1130 this morning.  Since the swing down there six weeks ago we have seen two runups to the trading midrange around 1235 and now we are back down again.  The financial ETF XLF will take a further hit this morning and its ability to predict better times will be put on hold as new lows for the past couple of months will probably be made.

Most importantly, however,  is a return to reality with a stronger dollar and weaker gold.  No doubt there will be a lot of hand wringing as the hedge funds and Wall Street are addicted to funny money and its extensions.

When to Buy Stocks: 

The Question on many minds this morning is when should one be a buyer of stocks.  For me, I am watching the relationship between the Gold ETF “GLD” and the S&P 500 ETF “SPY” .  The ratio of GLD/SPY topped out at around 1.64 recently.  At the moment it is around 1.49.  When it breaks below 1.37 I am going to be a buyer of stocks as that level will indicate that the back on the pessimist gold market has been broken.

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