Dubai Doubts
SPY traded above its Dubai gap on Tuesday, but failed to close above it. So, we can’t yet be absolutely sure that the market has shaken off the news. The VIX has also not filled its Dubai gap. Perhaps the market is waiting on this Friday’s big jobs report, which is sometimes priced in after Wednesday’s ADP report.
Powering Up?
One thing I have been watching is the XLU utilities ETF. Energy usage is a good economic indicator, and the utes have been moribund all year. The XLU has been the second-worst major ETF this year, up only a couple percent, and outperforming only the XBI (biotechnology). On Tuesday, the XLU popped 2% and is testing its yearly peak from January. Recent reports have shown the manufacturing sector to be making modest improvement, so maybe electricity demand is coming back. That might also be good news for natural gas.
On the other hand, maybe this is only the cats-and-dogs phase signifying a withering rally. Or maybe American utility companies are just exporting electricity to the Mexican auto industry, formally known as “Detroit”. After all, loaded tankers are still being parked at sea due to what the Wall Street Journal calls “a near-record excess oil supply”.
one of these days we will see a $200 move in gold to the downside.
K,
Of course, but probably not until after a $200-up day.
Matt