What a Difference a Week Makes

Well, it's all over but for the cryin' - at least until Monday. What the last eight weeks giveth has now been taken away.

The Dow fell over four percent, the Nasdaq dropped almost six percent, and the Shanghai composite index, the one that started it all on Tuesday, fell seven percent on the week. The model portfolio at Iacono Research fell a whopping 6.2 percent for the week, but remains in positive territory for the year (barely).

The CRB Index declined only 1.4 percent and crude oil and gasoline actually rose. There was a study done some time ago by Absolute Return Partners showing that commodities outperform equities early in recessions - while stocks and bonds lose money, commodities continue to gain until late in the recession, at which time the relationship reverses. Something to keep in mind.

Oil sure didn't show too many signs of weakness over the last five days.


Oil stocks fell about five percent along with broad equity markets. The commodity price and the price of related shares move together much of the time, but not always.


There's no need to be quiet anymore for fear of spooking gold buyers. They've been spooked pretty good this week. Mark Hulbert's Gold Newsletter Sentiment Index (HGNSI), tracking bullishness among the short-term gold timing newsletters, fell from 75 percent to 57 percent in the last two weeks. Down $42 on the week, gold did not function very well as a safe haven, though it is still up almost one percent for the year.


Gold mining stocks were absolutely awful falling five percent at the open on Tuesday and losing 11 percent on the week. Some would call this a buying opportunity - readers sometimes object when that characterization is offered here after a week such as this.


And the dollar fell below 84 on the U.S. Dollar Index, largely a result of the Yen rising. The dollar didn't offer much of a safe haven for currency traders this week, though dollar denominated debt in the form of U.S. Treasuries surely did.

The ten-year note rose 3.5 percent moving the yield from 4.68 percent all the way down to 4.51 percent, a new low for the year after climbing to almost 4.9 percent in January.

It was very odd on Tuesday when, after all the early action in Asia and in New York, gold closed down only a couple dollars when trading stopped on the COMEX at 1:30 PM EST. Shortly thereafter, in New York Access trading, prices fell more than $20.

Treasuries and unleaded gasoline were the only winners for the week.