Donovan is Cluth, Gold Testing Nerves, Buying Equities

Donovan comes through for the US

I have to admit I have been a hater of Donovan for years now. I followed him early on in his career and found him to be an over-hyped, choke artist. Yet, times have changed and in the last few years his playing style has greatly matured and his composure on the ball has strongly developed. His brilliant top-shelf shot against Slovenia put us on the road to a tie and his extra time goal yesterday against Algeria was absolutely clutch. The US now takes on Ghana on Saturday at 2:30 PM in a very winnable game. Winning Saturday will put us against the winner of Uraguay and South Korea. We can definitely prevail in the next couple games especially if Donovan continues his star performance.

Gold stops out weak hands

My gold position is hanging on by a thread and my stop will be triggered if gold makes its first lower low since March. While I will have given back a good deal of profit I have no problem taking a small loss should my plan not pan out. Gold has dropped 2.9% off the all-time highs in a fairly harsh fall that has easily wiped out any weak hands. Being a trader with a short-term, momentum-based strategy, I am far from a strong hand yet the action yesterday was encouraging as gold bounced off the 20-day moving average for a strong close. Once again, I have my stop and no other action is required of me until it breaks down or moves out to new highs.

Goldman Sachs issued a report a few days ago stating that "if gold-ETF buying were to continue at its current pace for the remainder of the year, we would expect gold prices to rise to $1,400/toz by the end of 2010." Understanding the impact of NYSE:GLD on the gold market is important. I have noticed many 3:30 PM rallies in NYSE:GLD even while the gold futures market is closes at 1:30 PM. ETF buying has become a dominant feature in gold's movements.

S&P now 50% off short-term bounce at $1,075

I am looking at the $1,075 area in the S&P as a great place to be picking up longs for the next wave higher. Wall Street has forgotten about the Eurozone's debt woes as quickly as we started caring about them. It seems to me that the path of least resistance will be higher in the next couple weeks into earnings season beginning on July 11th with Alcoa. I am not as interested in being long market indexes but rather individual companies that have strong fundamentals and momentum behind not only their stock prices but their businesses.


Disclosure: Long GLD.

Consumer Confidence Data Scares Investors

The market finally pulled in today after five sessions of gains on the back of much worse-than-expected consumer confidence data. Stocks dropped 101 points (or .97%) taking back the last 4 days of trading in one session.

Consumer confidence was reported at 46.0, a 10-point drop from last month's reading of 56.5 and far lower than expectations of 55.0. Attitudes about current conditions purportedly fell to their lowest level in 27 years. Maybe all that snow really got us down. Yet, these data points are always subject to revision and I would be surprised not to see this revised up significantly. I agree with Eddy over at Crossing Wall Street, this just seems like too much of an outlier to be accurate.

Guess what? Bonuses on Wall Street were up in 2009! Surprised, I know. Banks paid out an average bonus of $123,850 for an increase of 17% over 2008. A total of $20.3 billion was paid out just one year after panic gripped the country that our financial system might collapse. Now, that's a quick recovery...for the select Wall Streeters that is. This leads me to wonder just how much they'll make this coming year, now that Americans are seemingly too tired to be outraged with Wall Street anymore.