Author: Peter Kurata
Covestor Model: CANSLIM
Disclosure: None
In a first ever post-Fed meeting press conference, Fed Chairman Ben Bernanke said QE II will continue to be supported after June. This news helped sparked the market to move to a new highs.
Inflation continues to creep in, and the Fed’s position that high energy and food prices are transitory will be tested. McDonald’s (NYSE: MCD) is set to raise prices for the second time this year. Procter & Gamble Co (NYSE: PG) and Kimberly-Clark Corp (NYSE: KMB) will charge more for diapers, toilet paper and detergent; Colgate-Palmolive Co (NYSE: CL) is raising toothpaste prices.
The real story for April was iShares Silver Trust (NYSE: SLV), which closed positive for 16 out of 20 of the month’s trading days. At this point, it is exhibiting technical topping signs and looks to be at in a climax stage of its run. Trading has advanced silver to its biggest daily gains of the year on 2 and 3 times normal volume. When a stock, or ETF in this case, becomes too crowded after a big run up, it’s usually time to exit.
Historically, Gold and Silver trade in tandem. But since March, the trade of these two precious metals has decoupled. While Silver shot through the roof last month, Gold continued on a slow upward trajectory. Right now, while Silver looks toppy, Gold is still a buy.
Sources:
“US markets up as Fed pledges support after quantitative easing ends” Independent.ie, 4/28. http://www.independent.ie/business/world/us-markets-up-as-fed-pledges-support-after-quantitative-easing-ends-2631886.html
“Fed’s relaxed inflation view to face test” Ann Saphir, Reuters, 4/28/11 https://www.reuters.com/article/us-usa-fed-inflation/feds-relaxed-inflation-view-to-face-test-idUSTRE73R6U420110428
“Worries about rising costs cast pall on McDonald’s” Associated Press, 4/21/11
