Cold Face Slap for Optimistic Traders Today

It appears that two consecutive days of disappointing U.S economic data was too much for traders to shrug off. The Dow Jones Industrial Average tumbled about 150 points after today’s University of Michigan Sentiment index of Consumer Confidence gave overly optimistic traders a cold slap in the face. Consumer sentiment which is the key driving force behind spending and economic growth clocked in well below expectations with a reading of 63.2. The Street was looking for 69.

Add yesterday’s disappointing Retail Sales and you can clearly see why traders headed back to the safety of the sidelines. As of 1:45 pm eastern the Dow is down 140 points.

Euro traders sold their currency fearing the Eurozone economic recovery may be suspect or short lived. Last on the Euro $1.4185 down 1.15 cents against the Dollar.

The poor data served to send energy traders on selling spree as well. Crude is trading $2.96 per barrel lower at $67.56. The metals were not immune with Silver slipping 26 cents to $14.69. Gold fell $8.00 to $947.00. Palladium closed unchanged at $275.00. Platinum shed $10.00 to end the week at $1254.00 per ounce.

It now remains to be seen whether the Dow can make a final hour recovery, or whether today’s action will give the investment world further cause to lighten positions in our over-extended market. It will be interesting to see how Asia reacts when it reopens Sunday night. As for next Monday the calendar kicks off the week with a fresh look at manufacturing with the New York Empire State Index of Manufacturing. See you on Monday the Asian reaction to today’s action.

Market Close Thursday, Gold Up, Dow at 9065

Gold closed at 955.00 up 3 dollars. Silver finished the day at 13.80 up 10 cents. Platinum closed at 1,180 up 5 dollars. Crude is now trading at 67.05 up 2.12 and the Dow is now at 9065 up 160 points. The Euro is trading at 142.30.

Gold futures on Thursday reversed course on early losses to head to fresh six-week highs amid talk of investors rotating out of equities and back into precious metals, while keeping careful watch on the movements of the dollar.

We have a tug of war here between those who dare to buy at these levels and people who got in at previous levels. If it breaches $960 it might make a quick run to $975. If either Treasury auctions or GDP [gross domestic product] data coming next week prove dollar supportive, it could bring gold down to the $930s.

Tomorrow’s report will be the University of Michigan Consumer Sentiment. Sentiment readings are a reflection of a variety of events rather than an accurate tool for forecasting consumer spending. Gas prices and political events can have an over-sized impact on sentiment. In general, these data points are of very little economic value.