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"Sixteen In A Row" Ends The Streak

04-13-2017

The market was slightly higher through midday and apparently for the last 16 years the day before the Good Friday holiday has been up. I was unaware of this until Fred Hickey told me, but I'm sure all the computers knew that.

In the afternoon, however, more "progress" was made, as the market rolled over and was about 0.5% lower with 30 minutes to go, when I had to leave. So while the tape wasn't buried in the afternoon, it didn't bounce, which I consider a moral victory from a sanity standpoint.

Away from stocks, green paper was mixed, oil was flat, fixed income was higher, and the metals were initially higher, then lower, then closed unchanged.

A Fine Mess The metals complex was particularly wild, as gyrations between the ETFs, the inverse ETFs, and the leveraged versions of the same precipitated more than their usual amount of chaos. Part of the reason could be because that there is a big rebalancing of the GDXJ coming up.

I am not going to go into all the gory details, because there will be plenty of stories written about that. The bottom line is that, with almost no money in the sector, the GDXJ already can't function as it was designed to, and one of its biggest holdings is the GDX. You can just imagine what sort of crazy action we will see when money starts pouring into the metals complex down the road. My guess is, as hard as it was to be bullish on the sector over the last couple of years, hanging on to this stuff is going to be a real chore when the party gets wild.

But It Can Have a Nice Ring To It That, however, is a problem for another day, even if it's a nice one to have. Folks should just be prepared for absolutely wild volatility, as this underscores a point I've made many times before, which is that the noise in the metals is immense. Thus, most of the time when stock XYZ is behaving in an odd fashion it has little to do with the company and a lot to do with machinations amongst the ETFs.