| Friday, June 28th, 2013 | | | | | |
 | | | | Don't Call it a Comeback | | | - Stocks rally—yet fail at resistance
- Relief rallies vs. relative strength
- Plus: 3 quick, easy answers to the precious metals selloff…
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| | | Greg Guenthner coming to you from Baltimore, MD...
 | | Greg Guenthner | The first half of the year is nearly in the books.
As of 4 p.m. today, the second quarter will be over. Futures are hinting at a stable open. For now, it appears the market will retain its comeback gains posted earlier this week.
However, stocks aren't out of the woods just yet. In fact, I'm more inclined to describe this week's action as a relief rally up to this point. Sure, the gains have been impressive. But the market still has work to do before it proves itself once again.
Yesterday's S&P 500 rally stalled out after briefly retesting its shorter-term moving averages. A close above 1,620 would have been huge for the bulls in the short-term. It failed. Until we see a meaningful, sustainable push above 1,620 toward 1,650, expect the market to churn sideways or trickle lower.
The market's a bit fragile—but it isn't completely void of tempting plays on the long side. Take regional banks, for instance. While market participants continue to bicker over the implications of rising interest rates, bank stocks are soaring. The SPDR KBW Regional Banking ETF (NYSE:KRE) staged a massive breakout. It's up almost 5% this week…
"Rising interest rates can do long-term good for some firms," explains our own Chris Mayer. "Low interest rates have hurt bank profit margins for years. You can't read an article about banks without a mention of 'net interest margin,' or NIM, compression. Higher interest rates will relieve those pressures."
In fact, while KRE is up nearly 4% over the past four weeks, the S&P is down more than 2% over the same period. Relative strength is especially important during a market correction. It helps us find the leaders of the next rally—and we could very easily see regional banks float to the top of the performance list.
If you're looking for a low-risk way to buy into one of the strongest sectors on the market, this is it. | | |  | | | | Rude Numbers | Targets, Predictions and Wild Guesses
| | | | 978 | is where the Russell 2000 rests this morning. Running with the rest of the broader market, the small-cap index gained more than 14 points, or 1.5%. | | $13 trillion | is how much Chinese credit has ballooned by in less than 5 years. The country has seen nominal GDP growth of less than 10% in recent quarters while its credit growth has exceeded 20%. | | $97 | buys a barrel of crude this morning. Crude futures finished higher for a 4th straight day. Positive data keeps pointing to increased gasoline demand. | | $1,201 | is where you'll find gold futures this morning. The yellow metal broke below $1,200 yesterday afternoon for the first time since 2010. | | 463 | points were added to the Nikkei today. The 3.5% gain comes on the heels of a report that showed Japanese industrial output rose 2% in May, according to Bloomberg. | | | | | | | | Rude Trends | When to Buy... When to Sell
| | | A well-organized reader recently submitted three decent questions regarding the bearish action in precious metals recently. To be completely honest, I'm getting bored of all the gold chatter. But since the golden flameout doesn't want to slow down, i figured a few answers would be in order…
1. I vaguely remember that recently you said when silver reaches $19.50 is a big support, and the bounce could be strong... so that scenario is no longer true?
My crash landing zone for silver is between $17.50- $18. We could see a bounce. But I suspect it would be short lived. Don't waste any effort looking for it. Other areas of the market are offering much better opportunities right now.
2. Your target for gold is $1,000 - $1,100. Do you see no bounce from current level, 1,232, at all?
I believe the market took care of this answer yesterday.
3. How soon do you think gold will reach your target? Are we talking one week, two weeks? Or more like one or two months?
Sooner than I initially thought. Weeks... Maybe a couple of months...
But it doesn't really matter. It's going lower. It will get to where it's going eventually. And even when it arrives, it probably won't be a buy. At least not anytime soon…
[Ed. Note: Send your feedback here: rude@agorafinancial.com - and follow me on Twitter: @GregGuenthner] | | | | | | | Ignore At Your Own Peril | Today's Must Read Links
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