Hot Tips and the Commodity Plunge
May 6, 2011
Posted by Jody Eisenman | Filed under Uncategorized
There is a story told about Joseph Kennedy (who was a noted stock manipulator who later became the first head of the SEC and was the father of the president John Kennedy). With the stock market roaring along in the 1920s, it seemed that everyone wanted to play and get rich. It is said that when his shoeshine boy starting giving him stock tips, he figured the market had gotten way ahead of itself and sold everything. As we all know, the stock market crashed in October 1929. Well, about two weeks ago, a friend of mine who owns a food company, casually told me that he had made a very sizable investment in silver. As I had never known him to invest in much of anything other than his company, I thought this was strange. Apparently, he was jumping in to what’s known as a “crowded trade”, meaning that everyone saw how much silver was advancing and wanted to get in on it. Much like the shoeshine boy of the 1829s, this was a good sign that the market was near a top. Since February 2010, the price of silver soared from around 15 to over 47 dollars/ounce last week. However, since then, the bottom has fallen out. Thanks to some extant to the CME raising margin requirements several times, the price of silver plunged to a close today of 33.72. In addition, the fall has spread to other commodities as well. Oil dropped to below $100 with its’ biggest one day drop ever. Meanwhile, after making a high of 12,928 last week, the Dow Jones Industrial Average was dropped to 12,584. The S & P 500 is now trading right at support. For now, all eyes are focused on the jobs number Friday morning. While a strong number could reverse the recent trend, a worse than expected result could really accelerate the slide. Believe me when I tell you that there more than a few very nervous traders tonigh
