Financials bounce, crude corrects, gold holds steady...

We finally got a bounce in stocks, notably financials. The SEC's attempt to scare (squeeze) bank shorts is just another sign of desperation...by the way, why didn't the SEC include Wachovia or Wamu in their do-not-short list? Meanwhile crude is undergoing a correction (long overdue), which has put some pressure on precious metals, but not as severe as recent correlations suggest. Gold:Crude ratio has actually risen sharply this month, and I think it indicates a significant change in market sentiment in favor of gold.

Gold:Crude ratio YTD


Speaking of gold...what's up with gold stocks? My favorite gold stock, YAMANA, got hammered this past week. Yamana had a spectacular breakout late June, but it has since erased all those gains. Indeed it's pretty frustrating to see mining stocks underperform the physicals so drastically. There are no doubts about the strong fundamentals of Yamana (it's the one stock that I've actually done my homework), so I'll just keep buying the dips. I think Yamana's sell-off last Friday provided such an opportunity, so I bought some Aug 16.0 calls...I figure I'll cover if the lower range is broken, otherwise it should rally to at least 16 before mid-August.

Yamana (AUY) YTD


Update on 7/22/08: Yamana broke 14. Maybe some other time...