Most Investors consider the Gold to be a "Safe Haven" in times of economic strife. Gold is the "anti Dollar" and with Crude Oil prices beginning to rally once again the Gold Community is settling in for what I believe to be continuous roller coaster ride.

Financials

Stocks: The Dow rose 223 points or 2.7% to 8500, the S&P picked up 3.6% or 32 points to 919 while the NASDAQ gained 82 points or 5% to 1774. With May now at our backs we've put in three positive months in a row, marking the best 3 month performance by percentage since 98'. This is an improvement from the doomsayer's just months ago. We've been consistent in our assessment and still expect a 10-15% correction is around the corner. For much of May the S&P was range bound between 875 and 930 and the Dow between 8100 and 8550, will this continue? Although we expect a downward break, the move out of these ranges should signal the next direction.

Bonds: September 30-yr bonds were lower by 11.5 ticks last week; trading lower 9 out of the last 10 weeks. Prices were able to rally just over 3 basis points off the weekly lows so we should get an additional bounce. Support is seen between 116'10/116'20 with resistance at 118'20. In the coming weeks we expect a move up to 120'00/121'00. September 10-yr notes were lower by 18.5 ticks last week. Support is seen at 116'00 while resistance comes in between 117'20/118'00. As for the Euro-dollar, stay short March 10' as long as 99.095 remains as the contract high. As for options we advised clients to buy December 09' 99.00, 98.75, and 98.50 puts. Contact us for pricing. NFP # out Friday; loss of 525,000 jobs and unemployment rate just over 9% is factored in.

Keeping bonds and notes under pressure are assumptions that the U.S. economy is showing signs of recovery. The newest evidence supporting this theory is a statement made by Gary Stern, President of the Minneapolis Fed;

"As we get into the middle of 2010 and beyond, I would expect to see a resumption of healthy growth." He also downplayed the role of deflation, "To date, there is scant evidence of deflation in so-called core measures of inflation." He added, "If economic growth resumes in the United States as I expect, the threat of deflation should diminish commensurately."

With the Stock Market falling from the 14000 level to the present 8200 level and Crude Oil dropping From the $147.00 per barrel level to $59.00 per barrel presently it certainly proves the stability of Gold. Gold has certainly been a "flight to safe haven" market for investors. We are presently seeing a sideways to BULLISH trend in my opinion. Despite smaller ranges of late we are still seeing 50.00+ ranges monthly and it appears technically we may have a move to the upside.

It was another data challenged session, leaving market direction up to equity market action and of course the Fed. Traders are noting that there don't seem to be as many institutional or large spec traders as there have been in years past and this makes the Fed an even bigger "player" than it may otherwise be. On the other hand, the stock indices pared early morning losses, which worked directly against the Treasury rally. It is clear that the near-term direction of bonds and notes will be highly dependent on the path taken on Wall Street. We are still leaning slightly lower in stocks and higher in bonds but remind traders that it is important to be nimble as circumstances are changing quickly.

With investors looking at a potential depression in the rear-view mirror, the market is approaching a major crossroads. It seems as though the market rallied prior to the streak of better than expected economic numbers and will likely turn over before expectations begin overshooting reality. On the other hand, we are in a scenario that has never been seen before. There is a significant amount of cash on the sidelines and if investors begin fearing that they are missing the boat, dollars could flood the markets for no apparent reason.