Hello All,

The middle east turmoil has finally flipped the switch on uncertainty as the flight to safety in metals is the true barometer of fear.  Hitting fresh highs given the current environment constitutes the possibility for a $100 rally in the yellow metal within a matter of days.  Granted the potential for silver to out-pace gold has and will continue to be the case.  Oil closed at new highs since 2008, and for the most part it is difficult to speculate if anything develops overnight in the middle east.  The pit session did stall beneath $100, only to be broken after-hours which is essentially in lower volume activity.  I still remain cautious for a possible pullback on oil to shake out all the weak longs, but the wild card remains to be played in the middle east as $120 will come into play sometime in the near future.  With the first of the month typically supportive of stock prices, equities hit the pavement today as oil headed back towards $100. We'll need a break of last weeks low to indicate a larger correction is underway, needless to say this could have been the first leg of something much larger.   As part of a two day testimony to Congress, Bernanke indicated that the Fed is ready to do what is necessary to help curb inflation, which helped bid up the US dollar against the basket.  We still await the ECB's decision on Thursday as to whether they will continue to be hawkish, while today's decline in the Euro is evidence that investors are less confident that will be the case.

We will sit aside overnight and see what develops.  S&P projects 1287, Gold looks like it will hit at least 1444, Crude can go either way so we'll see what EIA reports in the morning, and the Euro looks like it will test at least 1.3860.

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Arman Vahdatinia
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