It was a rough week in the stock market, though it ended with a nice rebound.

The S&P 500, Nasdaq Composite, and Dow regained some of this week’s losses and closed with a strong finish on Friday. The Dow closed up 674.62 points (+1.65%), the S&P 500 up 117.42 points (+2.13%), and the Nasdaq Composite up 451.07 points (+2.61%). That was an exciting end to a pretty dismal trading week. But don’t party too hard this weekend.

Here’s the reality. All three indexes are still trading below their 200-day simple moving average, market breadth is weak, and investor sentiment is negative. In addition to the technical factors, uncertainty, inflation fears, and weakening consumer sentiment are still front and center in investors’ minds. So, it’s not surprising to see gold and silver outperform other assets such as equities, oil, US dollar, and bonds (see chart below). Note: You can click this chart and save it in one of your ChartLists.

 

Gold hit an all-time high on Thursday, crossing $3,000 an ounce and silver came close to its 52-week high. This could be a sign of “risk-off” investor sentiment, but it could also have something to do with falling U.S. Treasury yields and the more recent decline in the value of the U.S. dollar.

What’s more interesting is that the SPDR Gold Shares ETF (GLD) and iShares Silver Trust ETF (SLV) have outperformed the SPDR S&P 500 ETF (SPY) in the past year, with periods when SLV was the dominant metal. Thus, while investors were focused on the equity rally, metals fell under the radar.

If nothing else, the above chart serves as a reminder that investors need to have a diversified portfolio.

When the S&P 500 is heavily weighted on a handful of stocks, a major decline in these stocks can hurt your portfolio. Having exposure that’s not dependent on the performance of a handful of seven magnificent stocks can make a difference in protecting your portfolio from large drawdowns.

And speaking of protecting your portfolio, here’s a friendly reminder. If you’re an OptionsPlay Add-on subscriber, don’t forget to join the members-only webinar on Tuesday, March 18 at noon EDT!