I bought palladium on a 10-day breakout, which has worked well in the current trend.

Is there a trend? I think so. Insofar as palladium is an industrial metal (used in auto catalysts), QE and continued growth in emerging markets, coupled with relatively good news in developed markets, should continue to provide support. Insofar as it is a precious metal, it should benefit from haven buying from the Eurozone, from continued strong demand for precious metals in China and India, and from buying by gold bugs who think QE2 will lead to inflation. It has been stronger than either gold or platinum (and left silver, which broke out the day before, standing in the dust yesterday). Palladium has been supported in risk-off phases and risen strongly in risk-on phases recently, which seems to make for a good risk-reward balance.

The risk to the trend is Chinese monetary tightening — that is what caused the market to sell off in November. But for now the market is focussed on the strong production numbers. This is as I expected — I think Chinese industrial production and investment demand will remain strong until the government kills the leveraged boom that is going on at present, and it will take a lot (in terms of both will and action) to do that. That doesn’t mean that the market is not vulnerable to further stories about Chinese tightening, of course.