Busting Out The "White-Out"

Long-time Turdites will recall that I sometimes use a little "correction fluid" if I feel that recent Cartel actions have distorted the true technical picture. For fun, let's call this "White-Out Wednesday"!

So, what do I mean by "distorted". Below are the unaltered 2-hour charts:

The "distortions" are easy to spot. We have the attempt at a cascade last Wednesday when price was jammed lower, through what The Cartel and other shorts had hoped was a critical support level at $1750. Much to their collective chagrin, price immediately rebounded and the only remaining traces of the action are the long "tails" on the candlestick charts. Note, too, the obvious and brutal price capping of Monday, where price surged pre-open only to be summarily beaten lower, even after Fed Goon Evans admitted $1T+ in QE for 2013. Again, all that remains are the "wicks" at the top of the candles.

Using those particular highs and lows throws us off in our technical analysis because the actions these charts show was clear manipulation and not real, grassroots buy-and-sell price action. Therefore, it can sometimes be helpful to "remove" those actions with the help of a little "White-Out". When we do, look at the pictures that emerge:

Hmmmm. Well, now. Isn't that interesting? What we clearly see here are two charts making higher lows and pressing up against a well-defined resistance line. Though, it doesn't always work out this way, technical patterns such as those shown above typically resolve themselves by breaking in the direction of the diagonal trendline. This is because the diagonal line connecting either higher lows (in an uptrend) or lower highs (in a downtrend) is more "powerful" in terms of showing the underlying sentiment of the market. In this case, the higher lows show a powerful and gathering momentum against the resistance cap that is being imposed.

Note, too, that I have extended the timeline into the future. You can see that this overall pattern will resolve itself by Friday at the latest. Hmmmmm. Can anyone think of a "fundamental event" that will occur before the close on Friday that might provide the impetus for a breakout?

The BLSBS, of course!

Anyway, once again I am attempting to use past price and White-Out to predict the future. Take it for what it's worth.

As an aside, I've seen some chatter about the recent prediction a certain subscription analyst with a track record of rapid flip-flopping using pure TA. This guy consistently fails when predicting PM price because:

  1. He uses TA only and assumes that the metals are freely-traded and fair markets.
  2. He fails to take into account the overwhelming physical demand in London which is underpinning the metals markets and keeping The Cartels from effectively raiding the paper price.

Other than that, I'm sure he does a fine job and if you want to blow your money on his or some other BobbyP-type service, knock yourself out.

Moving on, we should discuss crude here, too, as price has fallen dramatically again today. What is going on you ask? I'm asking myself that, too, but I think I have the answer.

Ole Bibi seemed to leave everyone with the impression last week that Iran had not yet crossed the "red line" where an Israeli attack on their nuclear facilities was imminent. I've since seen the stories linked below posted on Debka, which I'm confident is sourced by The Mossad. Is it just me or does this all look like a smokescreen of disinformation? Sort of like The Allies trying to convince the Germans that D-Day would be waged at Pas de Calais and led by General Patton.

http://www.debka.com/article/22400/Israeli-politicians-getting-set-for-Netanyahu-to-call-a-February-election & http://www.debka.com/article/22394/Fordo-sabotage-enabled-Netanyahu-to-move-Iran-red-line-to-spring-2013

Remember, the U.S. will soon have an unprecedented three aircraft carrier battle groups in vicinity. See this:

http://www.zerohedge.com/news/third-us-aircraft-carrier-returning-unexpectedly-mideast-ahead-schedule & http://www.zerohedge.com/news/us-aircraft-carrier-stennis-now-en-route-join-enterprise-and-eisenhower-just-iranian-coast & http://www.zerohedge.com/news/4000-marines-headed-middle-east-part-peleliu-amphibious-group-dispatch

And then throw this log on the fire...We've been watching the Iranian rial melt down over the past week and this is fast becoming a full-blown crisis within Iran. The last thing the mullahs and the political leaders need right now is a full-on case of civil unrest. Tyrannical governments typically offer two responses in a desperate attempt to regain control:

  1. Violent repression and cruelty
  2. Start a war in order to create an adversary to blame.

http://www.marketwatch.com/story/iran-rial-sinks-on-sanctions-down-80-over-year-2012-10-02 & http://www.aljazeera.com/news/middleeast/2012/10/2012103113527747494.html & http://www.bbc.co.uk/news/business-19798655 & http://www.jpost.com/MiddleEast/Article.aspx?id=286450 & http://www.debka.com/article/22402/Iran-pumps-large-Bassij-militia-forces-into-Tehran-as-riots-flare

So, now, take a look at this chart. I'm still patiently waiting to buy but I don't think I'll be waiting much longer.

And I apologize for the relatively "late" post today. I was hosting the webinar over on TTM with James Turk. It seemed to go really well and Mr. Turk is sure a very nice and knowledgeable man. The show was about an hour long and included a few questions from the audience, too. It will soon be posted to TTM so that all subscribers will get a chance to hear a recording. This was just the first installment of what will become a regular feature of the service. At just $15/month (a paltry 50c/day!), I think most members are finding the site to be a remarkable value. You should consider joining.

In what has become the usual pattern, I see that the metals closed UP today on the Comex session but are once again being pounded on the Globex by the panty-waste sissies of The Cartel. Whatever. Just buy some more physical this afternoon as your show of defiance.

Have a great rest of your day!

TF

377 Comments

StevenBHorse's picture

Long and Strong

They have capped all week to keep a lid on the market until the BLSBS blows the roof off Friday.

Anyone pissing their pants thinking that another Feb massacre is nigh needs to pass the shit to the horse on their left.

Adding on any weakness this afternoon.

Good post as usual.

Neigh

Pining 4 the Fjords's picture

Damn...

Lost it by a second.  Oh well, here is your Turdville scene of the day, overheard at the Speak's bowling alley:

Montecarlo's picture

TurD!

My first top three

reefman's picture

Turd, I really like your "white out" approach".

Turd, I really like your "white out" approach". In fact I like it so much that I have started to do that mentally myself when looking at these sporadic crazy nutzy charts. 

Dr Jerome's picture

Whaaaaat?

Did you three read Turd's post? I have been sitting here pressing F5 repeatedly waiting for a chance to be first! Turn my back for one minute and I miss. I guess I should go do some work.

reefman's picture

I just went in on USO

I just went in on USO because it hit the bottom of the bollinger band.....

I believe it's going to bounce from here.

http://stockcharts.com/h-sc/ui?s=USO&p=D&b=5&g=0&id=p91874658937

¤'s picture

Crude Price / Infographic

Sub $90 oil just hanging there and primed to reverse course?

http://www.tasgall.com/web/2008/05/xtralargeposter2.gif

Go here for clickable/larger graphic

xtralargeposter2.gif

Turd Ferguson's picture

Eye-opening KWN post

MODERATOR
Big Buffalo's picture

Iran

JAN: $1 = 10,000 rials

last week:  $1 = 20,000 rials

today: $1 = 35,500 rials

When the shit hits the fan, it hits fast and hard. They are currently starting the barter.

California Lawyer's picture

Thanks for the Great Post Turd

I missed that angle entirely!  Damn, sloppy on my part.  

I never once thought that Israel may be posturing for an early invasion, trying to lull the Iranian regime into a false sense of security.

As to the Iranian currency collapse, that to me is the end game.  No currency = no sanity = govt crackdown is IMMINENT.

Will there be an internal Iranian attempt at a coup, backed by CIA of course, or will there be a false flag and an invasion?

What is in the Military Industrial Complex's best interest?  A coup?  I don't  believe so.

A false flag?  Of course.  But where?

Syria is goading Turkey, but is not the Strait of Hormuz the almost certain flash point?

Damn you Turd, now how am I supposed to draft up this breach of contract complaint with all this excitement?  I'm sending you a bill . . .

heyJoe's picture

Great Q & A with James Turk

Thanks Turd for the James Turk interview.

Very informative and well worth the price of admission.  yes

Pining 4 the Fjords's picture

Uh, Turd...

Just so I have a handle on this:

1.  The big boys (commercials, smart money) are now holding a record net short position vs. the longs in the stock market- 50 billion net short, in fact... 

2.  AND at the same time the big boys (commercials, smart money) are now holding a near record net short position vs. the longs in the PM market, and have been adding shorts for weeks even in the face of unlimited QE being announced.

Am I the only one here thinking "uh, these people clearly know something"... ? Because honestly, this is starting to scream "October surprise".  Alarm bells are ringing...

Dr Jerome's picture

clinkin and other interested parties...

Here is that Barbara Bellar quote:

"We’re going to be gifted with a healthcare plan we are forced to purchase, and fined if we don’t, which purportedly covers at least 10 million more people, without adding a single new doctor, but provides for 16,000 new IRS agents, written by a committee whose chairman says he doesn’t understand it, passed by a congress that didn’t read it but exempted themselves from it, and signed by a president who smokes, with funding administered by a treasury chief who didn’t pay his taxes, for which we will be taxed for four years before any benefits take effect, by a government which has already bankrupted social security and medicare, all to be overseen by a surgeon general who is obese and and financed by a country that’s broke.
So, what the blank could possibly go wrong?"
Bollocks's picture

Yup, Currency Wars...

Iran police clash with protesters over currency crisis

Riot police in Iran have clashed with protesters in the capital over sharp falls in the currency, the rial.

Tear gas was used to disperse the demonstrators, some of whom were setting fire to tyres and rubbish bins. There were many arrests, reports say.

Eyewitnesses told the BBC that scores of people gathered outside the central bank, calling for the governor to stand down, chanting anti-government slogans.

The rial has plummeted to record lows against the US dollar in recent days.

It is not every day that you see anti-government protests in Iran, let alone by those who have, on the whole, done very well under President Ahmadinejad and the Islamic regime.

What has led them to frustration is the continuing free fall of the value of the Iranian rial - in recent days by 15% per day. This speed of devaluation has made it very difficult for them to buy and sell as prices change on hourly basis.

Worse still, they find President Ahmadinejad, who seems to have little idea about how to arrest the downward spiral of the currency, blaming them for the crisis.

It is clear that Mr Ahmadinejad's many enemies in various centres of power have begun a push to remove him before his term ends in June 2013. He may be the first big casualty of the sanctions against Iran. But Mr Ahmadinejad is a fighter and his removal may not be that easy.

Money dealers were joined by traders from the nearby central bazaar, reports say.

Amateur video footage posted online appeared to show hundreds of people marching towards Iran's central bank.

Eyewitnesses told BBC Persian that riot police fired tear gas to disperse the crowds.

Reports say many shops in the central Grand Bazaar have brought down their shutters in sympathy with the demonstrators.

Traders are angry at the lack of direction from the government in the crisis, which they say has led to more instability in prices and made trading almost impossible, according to commentators.

http://www.bbc.co.uk/news/world-middle-east-19812482

Swineflogger's picture

OK Kids! Have Some Fun Tonight!

atomic180's picture

IRANIAN SPRING...

Is coming in six more weeks...

tread_w_care's picture

+1 to Pining's Question . . .

2.  AND at the same time the big boys (commercials, smart money) are now holding a near record net short position vs. the longs in the PM market, and have been adding shorts for weeks even in the face of unlimited QE being announced.

Who's got a handle on the size of the net short PM smart money position right now?  Might need to take some paper profits again here soon. 

SRSrocco's picture

Some Gold Tidbits....

TOP 5 GOLD PRODUCTION & PRICE MOVEMENT:

Well, it looks as if gold production from the Top 5 gold companies declined 5% in the first half of 2012 compared to the same period last year:

Barrick had less gold production due to less ore processed and GoldCorp was dealing with the drought in Mexico which cut back their production.  Regardless, it will be difficult for these top 5 miners to make up the shortfall in the second half of 2012... especially with 39% of the gold production offline in South Africa.

If global gold production increases in 2012, it will be due to increases in other countries and in smaller gold producers.  We shall see.

WHERE'S THE PRICE OF GOLD HEADING??

That's a good question.  According to Clive Maund, both gold and silver are overbought and have extremely high COMMERCIAL NET SHORT POSITIONS:

Of course Clive is guilty of reading the gold and silver charts in a vacuum.   If we look at one of Gene Arensberg's charts from GotGoldReport.com, we find that during the big move up in Gold in Sept 2011, the commercial net short position actually declined:

The Pink line denotes the gold price, while the Blue line is the COMMERCIAL NET SHORT.  As we can see from the action in Sept 2011, right before gold went vertical, the commercial net short positions were at a peak.  But, when the price moved up it caused a HUGE SHORT SQUEEZE,  forcing the commercials to cover. 

Here we can see that the BULLS won the battle.  Presently, the gold price could go either way as we are seeing extreme high levels in the commercial net short positions.  However, if we do see large buying coming in from the Hedge Funds and etc, it could cause a huge short squeeze, similar to what took place back in Sept 2011.

On-the-other-hand, if we do get a correction... it won't be much.  Anyhow, we are in it for the long term.  We got Ben Bernanke on our side.

IS THE US MINT ON VACATION??

The last time the US Mint updated their gold and silver eagles sales was back on Tuesday, Sept 25th.  For some very odd reason, they haven't even updated in the beginning of a new month.  This is very strange if you ask me.  I have never seen a new month come and go without an update either on the first or second day of the month.

I just contacted Michael White, PR spokesperson for the US Mint about the delay in updating their figures... all I got was an answering machine.  I left a message.  Maybe we may see an update here soon.

achmachat's picture

so...

does this mean that you still think hot explosive and historic is still going to happen soonish?

I'm just asking because I have faith in your sources and need to know how fast I need to raise new cash before I can save it into metals...

reefman's picture

Achmachat, it means it is

Achmachat, it means it is going to be hot and explosive to either the up side, or the down side.... I bought spreads now hoping that one will take out the other and profit. 

achmachat's picture

reefman

I stopped "trading" around two years ago. (it's a long story... but basically the risks outweighed the profits and it was my "side job" anyway).

I am purely a stacker now, hence my question about how fast I need to be in order to save more fiat into something real. 

Bollocks's picture

@Swineflogger

I predict that anyone who plays that drinking game will find themselves on the way to Accident & Emergency within 15 mins of the start of the debate.

Ok, it might take 16 mins wink.

CBDooper's picture

Raid Signals

There are a few signals currently indicating a raid may be just around the corner. The following are what could potentially be the recipe for an attack.

  1. Silver is relatively weaker than gold
  2. The shares are much weaker than both metals. GDX -1.4% ATM
  3. NFP report week
  4. China on holiday all week
  5. Open interest near YTD highs
  6. *Added* RSI divergence on the daily charts of both metals evident on the highs of Monday

Bill Murphy of GATA is convinced numbers 1 & 2 are used as signals by the cartel to signal their allies of an impending raid. Bill also contends that more often than not, the metals are raided around the jobs report. 

IMO, we may get a raid, but it will be very short-lived and shallow as QE3 will work as a put for the metals and commodities. If in fact the raid does occur, I'd consider it a good thing if they can manage to get some spec liquidation to reduce the open interest.

Looking forward for a buying opportunity.  

BB's picture

Me white out, too

I used white out myself. We had a beautiful clean, accurate trend line up from August 20, and then the (9/21) Friday/Monday smackdowns killed it. I was annoyed enough I just skipped over the two smackdown days, and now again there’s a pretty good (not yet as accurate, nor as steep) uptrend that, according to Computer, puts silver above 35 on Friday, October 5, 2012 at 3 a.m. US Eastern Time. Don’t know about that 3 a.m. bit, but that’s what Computer says. 

BTW if you want to stay an optimist it helps to look at London Noon fix numbers, which come out before the monkeys can get to the price on the Comex.

 
usk's picture

Yep, there is a good chance of a major raid Friday

Mass media BS reasons for a Gold "correction" tomorrow:

Good job report. Obama saved the economy. Obama won the debate.

Biochar's picture

the Revolution begins with each one of us

...and like in the film, CLOUD ATLAS (in theaters Oct 26), our efforts and choices can have a great influence on shaping the world and future events

"How wonderful it is that nobody need wait a single moment before starting to improve the world" ~ Anne Frank

"The power to question is the basis of all human progress" ~ Indira Gandhi

"Not all of us can do great things, but we can do small things with great love" ~ Mother Teresa

Nuclear Rocketman's picture

Cosmo

The James Turk interview on TTM was great!

When Mr. Turk made references to Turd, it made me wonder how long this alias can continue and was reminded of this famous TV revelation:

worldend666's picture

Gold vs Crude

TF

Love your gold and silver analysis but your crude oil calls leave something to be desired. If I had followed them I would be looking for a cardboard box to live in by now.

Best stick to the metals.

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