Shakeout

In hindsight, I'm mad at myself for not seeing this coming. Though I'd been telling you all week to expect weakness as The Cartel attempts to dissuade Dec12 contract holders from taking delivery, I didn't anticipate the severity of this morning's action.

Monday, I tried to warn you by using The Godfather as a reference. Yesterday, we discussed the possibility again. I didn't expect a huge selloff so I only gave you preliminary support levels. Boy, was I wrong. They came after it hard this morning with the deliberate intention of smashing price. Here are your 1-minute charts. Note that the sole focus, at least initially, was gold. It was hit right at the Comex open. Silver, which doesn't open until 8:25 just saw some spillover selling, initially. Silver then became the target later once The Forces of Evil saw the opportunity to attack it and drop price below the 50-DMA.

To save time, below is a C&P of a comment that I posted to the previous thread. This is the most likely explanation of the mechanics behind the attack:

Submitted by Turd Ferguson on November 28, 2012 - 8:50am.
MODERATOR
This is all just manipulative bullshit. The likely cause of the drop was the deliberate and manipulative unwinding of a Dec position, probably a spread trade. The manipulator takes the long side off all at once and then looks to cover the short side at a later time after price has been driven $20+ lower. In this case, the manipulator gets the added benefit of the momo-HFTs chasing price lower because of the breach of the 50-DMA (near $1740). Now down $30, the manipulator can begin to cover the short side for considerably less money than it would have cost if he had done the whole thing instantaneously.
Soon (later today or tomorrow) we'll get an FUBM where actual buyers pick up the discount and price rallies further on the back of the physical orders that were filled on the drop.

The goal now is to recover the damage. Gold is, unfortunately, back under "The Iron Dome" and it will have to fight again to break through. The goal for silver is easier. Get back above the 50-day, near $33.20, and the short-term technical picture will remain unchanged. I suspect this will happen later today but I also expect more raid attempts before FND on Friday.

Again, given what appears to be an extremely tight physical situation and the escalating open interest, I should have expected a raid of this magnitude today in order to frighten the remaining Dec12 longs. Live and learn, I guess, and we'll have to plan better in late January when the Feb13s go off. Until then, watch for more raids today and continued volatility through the remainder of the week. I am still expecting a very strong UPtrend in December that will carry over into 2013. Be patient. Hang in there and keep the faith. BTFD and take delivery.

TF

p.s. Obviously, trading these markets is extremely difficult. You'll recall that back in April, I enlisted Coghlan Capital and Andrew Maguire to help you navigate things profitably. To that end, I've scheduled a FREE webinar for next week with Paul Coghlan. He'll demonstrate for you the techniques he uses to trade and, frankly, we hope this encourages even more of you to join "The Army". The link to register is below. I strongly encourage everyone to attend.

https://www1.gotomeeting.com/register/240678176

283 Comments

ggnewmex's picture

First

I am honored!!!!!

Making a comeback?? but be careful!

only if you trade otherwise,,, THANK YOU for the cheaper price

Capt. Willard's picture

2nd

Is this the opening salvo for a retest of angle 1680?

Colonel Angus's picture

Just BTFD

that is all. I've been sending out messages telling everyone. BTFD now! 

luv2stak's picture

SECOND!

Well, nope... :-(   Slow internet connection...

But, we 'honor' Turd and his voluntary efforts in his readership's behalf by eagerly checking his site for 'the latest' pearls of wisdom, and enthusiastically posting if we happen upon them first, second or often-- third...!

It's kinda like a 'Thank You'!

and, Feed The Turd... (which is probably even more appreciated by His Turdship and The Wife 'n'Kids!)

¤'s picture

Predictable: Eminent Domain To Clear Housing Market

A lock secures a chain on the steel fence of a foreclosed home previously owned by U.S. Bancorp in Los Angeles, California July 17, 2012. REUTERS/Mario Anzuoni

 

A way out of the mortgage mess, finally?

The man behind the plan to use eminent domain to take over underwater mortgages says pressure is building for the federal government to solve the housing crisis. He says the White House should release decisive policy within the next six months. Video | Full Coverage

ReachWest's picture

Frustrating, for sure

Will it ever end? On days like this it seems that the answer is no - but, of course, it will end and the natural laws of economics and true value will ultimately prevail. Until that time - this really sucks.

So - how many naked shorts did the bastards have to add to their bottom line to take this action today? I guess we won't know until a week and a half from now.

Nose's picture

Dec OI

New member here, Nymex OI has shed 12,100 contracts so far today for Dec. 2012. I hope we can hold over 7,000at the end of the month. Wishful new member thinking. So glad to have the courage to finally register & comment here.

Outfitter's picture

The Plan

I think their plan is to just out live all of us.

Round and round we go, where we stop, nobody knows.

Big Buffalo's picture

UCO

Got UCO?

Decrease in inventory when an increase was expected.

Turd Ferguson's picture

Welcome to Turdville, Nose

MODERATOR

And everyone, please check the "p.s." to the post and register for the webinar. Here's a sample:

http://www.coghlancapital.com/node/4765

Response to: Dec OI
¤'s picture

Housing Data Revised Sharply Downward After The Fact

Why should we believe any data as being remotely accurate and based in reality? All the talk before the election is how the housing market has rebounded.

Funny how that works isn't it? indecision

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

New home sales edge down, prior estimate revised lower

A U.S. flag decorates a for-sale sign at a home in the Capitol Hill neighborhood of Washington, August 21, 2012. REUTERS/Jonathan Ernst

A U.S. flag decorates a for-sale sign at a home in the Capitol Hill neighborhood of Washington, August 21, 2012.

Credit: Reuters/Jonathan Ernst

 

WASHINGTON | Wed Nov 28, 2012 10:11am EST

WASHINGTON (Reuters) - New single-family home sales fell slightly in October and the government revised sharply lower its estimate for the prior month's sales, casting a small shadow over what has been one of the brighter spots in the U.S. economy.

The Commerce Department said on Wednesday sales dropped 0.3 percent last month to a seasonally adjusted 368,000-unit annual rate.

Government data for new home sales are subject to substantial revisions. Indeed, the Commerce Department cut its estimate for sales in September by 20,000 to a 369,000-unit rate.

The data leaves the pace of new home sales just below the pace reported in May, suggesting little upward momentum in the market for new homes.

Still, the report gave some upbeat signals that reinforced the housing sector as a point of strength in an economy beset by flagging business confidence and cooling demand abroad. The median home price of a new home rose 5.7 percent from a year ago.

Economists polled by Reuters had forecast sales rising to a 390,000-unit rate last month from the previously reported 389,000-unit rate.

The Commerce Department said superstorm Sandy at the end of last month probably had a "minimal" effect on sales activity, and did not affect collection of data.

HeNateMe's picture

Selling Some Physical Today...For Good Reason Though

Selling some physical to pay off a private loan at a discount today.  3/4s of this large loan is going to be written off if I pay 1/4 in full by the 30th.  The only way to come up with that amount of cash is to sell some physical.  It PANGS me to do this which is why I am spilling my guts out before you.  Have to go diving this afternoon to find the stash though. 

But don't worry.  I will still make monthly purchases.  I will get it all back and then some before hyperinflation.

HeNateMe

ratioarbitrage's picture

Second leg ... in a body bag

So if you are structurally short with a spread and you close your longs over an hour and a 2% drop... but every time you close part of your short it just rises more steeply, so you end up back at the same price with half your short leg still open... does that mean you go home in a body bag?

Edit: and do you tell your boss or do you just leave it there?

Terp's picture

Early November

Capt. had a good point from the last thread.  I can't post the chart for some reason (shows up as an "X") but check out November 2nd.  Only took two days to correct!

I'm not scared - I have plenty of room before my Stops are hit  - I too just wish I had more fiat to throw on the long side!

I'm not surprised that gold dropped $30+ this week (from what Turd has been saying) - just didn't expect it to happen in five minutes!! It just seems more painful that way, but a quick death or slow death is the same result. Now that they got it over with, hopefully they will take a four-day weekend and the price can creep back up.  I've seen someone say this here before and I say it to my GF all the time - "The (gold/silver) markets take the stairs up, and the elevator down"

Healthy correction, or unhealthy correction - hopefully this does the job =)  I rely on you guys for my technical analysis and thank you all for that, especially the Turdmeister!!!  I'm only in this game because I believe in the long term fundamentals and have for the last four years (when I stopped drinking Koolaid and started drinking Jack).

This site is my main source for PM info and again I thank you all for that!

vitorio's picture

Turd great! Looking foward

Turd great! Looking foward for Trading webinar.....

¤'s picture

HeNateMe

You're doing the smart thing so try not to let it bug you too much. I'm sure it was a tough decision nonetheless.crying

You can begin re-stacking from a position of strength and less indebtedness when we hit some of those inevitable future waterfalls. yes

silver_bars_stack.jpg

Big Buffalo's picture

Happy

I'm happier then a witch in a broom factory.

boatman's picture

no bond bubble

not crashing either.......til they sniff the possiblity[fact, actually] that they're not getting their money back without a haircut....or at all.........CDI paying off?............that does not pencil out.

Fuss doesn't get it 

greece WILL leave OR they will PRINT to keep it from leaving[greece the GDP of Dallas].....which they do not want to do because spain n italy would  FORGET getting their socialist house to pencilout.

then spain n italy leave or they print MASSIVELY.........you think sobering up with austerity is going to happen if/when they put greece on a tab?

then the bond vigilantes get to japan............from euro defaults OR  MASSIVE printing that questions sovereign viability and causes BIG inflation.

and then to US.

and what will they buy when stocks AND bonds are going down at the same time?

we have our answer because we are already here.

fast mover's picture

Called it Monday Night...maybe I was inspired by Eagles on MNF

Expect some volatility tomorrow, especially at the market open

 

"The odds of a takedown seem high, as if we are overdue."

Buying with both hands today.

FM

Turd Ferguson's picture

On the previous thread

MODERATOR

Someone tried to spread some obvious disinfo crap about the drops in the metals correlating with the drop in crude. This is complete bullshit and apparently aimed at convincing you that today's metal drop was NOT a manipulative event.

Note that there IS NO TIME CORRELATION. The crude drop was at 9:00 am, well after the gold drop at 8:20. Additionally, the 50-DMA attack on silver began at 9:22. By then, crude had bottomed and had begun to bounce.

tmosley's picture

Well, dang.  I was hoping for

Well, dang.  I was hoping for a larger selloff, and now it looks like I have missed my opportunity.

Oh well, what's a few oz here or there?

HeNateMe's picture

Dark Purps

Thank you so much for your response!  I know logically I am doing the right thing for my family (including my new daughter set to arrive March of 2013) but it's tough to let go, emotionally, of any part of my stack - as I am sure many on here can relate.

But I appreciate your reply.  Thanks for validating my decision! yes

HeNateMe

California Lawyer's picture

Hey! Turd Picked Nose for an Accolade

Turd picks his bottom, now he picks Nose!
Turd, you ain't no bandleader, and I am damn glad you are instead a blogging wizard!

I really appreciate you doing that dollar cost average post yesterday, thanks again.

As for this current raid, I find your analysis dead-on. It is crystal clear to me that price is being managed at key points, like the 50 day moving average.

Here is a question, though. Can you go back and superimpose all of the past op ex's relative to the 50 day moving averages for the past couple of years, and see if there is a pattern? And, say, for example, if the price is smashed below the 50 day at op ex, what is the typical price action in the next week following the op ex? I have a feeling there is a pattern.

Thanks!

boatman's picture

eminent domain to solve housing crisis

let me see, print ALOTTTT of money, buy  the houses from the bailed out underwater-marked-to-market TBTF banks.

sell them back to the people that lost them via fed mandated FANNIE n FREDDIE loans.[isn't that what got us here in the first place?]

now the TBTF banks are BAILED OUT TWICE.

and the people who were working both two jobs to live in something they couldn't afford in the FIRST place are taught-----don't worry bout nuttin'......you just buy WHATEVER you want to.

yeah, that will solve it alright.

there's just no blood in this turnip.

try as they might to find it. 

Nana's picture

I Feel Like The EE Has Inflicted

Shaken adult syndrome which makes my head hurt but I refuse to give up, give in or go away.......

¤'s picture

HeNateMe

You just made me smile about your anticipation of a new daughter.

I hope 'mom' is doing ok these days yes

The birth of my first child (daughter/ and then a son 18 months later) was the best thing that ever happened in my life and changed me forever into a person I never knew was residing within me for the first 29 years of my life.

I could sit here right now and make my eye's almost water with intense love and pride just thinking of my children. heart

Basil's picture

@HeNateMe

" .....but it's tough to let go, emotionally, of any part of my stack - as I am sure many on here can relate."

You are surely correct here, but IMO that fact gives rise to a problem , namely :   We must never become emotionally attached to our investments, because this can heavily influence our rational thinking , resulting in significant psychological bias.

Let's be honest , there is more than enough confirmation bias already on this site. We all know it - at least those of us with more than half a brain know it.

Just be careful of allowing your emotional state to result in decisions that cost you dearly. That's all I'm saying. 

¤'s picture

Saudi King Alive / Saudi Diplomat Dead

See realtime coverage

Saudi diplomat shot dead in Yemeni capital

 
Saudi Arabia, which shares its southern and eastern borders with Yemen, is playing a key role in helping the Yemeni government and the United States battle militants of Al-Qaeda in the Arabian Peninsula, the terror network's Yemen affiliate.
Arutz Sheva

See realtime coverage

Saudi king appears for first time since November 17 surgery

 
JEDDAH, Saudi Arabia (Reuters) - Saudi King Abdullah has appeared on state television on Wednesday for the first time since his 11-hour operation to tighten a back ligament on November 17, helping assuage fears over his health.

http://www.google.com/news?pz=1&cf=all&ned=us&ict=ln

Silver_investor's picture

Webinar with Paul Coghlan - Question for TF

I'm going to register for the Webinar and watch it. I'm looking for a way to generate income as I currently have none. (I can't even find a menial job at a local grocery store.) However, I have NO trading experience, and I only have a little savings that I cannot afford to lose. It is the only money I have besides my silver. Is this trading service something I should get into?   

HeNateMe's picture

Even Darker Purps...

My wife and I already have a seven year old son who was a very difficult baby/toddler (colic, etc.).  But I love him dearly.  Having a child has changed me in countless ways: it's made me stronger, made me more responsible, strengthened my marriage, allowed me to shed childish things, and taught me how to be selfless (of this last I had no choice). 

Now, I couldn't be happier expecting a daughter.  I still am in shock that it's a girl.  I have only brothers and raised only a son so far so a girl is going to be a complete change for me but I am ready.  I have been trying to convince my wife to name her Silver, to no avail.  However, I beat my wife in a high stakes cribbage match on Thanksgiving.  To the winner went naming rights of our new daughter, so Silver might still be in the cards!

Yes, we are lucky men.  Thanks for linking that video!  Listened to it twice now  I honestly don't know where I'd be without my wife and son.  Sounds stupid, but they've changed my life for the better.

What a great day!  I feel like Alec Baldwin in the episode of Friends, "The One in Massapequa".

HeNateMe

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