Algos In Charge

Looks like the WOPRs have the run of the place today ahead of the BLSBS tomorrow. Let's see...what else can we talk about?

Well, we should start with the metals, of course. There doesn't seem to be much happening today as most participants (with actual human intelligence) have learned to be wary ahead of the monthly BLSBS. This leaves price to the machinations of the machines and we're left with a tightly rangebound but volatile market. The 200-day MA in the Apr13 is right below $1670 and the 50-day in the Mar13 silver is at $31.90. Expect the trade to center around and bounce off of these levels for most of the day. Any sustained dip/raid that suddenly drops price toward $1660 and/or $31.60 would present a pretty good trading opportunity as London physical demand remains very robust and those levels would bring a lot of buying. This, in turn, would cause The Cartel banks to buy futures to hedge and the paper market would/should recover. Be vigilant and patient.

How about crude? It's down today with most everything else in spite of the flare-up in tensions vis-a-vis Israel/Syria/Hezbollah/Iran. See this: http://www.jpost.com/MiddleEast/Article.aspx?id=301670 [1] and this: http://www.debka.com/article/22724/Russia-slams-Israeli-attack-on-Syria-US-forces-in-Jordan-on-alert [2]. Price has reached and exceeded our long-standing target of $98. Even with the "tensions", I'd still be looking to ring the register a bit here and wait for a pullback. Below are two charts I posted into the comments of yesterday's thread.

OK, how about some reading material?

Our good pal, Trader Dan, was all over the web yesterday and you'll definitely want to read both of these. First, there's this terrific piece on his own site where he discusses the long-forgotten (it seems) Euro-Yen cross. http://www.traderdannorcini.blogspot.com/2013/01/euro-yen-cross-continues-streaking.html [3] And then he showed up over at KWN where Eric has inked him to exclusive analysis. This is a very good read, too. http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/1/30_Norcini_-_Silver_Now_Very_Close_To_A_Major_Short_Squeeze.html [4]

Another friend of Turdvile is The Crazy Canuck, Jeff Nielson. Here Jeff discusses the prospects for "global growth" in 2013. http://www.bullionbullscanada.com/intl-commentary/26053-the-2013-economic-reality-check [5]

Alasdair Macleod has been writing some fantastic stuff lately at the GoldMoney website. Seems like 2 or 3 times per week. Keep an eye on that site or you might miss something, like I nearly missed this: http://www.goldmoney.com/gold-research/alasdair-macleod/bank-of-england-gold-the-doubts-remain.html [6]

Here's a link that somebody sent me by email. I haven't had the chance to fully review the site yet but it looks interesting. Maybe some industrious Turdite (with some time on his/her hands) could peruse the site and see if it is something valuable. http://about.ag/slv/ [7]

More and more talk about the renminbi/yuan becoming a/the new world reserve currency. As you know, I am convinced of this eventuality...I'm just not convinced of the timing. So, I try very hard to not paint myself into a corner regarding it. However, I can't help but get the felling that this is looking more likely sooner than later. Maybe as soon as the next 1-3 years? Maybe? Just keep watching these stories and collecting these links. All of the signs are there. http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=20130118000075&cid=1102 [8]

And fresh off of his overexposure at CNBS yesterday, Squeaky is out with a new missive this morning. I'd suggest you read the entire thing and you can find it here: http://www.zerohedge.com/news/2013-01-31/bill-gross-credit-supernova [9]. To save you time, however, here's a C&P of his conclusions:

Speed Read for Credit Supernova
1) Why is our credit market running out of heat or fuel?
a) As it expands at a rate of trillions per year, real growth in the economy has failed to respond. More credit goes to pay interest than future investment.
b) Zero-based interest rates, which are the result of QE and credit creation, have negative as well as positive effects. Historic business models may be negatively affected and investment spending may be dampened.
c) Look to the Japanese historical example.

2) What options should an investor consider?
a) Seek inflation protection in credit market assets/ shorten durations.
b) Increase real assets/commodities/stable cash flow equities at the margin.
c) Accept lower future returns in portfolio planning.
William H. Gross
Managing Director

As I go to close, I see that a headline of a Chicago PMI beat has caused the algos to pound the metals lower. Let's see...outright QE∞ and a negative Q4 GDP were only good for $13 yesterday. A "surprising" Chicago PMI rips it all back out. What a freaking joke. Just btfd.