Post BLSBS

202
Fri, Aug 5, 2011 - 9:17am

Weren't the looks on the faces of The Shill and The Coug absolutely priceless? "What? An upside surprise?" Look, we don't refer to it as the BLS"BS" report around here for nothing. The BLS has the ability, through their goofy and worthless statistics like the "birth/death adjustment" to make their monthly reports sing in whichever manner they choose. Sometimes the data is so bad that it's impossible to touch up. Sometimes, like July, when the markets need a boost and a shot of stability, the BLS is able to goose the numbers just enough to take some pressure off. I haven't seen the internals of the report yet but I am highly confident that, once released, it will be plain for all who care to see.

Tucked away in the comments section of the blog from yesterday afternoon was this:

"BTW, upon further review, any BLSBS number tomorrow should be positive for gold.

Bad BLS: Ensures QE3. Positive for gold.

Good BLS: Provides "stability" for stock market. PMs recover, too."

And I suspect that this is true. Though there will be volatility today, there should not be any of the abject panic that prevailed yesterday. As I type, the S&P is up 9 points or so and gold is off $2 at $1657.

There are still plenty of reasons for the equities markets to be spooked, however. All of the funky stuff coming out of Europe should keep you checking the headlines this weekend. Expect more of the same into next week. Gold, having found a floor twice right near 1645, looks poised for a rebound next week. The question is the shape of the rebound. I suspect that, sometime today, we'll get one more push down toward 1645. Whether or not that level holds again will determine the shape of the short-term bottom. If I had to guess, I'd say it's 75/25 that 1645-50 holds for the third time and we rally higher from there. On the off chance it doesn't, I'll get my momentary drop to 1635. From there, I'd look for a rally and then a dip back toward 1645, giving us a cozy, little reverse H&S. The question for me is: Do I move my "stink bid" up to the 1645ish level or do I hope for the 25% chance of getting gold down to 1635. I'll keep you posted.

Silver is a similar deal, though the chart is flatter. I strongly suspect we'll get another look at 38.60 or so later this morning. Whether or not that hold is anyone's guess. I suspect it will but I would not rule out a quick dip that approaches 38. IF that were to happen, I'd be all over it. Unfortunately, yesterday's smash occurred just as traders were beginning to return to the silver pit. OI had finally broken through 120,000 but I'm sure we'll see it back under 120,000 when we get the numbers later today. Because of this, it will likely lollygag around between 38 and 40 for a while. You can bet your arse that The EE would be very happy to see silver contained in a little 38-40 box all the way through the Spetember "first notice day" later this month. For now, I'm just sitting on my puny, out-of-the-money silver spreads and waiting.

As I publish this, we've got a rally! S&P is up 14, gold is 1662 and silver is 39.30. Let's see what the morning brings. TF

12:30 EDT UPDATE:

For those of you who don't regularly check the comments, I apologize if you missed this:

Let's see if they goose the

Submitted by Turd Ferguson on August 5, 2011 - 10:44am.
MODERATOR

Let's see if they goose the market a little bit before/around lunchtime. Maybe take the S&P down toward 1170-75. Perhaps create a momentary pukejob in the PMs. I'll try to buy that dip.

And this:

OK. That worked.

Submitted by Turd Ferguson on August 5, 2011 - 11:10am.
MODERATOR

I got my pukejob. S&P held just below 1170.

I put on a 1700 vs 1800 spread in Oct gold and a 40 vs 45 spread in Sept silver.

I strongly suspect that the worst is over for stocks...at least for today. Don't be surprised if the S&P even moves back into the green this afternoon as dip buyers move in. The same should be true for the PMs. They will likely follow stocks back up.

More later this afternoon. TF

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  202 Comments

Frontal Labottleme
Aug 5, 2011 - 9:58am

Miner's signal?

Small caps down - miners up (marginally). Given the "miner's lead the PM's" hypothesis might this bode well for today?

Eric Original
Aug 5, 2011 - 9:59am

"The Coug"  I think refers to

"The Coug" I think refers to Diane Swonk. "The Shill", ummm...I think that's Mark Zandi. Same rogues gallery they always have on BLS days. Steve Liesman always there too. Generally referred to as "LIESman".

Or not.

¤
Aug 5, 2011 - 9:59am

Wow! Quick market turnaround

Pretty amazing stuff, these markets. WTF!

Expecting something else pretty dramatic to occur with the PM's at some point today at this rate.

No idea what may happen here going forward, especially towards the London close.

But something is going to happen. Today could be the day that TF was referring to yesterday in his comments about gold's status morphing into something a bit more elevated in status.

Were definitely in the moment. I'm highly encouraged that gold is relatively stable given all of the other markets wild gyrations.

alexdgn
Aug 5, 2011 - 9:59am

Were it not for margin calls...

Were it not for margin calls and forced liquidations, Gold should have ended the day at or near all time highs. From a fundamentals point of view it would make sense since the ECB acknowledged in buying Portuguese and Irish bonds and left open the possibility of buying Spanish and Italian bonds for sometime in the future (the uncertainty really screwed the market thou). The SNB and BoJ intervened to devalue their currencies which means that Gold is the last currency standing that can't be tampered with by central banks/planning.

I'm leaving out EE maneuvers and obviously not talking about Silver since that market is tighter and because it still has industrial use which means if it weren't for the speculative interest it should move half way between Gold and Copper.

So at this point, besides the technicals after this sell-off. I think Tuesdays FOMC meeting is really going to set the short-term trend. If Bernanke can send us all to the cleaners if he says QE3 is off the table.

Pax Argentum
Aug 5, 2011 - 10:00am

@blackshirtuk TF is referring

@blackshirtuk TF is referring to the vapid, synchophantic, admnistration apologists on CNBC, a financial news network here in the States. Utterly useless for our investment purposes here, they do occasionally provide some amusement as well as a regular diet of jaw-droppingly blatant propaganda. Cheers mate! Pax

alexdgn
Aug 5, 2011 - 10:01am

Miners are totally over sold

But falling further... Gold miners are oblivious of what the metal does, it just keeps falling, again!

RockinJohnnyTFrontal Labottleme
Aug 5, 2011 - 10:02am

@Frontal Labottleme

I watch GPL and SLW - even though SLW was up at open GPL was even to losing, so I think we are headed lower.

Aug 5, 2011 - 10:03am
¤
Aug 5, 2011 - 10:06am

ZH's 3,000 pt. Circuit Breaker story...

...yesterday seems like that could happen today at this rate. (I certainly hope not)

I don't know if I've ever seen the markets so topsy turvey in very short spans where the swings are this wide. Maybe it's just algo's in a turmoil due to volume and some type of HFT influence.

I'm sure ZH will have a story on this a.m.'s trading irregularities at some point today.

Frontal Labottleme
Aug 5, 2011 - 10:10am

@Rockin

I hear you... i get the feeling that the only thing protecting silver from a big ass smackdown right now is big bro gold which is playing tough. Scary tho - everybody/everything has the jitters...

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