Isn't it funny how the brain works? I start out this morning by looking at a few charts of the POSX. Next, I'm looking at a chart of crude. I begin thinking about writing a post regarding a "greasy pig" and, before I know it, I'm watching this video. Out here in the sticks, nestled between Nowhere and Bumfuk, the locals find amusement at such simple things. Maybe you will, too.
So, anyway, back to the charts that started all of this earlier. As I said, I'm apparently one of the few "analysts" who is still watching the POSX. Seems there's hardly much discussion about it these days. A false sense of complacency perhaps? Perhaps, and with so many folks concerned now with Spain, France and the EU in general, maybe The Pig is set for another leg higher. However, with the metals making what appear to be such obvious bottoms, perhaps ole Pigatha can provide some impetus for a price recovery.
Take a look at these charts. Note first that on the hourly chart, The Pig is firmly entrenched in a down channel and has been for the last two weeks. This is such a prominent and obvious trend that it may take something dramatic for it to break out in the short term. Why is a short term breakout important/vital? Well, take a look at the daily chart beside it. The index now sits right atop the trendline from the lows last August that were made prior to the announcement of Operation Twist. A breakdown through the trendline would indicate a minimum drop to 78 and, if 78 fails, a drop back toward 75 or even the all-important 73. Also note that a case could be made that The Pig has already broken down through the line. (This is the lighter pink line on the chart.)
Another major indicator that has reached a critical point is crude. Take a close look at the daily chart below. IF crude can break higher here and move back through $105, it will signal the beginning of a new UPtrend and set a target of at least $110, if not $115. However, if it fails at this level, it will drop back to at least $101 and, failing there, will have a go at $98. Watch this closely the next few days.
As you might imagine, I am very relieved by the action the metals since late yesterday. It was so clearly obvious that they had to be bought at $30 and $1630 but, with things the way they are post-MFG, it's increasingly nerve-wracking to stick my neck out and urge a trade. At $1655 and $31, I'm very excited about our prospects from here but I would strongly urge anyone who bought yesterday to apply some stops at yesterday's lows. Today, we saw selling into the London PM fix at 10:00 am EDT but have since seen a further rally. The next critical level in gold is 1660 and for silver it is the old support level of 31.00-31.35. Moving back through and closing above those levels would be very encouraging and would likely cause an extension of the rally as more nervous, weak-handed shorts continue to cover.
If you have some time today, you should read the items linked below. First, our pal Jim Quinn has released part 2 of his current series. https://www.theburningplatform.com/?p=33585 And your other assignment is to read the text of this speech to the NY Fed by Robert Wenzel. https://www.zerohedge.com/news/robert-wenzel-addresses-new-york-fed-lots-head-scratching-ensues. Like Jim Grant last month, https://www.zerohedge.com/news/must-read-jim-grant-crucifies-fed-explains-why-gold-standard-best-option, Wenzel blasts away at our fuzzy-headed monetary masters. Why the Fed pretends to be interested in all of this is beyond me. I imagine they are just attempting to patronize their critics and, once they leave the building, they simply laugh off the criticism, if they even listened at all.
Finally, I'll be recording this week's podcast later today. Given the increasingly blatant manipulation of the PMs, I thought I'd ring up Ranting Andy again in order to have him explain, in greater detail, how The Cartels coordinate and implement their attacks. If any of you have specific questions you'd like me to pose to Andy, please include them in the comments section of this post. I likely won't be able to ask all of them but I'll certainly pick a few. Thanks in advance for your input.
I hope everyone has a fun day. Keep your fingers crossed for a move back above 1660 and 31. TF