Waiting For The Fedlines

Wed, Aug 1, 2012 - 10:40am

Though it appears that the algos have decided NOT to wait, we humans eagerly await today's "Fedlines" to see what The Bernank has in store for us next.

First, for an overview of what was expected this week, please go back and review this:


Look, if you and I can discern the pattern that metal prices are allowed to rise before The Bernank speaks and then get thrashed after, is it not surprising that some HFT computer programmers could see the same thing. Beginning late yesterday and continuing this morning (with a shove from the ADP), the HFTs and SpecSheep have attempted to front-run the Fedlines and The Cartels. Silly computers. Don't they know that there is no "front-running The Cartel"? If the market is falling today, it's because The Cartel wants it to fall. Would anyone be surprised if prices now rise after the Fedlines as The Cartel squeezes the SpecShortSheep? I wouldn't be.

In the post referenced above, I speculated that we'd see an early week rally, followed by a Fedline dip and then a BLBBS rally. That pattern could easily play out by the end of today instead of Friday. What I mean is this:

  1. The rally last week and Monday drew in some longs.
  2. Instead of waiting for the Fedline release, front-running algos drop price now. Longs are scared out and new spec shorts are added.
  3. Price rallies on the Fedlines. New spec shorts are scared out.
  4. Price returns to 1600+ and awaits BLSBS Friday.

We'll see but, to me, that's the most likely series of events at this point.

Here are two daily charts for you. Note that gold has slipped back into its "pennant" but that silver has not. Also note that silver should have very strong support should price approach, or dip below, $27.

Lastly, my brother-in-law, sent me the email I've copied below. It's something for you to chew on as we kill time this morning. I'll have more later, of course, after the FOMC headlines are released and the markets assessed. TF

In 1887 Alexander Tytler, a Scottish history professor at the
University of Edinburgh, had this to say about the fall of the
Athenian Republic some 2,000 years prior: "A democracy is always
temporary in nature; it simply cannot exist as a permanent
form of government. A democracy will continue to exist up until
the time that voters discover that they can vote themselves generous
gifts from the public treasury. From that moment on, the majority
always votes for the candidates who promise the most benefits from
the public treasury, with the result that every democracy will finally
collapse over loose fiscal policy, (which is) always followed by a

"The average age of the world's greatest civilizations from the
beginning of history, has been about 200 years. During those 200
years, these nations always progressed through the following sequence:

From bondage to spiritual faith;
From spiritual faith to great courage;
From courage to liberty;
From liberty to abundance;
From abundance to complacency;
From complacency to apathy;
From apathy to dependence;
From dependence back into bondage."

About the Author

tfmetalsreport [at] gmail [dot] com ()

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Key Economic Events Week of 1/24

1/24 9:45 ET Markit Flash PMIs for January
1/25 9:00 ET Case-Swiller home prices
1/25 10:00 ET Consumer Confidence
1/26 2:00 ET FOMC Fedlines
1/26 2:30 ET CGP presser
1/27 8:30 ET Q4 GDP first guess
1/27 8:30 ET Durable Goods
1/28 8:30 ET Personal Income and Spending
1/28 8:30 ET Core PCE
1/28 10:00 ET UMich 5-yr Inflation Expectations

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