Shake A Stick At This

278
Wed, Sep 26, 2012 - 12:31pm

Here you go. More charts than you can shake a stick at. (Whatever that means.)

Let's start today with crude because I just think it's messed up. Price rallies from late June to mid-September with never once seeing more than 3 days in a row of declines. In fact, it barely did that earlier in September. You could just as easily say that it never had more than two, straight down days. And then, just as QE∞ was announced AND tensions ramped even higher in the MENA, price collapses? And it's now down for 7 of the past 8 days? We'll talk in a minute about how much of this corresponds with the surprise POSX rally over the past week but come on...7 of 8 days down for a cumulative 10+% move?? This seems very fishy, particularly when gasoline was just reaching $4/gallon in the U.S. and the presidential election is just 6 weeks away. Very fishy, indeed.

But getting back to The Pig...The question is: What the heck is going on here? Why on earth would The Pig rally immediately following the announcement of QE∞? I've spent some time thinking about this and this is the best answer I can come up with:

Remember that the POSX is an index against all other, major fiat currency. Even though it is quite clear that unlimited QE will eventually make The Pig relatively worthless versus hard assets, in the short term, the global flow of funds is actually toward the dollar and treasuries as The Bernank has effectively assured perennially-nervous international investors that there will be no default, at least not in non-inflation adjusted dollars. Against this backdrop and in the very short term, QE∞ is judged to be dollar positive. Seriously. I know that sounds crazy...and it is...but that seems to be what has happened over the past two weeks. The good news is that the POSX is finally reaching the end of the raid for this bounce as the area around 80 will once again serve as resistance. I would now expect a few weeks of volatile, sideways action before The Pig resumes its downtrend.

So, in the context of The Pig apparently being the driver of short-term events in the commodities sector (where gold and silver are incorrectly relegated for now), any gyration by The Pig seems to flow immediately into buy or sell orders for the metals. We saw an exaggeration of this earlier today. The POSX began to rally at 5:35 EDT this morning and immediately the metals began to roll over. WOPRs, programmed for profit by actual human beings, began to build up sell orders for the Comex open and....WHAMMO!....the open is ugly and short-term technical damage ensues.

So, now that both metals appear to be in short-term corrective phases, where do they go from here and where might they bottom? Before we go there I want to reiterate again: QE∞ ASSURES THAT METALS ARE GOING MUCH, MUCH HIGHER. THERE WILL ALWAYS BE, HOWEVER, BRIEF PROFIT-TAKING CORRECTIONS WITHIN THE PRIMARY TREND.

The charts below spell it out quite plainly. Let's look at gold first. Tremendous physical demand makes further downward action unlikely but I can't help but think a weak-hand clearing plunge toward $1725 is coming. Note that this type of move would also have a very pleasant impact on the short term RSI.

Silver is clearly in a corrective phase, too. Though it is holding in there quite nicely today and though it, too, is seeing considerable physical demand, the 12-hour chart sure looks like a brief drop below $33 is in the cards. I'd love to see it as I'm sitting on a little cash that is burning a hole in my pocket as I type.

Just a couple of other items to consider today. First, there's this article I found linked at the GATA site. Nothing earth-shattering, but it's a reasonably competent summary of how things may eventually play out. https://www.internationalman.com/global-perspectives/manipulation-of-the-gold-price

And I have another book recommendation for you. You've likely seen me mention before that "The Big Short" by Michael Lewis is a real eye-opener. Lewis puts the entire "2008 Financial Crisis" in easy-to-understand terms and everyone here should read it.

Lewis' new book is a follow-up called Boomerang. It's not as good as "The Big Short" but very, very interesting nonetheless. Please read it. One of the chapters describes California as Italy or Spain as they relate to The Pig and The Euro, respectively. Along those lines, look at his headline from ZH. https://www.zerohedge.com/news/2012-09-26/california-screaming-4th-muni-bankruptcy-looms-atwater

OK, that's all for now. It has taken me quite a while to type this up and now I see that the metals have rallied smartly during the interim. That's great. Glad to see it. This does not, necessarily, make this post obsolete, however. Stay on guard and look for another dip.

TF

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  278 Comments

  Refresh
ivars
Sep 27, 2012 - 9:45am

Silver just reached golden cross

At lest on Netdania I can not discern both curves.

Green Lantern
Sep 27, 2012 - 9:42am

How to strengthen the

How to strengthen the dollar

Weak Dollar/Strong euro policy. By force if necessary

¤
Sep 27, 2012 - 9:33am

Spains Budget: The Pain Will Rain

They've delayed it until after the NY market closes. It must be a doozy.

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

Sept. 27, 2012, 9:20 a.m. EDT

Spain budget delayed for later Thursday in Madrid

By Barbara Kollmeyer

MADRID (MarketWatch) -- Investors waiting for the Spanish 2013 budget announcement were kept cooling their heels on Thursday. The budget was originally expected to be released around 2 p.m. Central European Time (8 a.m. Eastern). It was expected to be released later Thursday afternoon, but no specific time was laid out by the Spanish government. Spain's cabinet is currently meeting, and Reuters reported that the meeting was still going on, citing a government official, but there was no indication of how long that delay will last. Spanish Prime Minister Mariano Rajoy is due to hold a press conference after completion of the cabinet meeting.

https://www.marketwatch.com/story/spain-budget-delayed-for-later-thursda...

SilverSurfers
Sep 27, 2012 - 9:30am

Count me out.

btw - celebrating a man on fire, really? Count me out.

=======

Predictions come true, as we lament.

We see it coming, and we are scared.

Then in your face, and its pathetic and shocking.

We can talk a tough game, preach rebellion and revolt, expecting this happen.

but celebrate? With a "I told you so" ???

Im with you, Count me out.

¤
Sep 27, 2012 - 9:30am

The Redline: Historically Important Speech Today

NEW YORK | Thu Sep 27, 2012 8:42am EDT

NEW YORK (Reuters) - Israeli Prime Minister Benjamin Netanyahu will set out, in his speech at the United Nations on Thursday, an ultimatum for Iran to halt its disputed nuclear drive or risk coming under military attack, an Israeli official said.

Netanyahu faces the world body after U.S. President Barack Obama disappointed some Israelis, in his own address to the annual assembly, by not calling for a deadline to be imposed on Tehran - though he did say time for diplomacy "is not unlimited".

Israel sees a mortal threat in a nuclear-armed Iran and has long threatened to strike its arch-foe pre-emptively, agitating war-wary world powers as they pursue sanctions and negotiations.

Complicating Netanyahu's strategy have been his testy relations with Obama as a U.S. election looms, and the reluctance of many Israelis to trigger a conflict with Iran, which denies that it is seeking to develop nuclear weapons and has pledged wide-ranging retaliation if attacked.

"The prime minister will set a clear red line in his speech that will not contradict Obama's remarks. Obama said Iran won't have nuclear weapons. The prime minister will clarify the way in which Iran won't have nuclear arms," a senior Israeli official said en route to New York, without elaborating...

https://www.reuters.com/article/2012/09/27/us-un-assembly-israel-iran-id...

reefman
Sep 27, 2012 - 9:29am

We are now retesting critical $34.20

We are now retesting critical $34.20...... if it does not hold then today will be a down day from here. If it does hold... then I don't know what it will do....

Take a look at the trading pattern from today vs. yesterday. It is so far completely the opposite. Now take a look at the day before, we are an exact copy. And this is a pattern that it's mostly been in for the past 8 trading sessions.... in general.... let's see what happens between 11:30 - 12:00.... could be another waterfall if this pattern continues....

Sep 27, 2012 - 9:26am

if it isn't a down day

I dare say it will go up.

Hondo
Sep 27, 2012 - 9:18am

Dr . Jerome

Just play a few Farage clips and let them out of class early!

Have a good one, Hondo
Sisyphus
Sep 27, 2012 - 9:17am

@Dr Jerome - organizational leadership

"I have to lecture on "organizational Leadership" today"

Hope you haven't lost your notes!

Beastly Stack
Sep 27, 2012 - 9:16am

@reefman

Be careful,they came at the metals with guns blazing and it appears they failed!

Yes we are at the top of the range however gold looks like it wants to blow right through.

CNBC is touting Chinese govt to announce new stimulus before the holiday week next week to give the markets a week to digest!

Could be just spin but all these countries know they have to keep this thing afloat.Our US numbers were so bad this morning it gives the FED to do more!Market intgerpretations!

All the bad news out of Europe this week and the US dollar still looks like it is ready to puke!

Look at all your charts and good luck!Only trying to watch out for another fellow trader!

I would rather be wrong being long GOLD,it would kill me to lose fiat being short and the market explodes to the upside!

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