Here They Come Again

371
Wed, Feb 27, 2013 - 3:51pm

Having covered a massive amount of shorts on Monday and Tuesday, the HFTs and momos reasserted themselves today and pounded the metals back down. Now the question is, what happens next?

Chew on this for a moment...It seems nearly everyone was excited by the CoT setup this week. The latest report, released last Friday at 3:30 EST, showed an exorbitant buildup of spec shorts and left nearly everyone excited about an impending short squeeze. Well, now you know one of the reason why the report is held for 72 hours before release. The squeeze began late Friday on the Globex, it carried over into Monday and then ran it's course (at least for now) yesterday.

Over the two trading days of Monday and Tuesday, total open interest in gold fell by nearly 12,500 contracts. This while price was rallying almost $43. There's your short squeeze. Similarly, the total silver OI fell by 11,400 contracts as price rallied 80¢. I mentioned yesterday that those new shorts still remaining would likely be left with no other option than to "double-down" and I'm convinced that that's what we saw today.

After being allowed to open higher, gold was pressured all day on the Comex. As mentioned above, the question now becomes: What happens next?

Will the late-to-the-party momos, who just got burned late last week into this week for anywhere from a $20-$40 loss, be willing to give it another try? IF they do, gold will likely fall back to at least $1585 or even $1570. However, if they choose not to be re-fleeced, gold will bounce from the $1590-95 area and begin to make another move toward the crititcal $1625 level. The action tomorrow and Friday will be your tell.

Not surprisingly, given that the silver shorts were squeezed just like the gold shorts, the silver chart is in a similar position. I'd like to see it hold it's little, mini-trend from the lows of last Wednesday. It should and when it does, the main battle will still be for $29.25, initially, and then $30.20.

Just two more things before I call it a day...

This week's CoT is going to be fascinating, too. For the reporting week, gold was up $10 but OI fell by 13,500. And silver was down 17¢ while its OI fell by 9,700. The question that I hope to get an answer to is: Who was buying (covering) and who was on the other side of the trade selling? Did the silver commercial long position finally drop an enormous amount? Probably. But what if it doesn't? What if all the swapping was within the spec arena and there is little change within the commercial space? We'll see. Unfortunately, the CFTC is going to make us wait another 48 hours to find out.

And this video is fun. I think that Santelli is a closet Turdite and he confirms my suspicions again today with a few jabs at the charade that is the GLD. It still amazes me whenever I hear this stuff on CNBS!

If you haven't yet, please be sure to listen to the podcast with Sandeep Jaitly that I posted this morning. It's highly informative and it will serve as good background the discussion with Andy that I'll be posting tomorrow. Have a great overnight!

TF

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  371 Comments

  Refresh
Mar 2, 2013 - 7:27am

@Strongsidejedi: Thanks

Funny thing is I usually don't remember who I was "at it" with. I usually go after ideas. I don't really care who expresses them. I don't take it personally when people disagree with my thinking and I hope no one here ever takes it personally when I disagree with theirs. Just because we may disagree on some things doesn't mean we can't be civil or even friendly on everything else.

Strongsidejedi
Mar 1, 2013 - 11:39pm

@Puck - sorry to hear of your health issue

Dear Puck,

You and I were at it a few weeks back. I feel bad about it after seeing your predicament. I will be praying for your recovery and spirits. Get better and remember that you always can send us a few messages and we're here for you.

-SSJ

double 007pailin
Mar 1, 2013 - 7:13pm

@pailin  hey thanks for the

@pailin hey thanks for the link and info,goldmart save me shipping and wire fees and on top of that charge me 69 cents over spot

Larry
Mar 1, 2013 - 2:48pm

Hey Puck

On temp blog sabbatical, but saw your predicament and wanted to send you my well wishes and hope that your docs do all the right things for a successful procedure, full healing, fast recovery and, above all, that your faith is restored in the process.

With a prayer...

¤
Mar 1, 2013 - 11:49am
Groaner
Mar 1, 2013 - 11:36am

like I said.. strong hands.. not!

steady down all morning from the high.. sickening miners stink

¤
Mar 1, 2013 - 11:33am

P4

TFMR's version of ZH's WilliamBanzai7 except much, much more.

silver66
Mar 1, 2013 - 11:33am

Mayor Bloomberg speaks truth

but shows stupidity

“We are spending money we don’t have,” Mr. Bloomberg explained. “It’s not like your household. In your household, people are saying, ‘Oh, you can’t spend money you don’t have.’ That is true for your household because nobody is going to lend you an infinite amount of money. When it comes to the United States federal government, people do seem willing to lend us an infinite amount of money. … Our debt is so big and so many people own it that it’s preposterous to think that they would stop selling us more. It’s the old story: If you owe the bank $50,000, you got a problem. If you owe the bank $50 million, they got a problem. And that’s a problem for the lenders. They can’t stop lending us more money.”

Here is link

https://politicker.com/2013/03/mayor-bloomberg-dont-panic-about-the-sequ...

silver66

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Stack'em High
Mar 1, 2013 - 10:25am

Sorry...

I know nothing about the markets. Just remembered him talking about netdania vols and thought it might help...

YukonCornelius
Mar 1, 2013 - 10:23am

Bernanke Put

The only thing holding up the stock market is the Bernanke put. Of course this is the Open ended QE that the Bernank so skillfully put into place in the fall. So expect any real selling in the market to be met by more QE. This fiscal psychopath can continue this to infinity as we know. So expect the smoke and mirrors to continue. I think a selloff in the markets would clearly uncover the real truth about this economy. But Bernank will do anything and everything to avoid that happening. MOPE at its finest. Underneath it all the metals continue to be accumulated (physical) and over the long term, us stackers will prevail. And in a big way while the sheep continue to lose purchasing power to inflation.

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