The Return of Nostradumbass

Thu, Jun 13, 2013 - 11:59am

Just a big picture item to keep your eye on these next few days.

Much has been made of the selloff in the Nikkei...and deservedly so! After years of moribund performance, Prime Minister Abe decided to blow out the Yen by effectively devaluing it by half over the next few years. The result of all this haphazard money creation was an almost immediate flight into Japanese stocks. The Nikkei 225 index nearly doubled in a run from 8,500 to 16,000 between November and May.

But a funny thing happened on the way to blissful prosperity..the market broke. And it broke hard! Falling nearly 20%, from 16,000 to 12,500 in a matter of days. The selloff in Japanese equities boosted the yen and the yen-$ "rallied" from near 97 to 106. All of this yen strength has contributed to a drop in the POSX from near 84 to this morning's level below 81.

"OK, so what's the deal, Turd? Why does this matter?"

Because it seems quite clear that a sharp, short-covering spike/rally is coming for the Nikkei. Take a look at the two charts below. Note the clear double-bottom at 12,500. That's the first thing that should grab your attention. Then look at the daily chart. Since when does something go straight UP and then come straight back down? There's almost always a bounce which leads to a failing double top. And this is what I think is coming. (Btw...if you're crazy enough to attempt to trade something like this, you can start here:

Adding some confidence to this idea is that fact that Tungstenman Sachs has decided NOT to close out their "long Nikkei" recommendation, even though their stops have been hit. Hmmm. What do you think they are planning to make happen expecting to happen next?

And the ability of The Pig to magically reverse at critical support levels is well-documented. Here we are again. The 81 level in The POSX has consistently identified as important support or resistance, depending upon which way the index is trending. And where are we this morning? I've got 80.76 last. So, here's another piece of the puzzle. A snapback rally in the Nikkei will likely lead to Yen weakness and a move back toward 100. Since the Yen is a prominent component of the POSX, a falling Yen will help to bounce The POSX back UP and above the critical 81 level, maybe all the way to 83, at which point The Pig will begin tracing out "right shoulder" of a massive head-and-shoulder top.

IF all of this comes to pass, the short-term effect on paper metal is predictable. Lately it seems that any Pig selloff is greeted with yawns while any upticks have been used as reason to sell sell sell. Let's see if that happens again even though physical demand continues to support price and $1350 has been rock-solid support.

Maybe another trade possibility is to sell crude? A rising dollar will likely generate some crude weakness and you can clearly see that every time crude touches the red trendline on this chart, price quickly reverses.

So, anyway, just a cautionary tale today. Nothing has changed my bullish outlook on metal prices in the near term. All of the stuff mentioned earlier this week regarding the CoT and the BPR is still valid and extremely important longer term. In the short-term, however, there may be a fiat-making opportunity for those so inclined. Good luck!


About the Author

turd [at] tfmetalsreport [dot] com ()


Jun 13, 2013 - 12:00pm
Jun 13, 2013 - 12:01pm


First time ever!

EDIT - nope, I guess not

QE to infinity
Jun 13, 2013 - 12:02pm



Jun 13, 2013 - 12:02pm

I want silver 18 very fast

Just for a day!!!!

Jun 13, 2013 - 12:03pm
Jun 13, 2013 - 12:07pm



beastly hot here at treefrog manor. taking a break from yardwork/gardening. c'mon, silver, hit a bottom and reverse!

Howard Roark
Jun 13, 2013 - 12:11pm
Jun 13, 2013 - 12:12pm
Jun 13, 2013 - 12:19pm

randomize your IP's people

hello TF fans,
This is the strongsidejedi checking in after a lengthy period of silence.

I've been reviewing the stories from DC on N$A's behavior.

Nice huh?

They've been tracking your IP address all along.

Actually, what's interesting is that we've been saying this for years on this board.

Anyways, for any of you just posting on this board, you may want to use an IP randomizer.

TF, you may want to host your site outside the US in a neutral country and then let people subscribe for IP randomizer software.

It's ridiculous that we need to take these measures as ordinary citizens, but the IP randomizer is very helpful.

You really can see which companies are invading your privacy.

Their websites throw a hissy-fit when we hit their server from a randomized IP source.

Facebook was the worst offender. They actually put a series of log-in confirmation screens and then asked to confirm my location. Screw you Suckerman... you have no business tracking my location and neither does your company!

Jun 13, 2013 - 12:24pm

Another top ten to add to my

Another top ten to add to my stack! Isn't nearly as fulfilling as adding ASEs, but when you can't presently afford the one, you have to settle for the other!!

Key Economic Events Week of 10/21

10/22 10:00 ET Existing home sales
10/24 8:30 ET Durable Goods
10/24 9:45 ET Markit flash PMIs
10/24 10:00 ET New home sales
10/25 10:00 ET Consumer Sentiment

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Key Economic Events Week of 10/21

10/22 10:00 ET Existing home sales
10/24 8:30 ET Durable Goods
10/24 9:45 ET Markit flash PMIs
10/24 10:00 ET New home sales
10/25 10:00 ET Consumer Sentiment

Key Economic Events Week of 10/14

10/15 8:30 ET Empire State Fed MI
10/16 8:30 ET Retail Sales
10/16 10:00 ET Business Inventories
10/17 8:30 ET Housing Starts and Bldg Perms
10/17 8:30 ET Philly Fed MI
10/17 9:15 ET Cap Ute and Ind Prod
10/18 10:00 ET LEIII
10/18 Speeches from Goons Kaplan, George and Chlamydia

Key Economic Events Week of 10/7

10/8 8:30 ET Producer Price Index
10/9 10:00 ET Job Openings
10/9 10:00 ET Wholesale Inventories
10/9 2:00 ET September FOMC minutes
10/10 8:30 ET Consumer Price Index
10/11 10:00 ET Consumer Sentiment

Key Economic Events Week of 9/30

9/30 9:45 ET Chicago PMI
10/1 9:45 ET Markit Manu PMI
10/1 10:00 ET ISM Manu PMI
10/1 10:00 ET Construction Spending
10/2 China Golden Week Begins
10/2 8:15 ET ADP jobs report
10/3 9:45 ET Markit Service PMI
10/3 10:00 ET ISM Service PMI
10/3 10:00 ET Factory Orders
10/4 8:30 ET BLSBS
10/4 8:30 ET US Trade Deficit

Key Economic Events Week of 9/23

9/23 9:45 ET Markit flash PMIs
9/24 10:00 ET Consumer Confidence
9/26 8:30 ET Q2 GDP third guess
9/27 8:30 ET Durable Goods
9/27 8:30 ET Pers Inc and Cons Spend
9/27 8:30 ET Core Inflation

Key Economic Events Week of 9/16

9/17 9:15 ET Cap Ute & Ind Prod
9/18 8:30 ET Housing Starts & Bldg Perm.
9/18 2:00 ET Fedlines
9/18 2:30 ET CGP presser
9/19 8:30 ET Philly Fed
9/19 10:00 ET Existing Home Sales

Key Economic Events Week of 9/9

9/10 10:00 ET Job openings
9/11 8:30 ET PPI
9/11 10:00 ET Wholesale Inv.
9/12 8:30 ET CPI
9/13 8:30 ET Retail Sales
9/13 10:00 ET Consumer Sentiment
9/13 10:00 ET Business Inv.

Key Economic Events Week of 9/3

9/3 9:45 ET Markit Manu PMI
9/3 10:00 ET ISM Manu PMI
9/3 10:00 ET Construction Spending
9/4 8:30 ET Foreign Trade Deficit
9/5 9:45 ET Markit Svc PMI
9/5 10:00 ET ISM Svc PMI
9/5 10:00 ET Factory Orders
9/6 8:30 ET BLSBS

Key Economic Events Week of 8/26

8/26 8:30 ET Durable Goods
8/27 9:00 ET Case-Shiller Home Price Idx
8/27 10:00 ET Consumer Confidence
8/29 8:30 ET Q2 GDP 2nd guess
8/29 8:30 ET Advance Trade in Goods
8/30 8:30 ET Pers. Inc. and Cons. Spend.
8/30 8:30 ET Core Inflation
8/30 9:45 ET Chicago PMI

Key Economic Events Week of 8/19

8/21 10:00 ET Existing home sales
8/21 2:00 ET July FOMC minutes
8/22 9:45 ET Markit Manu and Svc PMIs
8/22 Jackson Holedown begins
8/23 10:00 ET Chief Goon Powell speaks

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