Stocks and Precious Metals Charts - The Long Goodbye

 

"A pretty, spoiled and not very bight little girl who had gone very, very wrong, and nobody was doing anything about it."

Raymond Chandler, The Big Sleep

"One of the primary characteristics of narcissists is their exaggerated sense of entitlement. It's hardly surprising then that so many politicians somehow think they 'deserve' to game the system. After all, from their self-interested perspective, isn't that what the system is for? In their heavily self-biased opinion, if they want something, by rights it should be theirs. So, nothing if not opportunistic, they take from public and private coffers alike whatever they think they can get away with.

And given their grandiose sense of self, they're inclined to believe they can get away with most anything. Exploiting their privileged position in such a manner hardly leaves them plagued with guilt. In general, guilt isn't an emotion they're prone to. How could they be if they feel entitled to the objects of their desire? In their minds their very ability to attain something must certainly mean it was merited."

Leon F. Seltzer, Narcissism: Why It's Rampant in Politics

"There is no trap so deadly as the trap you set for yourself.”

Raymond Chandler, The Long Goodbye

"There is no clean way to make a hundred million bucks.  Maybe the head man thinks his hands are clean,but somewhere along the line guys got pushed to the wall, nice little businesses got the ground cut from under them, decent people lost their jobs, stocks got rigged on the market, and the five per-centers and the big law firms got paid hundred-grand fees. 

Big money is big power and big power gets used wrong.   The tragedy of life, Howard, is not that the beautiful die young, but that they grow old and mean."

Raymond Chandler, The Long Goodbye

"The very banality and innocence of the first act only allowed the blow to fall afterwards with more awful effect.”

Robert W. Chambers, The King In Yellow

"Then the kings of the earth, their nobles and their commanders, the rich, the powerful, and every one of their willing slaves and free men, hid in the caves and among the rocks of the mountains. And they cried to the mountains and the rocks, 'Fall on us, and hide us from the face of the one who sits on the throne, and from the righteous anger of the Lamb.'"

Revelation 6:15-16

"At bottom, what should you do to avoid being an idiot or a swine? You should become resigned to the fact that you will seem ridiculous to a race of janitors and bureaucrats if you enter the service of Splendor.

Then you will know what it means to be the friend of God. Think of it. The Friend of God!"

Léon Bloy, The Secret of Léon Bloy, by Jacques Maritain, 1912


Most of the usual things do not matter much for the markets at this point. 

We are on the cusp of another collapsing bubble, woven out of betrayal and corruption.

Larger events are weighing on the near term.    The death and destruction that financiers have always sought to turn to their advantage have come to bear on events with an ominous and overwhelming inevitability.

As the principalities of the world have always come to find out, the madness serves none but itself.

"Fall on us, and hide from the righteous anger of the Lamb."

Have a pleasant weekend. 

Stocks and Precious Metals Charts - The Velvet Coup d'Etat

 

"The reconfigured software became known as the spreadsheet. The functionality of the spreadsheet would enable CGML to sell a very large quantity of bonds rapidly and close to the mid­market price. In an electronic message sent between the Traders the trading strategy, utilising the spreadsheet, was nicknamed "Dr Evil" after a fictional character."

FSA Statement on Fining Citigroup for the Willful Manipulation of the European Bond Market, 28 June 2005

“Its superfast, supersecret oil trading software was called the Hammer.  The markets used to be about capital formation,” said Mr. Quast, the consultant. “Now 80 percent of trading is driven by some form of statistical arbitrage.  We are buying into a statistical house of cards that could unravel very quickly.”   

Manipulation of the Oil Market, NY Times, 3 September 2009

The manipulation itself is nothing new.  Large Wall Street banks and hedge funds have been using their size to push the markets around for many years, as in the case of Citigroup which was caught manipulating prices in European bond trading. Citigroup Fined Over 'Dr. Evil Bond Strategy

They turned manipulation of the gold and silver markets into a money machine for many years.

The difference is that in the past the manipulation was implemented using the size of the trades and the deep pockets backing them. Size mattered, and the techniques were not elegant, more like an old-fashioned smash and grab.

Today the bias is towards stealth and speed, and colocation of your trading daemons with the Exchange to obtain an edge on information and execution. Having key regulators and politicians on your payroll is always a plus in any organized criminal activity.  It has more of the appearance of organized crime than it does of an efficient system of price discovery and capital allocation.

NY Times
Inquiry Stokes Unease Over Trading Firms That Shape Markets
By Landon Thomas Jr.
Published: September 3, 2009

LONDON — Its superfast, supersecret oil trading software was called the Hammer.

Transcripts and taped conversations of actions that took place in 2007, included in the commission’s case, reveal the secretive workings of high-frequency trading, a fast-growing Wall Street business that is suddenly drawing scrutiny in Washington. Critics say this high-speed form of computerized trading, which is used in a wide range of financial markets, enables its practitioners to profit at other investors’ expense.

Traders openly talked among themselves of “whacking” and “bullying up” the price of oil. But when called to account by officials of the New York Mercantile Exchange, they described their actions as just “providing liquidity....”

“The markets used to be about capital formation,” said Mr. Quast, the consultant. “Now 80 percent of trading is driven by some form of statistical arbitrage. We are buying into a statistical house of cards that could unravel very quickly.”

 

That run up in equities yesterday after the election was a pretty heavy handed gimmicky setup, which led to a bulltrap today.

A number of seasoned traders were seeing this, so its no special talent of mine.  Just experience.

That smackdown in oil was ludicrous.  

And the rally in Bitcoin was obvious.

This has more of the appearance of organized crime than of an efficient system of price discovery. Until we undertake reform with a serious commitment, there will be no relief from an extractive faux capitalist system.

Have a pleasant evening.

Stocks and Precious Metals Charts - Intimations of Sunrise, Remnants of Night

 

“In a room where people unanimously maintain a conspiracy of silence, one word of truth sounds like a pistol shot.”

Czesław Miłosz, Nobel Prize Acceptance, 8 December 1980

"Price discovery is not a sexy function of markets, but it is critical to the efficient allocation of scarce capital and resources, and to the preservation of the long term wealth of investors and the economy as a whole.   If price discovery is compromised by manipulation, then we will all be gradually impoverished and the economy will be imbalanced and unstable.

Over the past 25 years the forces of regulatory liberalisation and demutualisation of markets have allowed the largest global banks to set the rules, processes and infrastructure of global markets to their own self-interested requirements." 

London Banker, Lies, Damn Lies, and LIBOR 

"This is the Dr. Evil strategy, as so named by the US traders who got nailed pulling this baloney in the European bond market some years ago.  It is a massive dumping of contracts into a dull market for the purpose of gaming the price to achieve some objective." 

Jesse, 21 September 20>

"Most of them became wealthy by being well connected and crooked. And they are creating a society in which they can commit hugely damaging economic crimes with impunity, and in which only children of the wealthy have the opportunity to become successful. That’s what I have a problem with. And I think most people agree with me." 

Charles Ferguson, Predator Nation

"Surely, there is at this day a confederacy of evil, marshaling its hosts from all parts of the world, organizing itself, taking its measures, enclosing the Church of Christ as in a net, and preparing the way for a general Apostasy from it. This Apostasy, and all its tokens and instruments, are of the Evil One, and savour of death."

John Henry Newman, 1890

"For we wrestle not against flesh and blood, but against principalities and powers, against the rulers of the darkness of this world, against spiritual wickedness in high places."

Ephesians 6:12

Sometimes words are there, but just do not seem to be able to rise to the surface.

This is a beginning, but the rot has been allowed to grow deeply into the system.

There is work yet to be done. 

Fīat iūstitia ruat cælum. 

Non nobis solum. 

Have a pleasant evening.

Stocks and Precious Metals Charts - The Babson Break

 

"In 1929 Wall Street was dominated by trading pools run by groups of insiders managed by an 'operator'. One of the most common tactics was to manipulate the price of a particular stock, a stock like Radio Corporation of America.  Wealthy investors would pool their money in a secret agreement to buy a stock, inflate its price and then sell it to an unsuspecting public. 

Most major stocks in the 1920s were regularly manipulated by insiders.  They were a little like musical chairs. When the music stopped, somebody owned the stocks and those were the ones who suffered the loss.  One of the most successful pools was run by Michael Meehan in Radio Corporation of America.   They were able to take the price from $85 in 1925 to $549 in 1929.

If small investors suffered, they would soon be back for more. They knew the game was rigged, but maybe next time, they could beat the system. Wall Street in the 1920s had its critics, among them economist Roger Babson.  He questioned the boom and was accused of lack of patriotism, of 'selling America short.'  He had repeatedly warned of the speculation.  And people jumped on Babson from all around for saying such a thing, so that people who were cautious about their personal reputation, who did not want to call down on themselves a lot of calumny, kept quiet.

Babson was an MIT trained engineer who became a famous stock market analyst and financial theorist.  I have acknowledged in the past that my own particular style of charting was in part inspired by his approach to force and resistance.  He never really publicly codified his techniques, so they are not all that well understood. But in reading his works and considering his education background it is possible to deduce some of them. 

On September 5th, 1929 Babson gave a speech to a group of businessmen. 'Sooner or later, a crash is coming and it may be terrific.'  He'd been saying the same thing for two years, but now, for some reason, investors were listening. 

The market took a severe dip.  They called it the Babson Break. The next day, prices stabilized, but several days later, they began to drift lower. Though investors had no way of knowing it, the collapse had already begun.

Roger Babson had ten simple commandments he followed in investing and encouraged his readers to do the same.   The shadier aspects of markets are most always cloaked in convoluted jargon and complexity.

• 1. Keep speculation and investments separate. 
• 2. Don't be fooled by a name. 
• 3. Be wary of new promotions.
• 4. Give due consideration to your market ability.
• 5. Don't buy without proper facts. 
• 6. Safeguard purchases through diversification. 
• 7. Don't try to diversify by buying different securities of the same company.
• 8. Small companies should be carefully scrutinized. 
• 9. Buy adequate security, not super abundance.
• 10. Choose your dealer and buy outright (i.e., don't buy on margin.) 

 

The US midterm elections are being conducted today.

I have white cheddar popcorn AND a Costco pepperoni pizza on hand.

The next couple of weeks may be pivotal.

Have a pleasant evening.