02 February 2018

Stocks and Precious Metals Charts - Dropsy - Non-Farm Payrolls Boogie Woogie

"Sooner or later a crash is coming. And it may be terrific."

Roger Babson, Sept. 15, 1929

Well, it did not take much to deflate the overweening disregard for risk in the US equity markets.

A 'better than expected' Non-Farm Payrolls Report, together with some 'hawkish' comments by the Dallas Fed President had interest rates on the longer notes and bonds rising, stocks slumping.

And that NFP report was nothing to brag about.   But this all shows how addicted to easy Fed money that these sugar high markets have become.

Gold and silver gave some of their recent gains up, but that is almost a given for a Non-Farm Payrolls reporting day in an FOMC week.

The Dollar gained back the losses from yesterday, finishing up around 89.

I have dusted off my 'crash and correction' charts and calculators, and have started to note the marks on the charts that will help me assess the progress of our unfolding correction.

And a correction it is, at least so far. As you can see from the SP futures chart, we have done a first measure Fibonacci retracement of the parabolic breakout from the uptrend channel there. And so it is a correction. And almost rather neatly back to some sort of a sustainable trendline,

To start talking about crash scenarios we would have to see quite a bit more coming off the markets. I have noted some of those measurements as well, just to show them. Typically I track these things independently, and then mark them on public charts when different scenarios start validating.

I have loads of charts and spreadsheets that models 'crashes.' I don't see those coming into play yet, not at all. For that to happen we would have to follow this 'Bad Friday' with a 'Blue Monday' and then a 'Black Tuesday.' Well, let's see if that happens and how the markets react to it.

I'll keep you posted. If it becomes appropriate, I will start posting on these subjects more actively. I have not done so since about 2008. Most of the charts and spreadsheets I am using date back to 2001.

So, you were forewarned that today would likely be ugly for the precious metals. Unless you are trading short term, which you know I don't think is appropriate for almost everyone who stops by here.

I bought back some of the gold and put on a new silver position late in the day. I have taken my short positions on stocks off completely as of today. I may put them back on but it is best not to linger on leveraged instruments to the short side. The odds are too stacked against you.

Trumpolini and the members of his Insane Clown Posse in the House released 'The Memo' today, which to my mind seemed like much ado about almost nothing.   Trump is clearly looking for reasons to stifle the investigation into his crowd's Russian entanglements.  I think the election collusion stuff is rubbish, but money laundering and obstruction of justice are very much on the table.  But let's wait and see what actual evidence comes out.

And you'll forgive me if I find this sudden pathos and deep concern about US Agencies wiretapping citizens from the Congress to be the height of hypocrisy, given that they just renewed the general surveillance powers to the Trump Administration for you and me.  And let us not forget that the principles who supposedly acted so badly are mostly staunch Republicans.  Politicians are hypocrites, what a surprise!   But that does not mean that you should become the dupes to their lies.  And brother, if there is any bull market in this country, it is in whoppers, delivered fast and shamelessly.

Sorry I am so late in posting this, but after the close I went to get some coffee, and noticed that the bird feeder was empty. Remember that many of His little ones need our help and stewardship, as well as His poor, and the poor in spirit.

Yes, His creatures and His poor will always be with us. But so will the stock markets, and all the glittering distractions that seem so important to us.   But I can almost guarantee that when we are on our deathbeds, the least likely thing to cross our minds will be 'I wish I had traded more.'   And I can hazard a confident guess that our investment portfolios will not be a subject of conversation with our creator.  He will be looking at portfolios of another kind.   Let's hope that those are well funded.

Have a pleasant weekend.