US Stock Market Futures Slumping Overnight After Initial Plunge

After further declines to support levels after hours, that reached down well below the parabolic breakouts, the SP 500 and NDX futures have rallied back a bit to try to find support.  But the gains of this year and much of the rally from the end of 2017 have been erased.

I have put updated charts in tonight's regular posting showing some more aggressive correction levels.

Tomorrow is likely to be a pivotal day, as the bulls will attempt to find a footing and buy the dip.  They made an attempt yesterday that failed.

I think that they will try again tomorrow and most likely will have some help from their friends in the Exchange Stabilization Fund, aka the Plunge Protection Team.

But even for those with money to burn, it can be hard to catch a falling knife.

Let's see what happens.

Stocks and Precious Metals Charts - All Is Well -1987 and Its Consequences

"On a side bar. remember a couple of years ago, when I went on CNBC to talk to them about things that were happening in the markets in the afterhours that didn't make sense, and looked like an 'outside force' was moving them?   And they laughed at me, and told me to take my theory to Hollywood, and see if they would make a movie of it!  And then a month or so later, a guy came out and proved my theory?  Well. I have to believe that the rise of Gold and Silver, the rise of Treasury yields, and Oil, all being reversed on a dime, smells like PPT. it walks like PPT. and it talks like PPT."

Chuck Butler, Everbank World Markets


“Instead of flooding the entire economy with liquidity, and thereby increasing the danger of inflation, the Fed could support the stock market directly by buying market averages in the futures market, thereby stabilizing the market as a whole.”

Robert Heller, Federal Reserve Board


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

Raymond Chandler, The Long Goodbye

Today is the 30th anniversary of Black Monday, the crash of 1987.  I remember it very well.

As you may not recall, on Tuesday following the crash, with the futures market indicating a significantly lower open, Alan Greenspan and the Fed came in buying SP 500 futures in order to turn the markets around. And it worked.   And it continued, with the Fed supporting the equity markets with jawboning, persuasion, and occasionally direct intervention, so that by the end of the year all was well with the markets.

And most will forget that Mr. Greenspan's expansion of the role of the Exchange Stabilization Fund for currency markets to manipulate equity and commodity markets was formalized in the following year. On the advice of his financial advisors, President Reagan formed The Working Group on Financial Markets (colloquially referred to as the Plunge Protection Team) was created by Executive Order 12631, signed on March 18, 1988.

 And thus came the era of bubble-nomics.

Stocks in the US opened significantly lower after an overnight sell off overseas.

The cause of that selling was the news out of Taiwan that Apple has significantly reduced orders to its suppliers for the iPhone 8.

Bearing in mind that there is an option expiration on Friday, and more importantly that the stock market has become a proxy for the economy in general, steady buying was applied almost from the opening bell, especially to the SP 500 futures.

And see that the SP and the Dow managed to finish in the green, while the tech heavy NDX finished in the red.

This is classic bubble top action.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - The Summer Knows

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

Raymond Chandler, The Long Goodbye

Stocks were a bit on the wobbly side today, although the SP futures managed to close on the green.

The SP futures, or rather the manipulation of them, was a Robert Rubin innovation.   He noted that you can let a financial crisis happen, and go in afterwards and spend a great deal of money fixing the collateral damage in the markets.

Or you can intervene with leverage in the SP futures, specifically, in order to get ahead of the declines, and make the clean up job just that much easier.  Neater, cleaner, and best of all, cheaper.

And in the aftermath of the Mexican debt crisis, under Rubin's practical guidance and Greenspan's acquiescence, the Exchange Stabilisation Fund grew into a formidable presence, the abiding 'invisible hand' in the markets, also known colloquially as the 'Plunge Protection Team.'   It has one of the few federal budgets that never really gets audited, outside of the military.   And that is fitting, because these days paper money is an instrument of war.

But once you start that music playing, the trick is not how to keep it going, because a lie is almost inexhaustible as long as everyone still believes it.  No, the trick is how to ever stop.

Have a pleasant evening.

Gold Daily and Silver Weekly Charts - Consolidation Day and Tragedy In Canada

"Anger is the enemy of non-violence, and pride is a monster that swallows it up."

Mahatma Gandhi

There was a terrible shooting of some innocent people near the Parliament in Ottawa today. Such actions are never justified, and are simply murder, no matter what rationales some may wish to put forward. That these types of things may be used to promote oppressive responses by some is simply a doubling of the tragedy and injustice.

As Gandhi said, 'an eye for an eye makes the whole world blind.'

Gold and particularly silver were under pressure for most of the day.  They may have taken a pause at support.

It is interesting to see them run with stocks today, in the face of some exogenous risk events. They are certainly acting oddly.  One has to wonder if this is a related action by the 'Plunge Protection Team' which feels free to purchase stocks at key points apparently to help restore confidence.

Huge offtakes of physical gold are occurring, as highlighted by the official statement from China concerning their acquisition of 2,199 tonnes of gold bullion in 2013.

Let's see how the rest of the week goes.

Have a pleasant evening.

Gold Daily and Silver Weekly Charts.

I believe the general manipulation of markets we are seeing now will be traced back to Robert Rubin who formulated a principle of financial activism, or intervention before the fact, as being cheaper and more effective that repairing markets after they suffer a significant decline as Greenspan had done in 1987.

As you may recall the 1987 experience led Reagan to form the President's Working Group on Markets, which grew into the infamous 'Plunge Protection Team' of the 1990's which made generous use of the Exchange Stabilization Fund, an opaque kitty used for general market tinkering.

Treasury Secretary Rubin's favorite tool of choice in the markets was said to be the SP futures since they carry the best 'bang for the buck.'

Apparently LIBOR is quite good on the interest rate side of things as well.


The Federal Reserve is adding Daily Gold Prices to their FRED database.


Perhaps they think the price might become more interesting in the near future, or more deserving of their official concern.

How Goldman Sachs Leveraged $70 Billion in Government Money For Record Profits

Guess which two Wall Street banks were acting as informal agents of the government in order to support the bond and stock markets and reinflate them?

Two big banks that are showing record trading profits, and a small group of enablers and assistants.

Its a near layup when the US fronts you the money and then works with you to take the markets higher via its Working Group on Financial Markets. Especially when it is on thin volumes based on 'news' which you help to create and control via frequent calls to young Tim who is your coordinator, in addition to all your other well-placed backchannel sources. You get a heads up, you use the futures to prop the markets. You need some good news, some can be arranged. Just like the good old days when Timmy was riding herd on the NY Fed desk.

All for the good of the country. And if you happen to make a billion per month in trading profits, well, that is the price of freedom for a job well done. Besides, a lot comes back in lobbying and campaign contributions. And you get to be rather porky and demanding about new banking and derivatives regulations because after all, you have a job to do and if they won't let you do it, well its uh oh.

That's what we hear, rumour-wise. Makes as much sense out of this as anything. How about you? Max Keiser thinks it is a fraud, as he describes here.

Below is Dylan Ratigan and his guest's take on this rally and the record profits.