SP 500 September Futures Daily Chart

The US equity markets went out on the lows, after having set a new low in this decline, ahead of a four day weekend, at least for senior traders.

The markets have 'jitters' over the Non-Farm Payrolls report tomorrow sparked by fresh concerns over a double dip recession. The "D" words, Depression and Deflation, are being tossed around aggressively.

Let's remember this and compare it to where we are in thirty days, towards the end of July.



As an aside, it is now becoming increasingly clear that Goldman Sachs 'triggered' the housing crisis by pulling its credit lines to New Centuary Financial mortage company, and helped to trigger the most recent crisis by pulling credit lines first on Lehman, and then later on AIG.

I wonder if Goldie has what it takes to pull the credit lines on the United States? One can only wonder. Keep an eye on Big Daddy, because it's the whale in the ocean.

Gold Daily Chart: Shock and Awe; Cup and Handle Formation; US Bonds on Deck

The metal bears and bullion banks certainly get an 'A' for effort in this most impressive 'shock and awe' smackdown in the gold bullion futures. I was getting concerned about this sort of attack given the recent things floated out in the press about gold and its relationship to external events.

I had an email this morning saying that 'this proves that charting has no value in a manipulated market.' If this is your understanding of charting, that it is a sure thing, that perfect system you have been looking for, then you are right, it has no value to you. Maps do not take you where you wish to go; maps let you know where you are relative to your objective.

What charting provides is perspective, a visual representation or 'map' of the market.

More importantly, it helps us to understand the context of this sell off, which looks like the banks 'threw the kitchen sink' at the futures market over growing concern about the potential for a breakaway rally, and the physical offtake at the Comex getting out of control.

That this is US-centric selling program could not be more clear from this chart, a selling phenomenon which is repeated almost every day after the London PM fix and as the US markets open.



I do think the cup and handle formation is still active, although it has been pressed to the level at which we would be more concerned about follow through selling to the downside. As we have always said, in the event of a general selloff, a liquidity panic, everything will get sold, and the charts are trumped.

I was a little surprised that they could press it all the way down to 1199 even on an intraday, expecting 1204 to provide more solid support. But the trade is thin, and the markets are 'lightly regulated' by the CFTC under Gary Gensler (Goldman alumnus) to say the least.



Now having said all that, I am not overlooking a broader setup in the markets, created by the likes of Morgan Stanley, Goldman Sachs, and JP Morgan and their associated hedge fund cronies, in which the big financials are herding investors, shoving them around the allocation plate, keeping them moving, which is how they make their money through taxing transactions heavily with fees, commissions, and soft frauds.

Stocks are rather oversold in the short term, and the bonds are very overbought. As I mentioned yesterday, if the market does not 'crash' it would be quite seasonal for the bonds to come under bear attacks in July. Here is what that chart looks like.



Can they get ever more overbought? Sure, we just saw that sort of panic buying in the last great plunge in US equities. But historically bonds are well priced to put it mildly, and certainly not for anyone seeking value. I think a lot of tension in the market is due to the Jobs Report tomorrow, and the fact that most traders will be leaving on vacation after today.

As I recall Goldman was forecasting stocks to go lower, down to 950, if we broke support as we did a few days ago. I am interested to see if their forecasts match up with their own books. Personally I think that since they are a Fed supported bank, they should be required to disclose all their major positions in the particular, not aggregate or net, on a monthly delay at most, with weekly even better. That way the people would know if these monstrosity banks are acting honestly as a major bank supported by taxpayer dollars, or are they really enormous hedge funds which are entitled to a greater level of secrecy, but should be fully culpable for all their losses.

England to Sell 3 Year Bonds - In US Dollars

“In the eyes of empire builders men are not men but instruments.” Napoleon Bonaparte

Got Gilts?


Bank of England Plans to Sell 3-Year Bonds in Dollars
By Caroline Hyde and Sonja Cheung
March 02, 2010

March 2 (Bloomberg) -- The Bank of England said it plans to sell three-year bonds in dollars to finance its foreign-exchange reserves.

The U.K. central bank hired Barclays Capital, BNP Paribas SA, Goldman Sachs Group Inc. and JPMorgan Chase & Co. to manage the issue, which will be benchmark in size, it said in a statement. The bank paid 106.2 basis points more than Treasuries when it issued $2 billion of three-year notes in March last year, according to data compiled by Bloomberg.

“The notes will likely receive good investor appetite seeing that it’s a AAA rated name,” said Trevor Welsh, a portfolio manager at London-based Aviva Investors, which manages about 10.5 billion pounds ($14 billion) of fixed-income assets. “This bond sale is purely a technical move for the bank’s foreign currency reserves.”

The Bank of England is seeking to raise funds as confidence in the U.K. currency plummets on concern no party will win an outright majority in a forthcoming general election. The pound weakened 7.6 percent against the dollar this year, the worst performer among the 16 major currencies, as traders bet a new administration won’t be strong enough to reduce the nation’s budget deficit of more than 12 percent.

“It will be interesting to see if investors require a slightly higher spread because of sovereign risk,” Welsh said. “But if so, it won’t be more than a couple of basis points.”

The central bank has issued three-year notes in March every year since 2007 to finance foreign-exchange reserves that support its monetary policy objectives, according to the statement.

"Thy glory, O Israel, is slain upon thy high places! how are the mighty fallen!"

What next. Rupees?