Gold Daily and Silver Weekly Charts

Everything was bouncing today, even the dollar.

The tech stocks were notable laggards, and the miners did not get back all the losses of the past couple of days.

Follow through is everything.

SP 500 and NDX Futures Daily Charts - Bounced

We had the bounce as expected. It came on support, and from a short term oversold condition.

The next few days will tell if this is just a dead cat bounce or the beginning of a short term trend reserval.

Net Asset Value of Certain Precious Metal Trusts and Funds

Gold Daily and Silver Weekly Charts

Both the US and the UK have now taken downgrades to their sovereign debt, although the US is sloughing their own off because it came from a European agency.

The miners were hit much harder than bullion today, in keeping with the stock market weakness.

Four Simple Indicators for Precious Metals - Hussman

We might see a technical bounce around here in stocks, not something based on fundamentals. Stuffing the dysfunctional banks with money is not working, but the Fed and Washington seem incapable of taking effective new types of action.

Pawlenty's proposal of more tax cuts for corporations and the wealthy, while shifting more of the burden to the middle and lower classes, is probably the last gasp of a dying theory that still breathes life and does damage.

Neither stimulus nor tax cuts will work on an economy that is broken from years of public policy that favored job destruction and median wage stagnation. It is like putting gas into a car wrapped around a telephone pole.

And yet the US finds itself in a credibility trap, wherein the power brokers are complicit in national theft, and cannot stop themselves and each other from 'going in for the kill.' This is what I had forecast in 2005, and I think it is happening now.

And they may get it, the kill, one way or the other.

SP 500 and NDX Futures Daily Charts

The sentiment has become decidedly bearish, and we now have six down days in a row on Wall Street, something not seen since February 2009.

One might look for a technical bounce somewhere around here, but it may take something from the Fed or Washington to turn the market around.

European Credit Agency Downgrades US Credit Rating from AAA to AA

Here is my rough translation of the original Feri stuft die Bonität der USA herab.

"Man muss manchmal in den sauren Apfel beißen."

The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustained recovery.

Feri Downgrades the Creditworthiness of the United States
By Harald Weygand
Wednesday, 06.08.2011, 08:56

Homburg, 8 June 2011 - The Bad Homburg €uro Feri Rating & Research AG downgraded the first credit rating agency's credit rating for the United States from AAA to AA. Feri analysts justify the downgrade by the continuing deterioration of the creditworthiness of the country due to high public debt, inadequate fiscal measures, and weaker growth prospects.

"The U.S. government has fought the effects of the financial market crisis primarily by an increase in government debt. We do not see thank that there is sufficient attention being paid to other measures, "said Dr. Tobias Schmidt, CEO of Feri Rating & Research AG €. "Our rating system shows a deterioration in economic health, so the downgrading of the credit ratings of U.S. is warranted."

For the third consecutive year the deficit of the United States is in double digit percentages relative to gross domestic product (GDP). "Deficits of such magnitude are not a sustainable fiscal policy.  We would reconsider the rating when the U.S. government creates a long-term sustainable budget," said Schmidt.

Feri Rating is listed on the Federal Financial Supervisory Authority (BaFin) as an EU credit rating agency approved and created with more than 20 years experience in sovereign ratings. Every month, the Feri analysts evaluate sovereign credit ratings from the perspective of a foreign investor based on the ability and willingness of countries to repay their debts. The credit ratings have eleven possible gradations between "AAA" (best credit) and "Default".

About Feri Rating & Research AG
Feri Rating & Research AG is a leading European rating agency for analysis and evaluation of investment markets and products and one of the largest economic forecasting and research institutes. Currently, the company with about 50 employees and has approximately 1,000 customers in addition to its headquarters in Bad Homburg with offices in London, Paris and New York.

Gold Daily and Silver Weekly Charts - Comex Silver Deliverable Inventory Hit New Lows

The ability of the Comex to deliver on the silver contracts continues to deteriorate.

Still running a long gold-short stocks pair. Added some silver long today, and doubled up the stock short, so the beta is leaning to the bearish side. I will adjust it tomorrow depending on how things look after the European close of trade.

SP 500 and NDX Futures Daily Charts

The bullish case on these charts is for stocks to find a footing around the obvious support levels and create a slanted "W" double bottom with a nice summer rally back to the top of the channel trend resistance.

The bearish scenario involves a break of this support and a continuing decline into the Fed's decision on QE3 at the end of June.

Bernanke's waffling did not help stocks today.

I am still running the long gold-short stocks trade, but adjusted my beta and took the short position up a notch to a bearish lean.

NAV of Certain Precious Metal Trusts and Funds

Gold Daily and Silver Weekly Charts

The long gold - short stocks trade worked well today as stocks slumped yet again while gold held its own for a short gain on the bullion front.

The story is really in stocks, and whether they can hold key support levels, and not slip into a liquidation sell off.

Although the dollar crawled a little higher, there was no flight to safety into it.

Today we remember the Allied invasion of Normandy, a time when ordinary men and women did real, heroic things for the benefit of the many.

"Your task will not be an easy one. Your enemy is well trained, well equipped, and battle-hardened. ...The tide has turned. The free men of the world are marching together to victory. I have full confidence in your courage, devotion to duty, and skill in battle. We will accept nothing less than full victory. Good luck, and let us all beseech the blessings of Almighty God upon this great and noble undertaking."

General Dwight D. Eisenhower, 6 June 1944.

SP 500 and NDX Futures Daily Charts

Another bad day for bully as stocks just could not hold any traction from the open.

We are approaching critical support levels for stocks. Much lower and we might begin a much more serious intermediate downtrend.