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Today was the option expiration on the Comex, and those options which are 'in the money' and have not been settled for cash are now converted to March futures positions.
Depending on the size and distribution of those conversions we may see some 'action' in the front month because they are sometimes notoriously weak hands and will receive at least one 'gut check.'
The trends remain as they are, without regard to the short term 'wiggles.'
I made the call for gold, and slightly thereafter silver, based on a fundamental analysis of the US economy and the actions of the Federal Reserve. This was when the prices were 275 and 4.50 respectively. I see no reason to change anything yet.
When the fundamentals change and information becomes more universally disclosed, then the market will clear and reach stability. Until then the safe havens from the dollar credit bubble will continue to go higher in spite of the gimmickry and perception management of the monied interests and their financial engineers. They have been caught with their hands in the cookie jar, and are trying to bluff and rationalize their way out of it to their personal benefit, as they have done throughout their lives.
Here comes the most important test for US equities, for the rest of the week and especially over the weekend.
They have fallen to levels that have typically sparked a new round of buying in this protracted liquidity rally for another melt up higher on thin volumes.
The end of this will come, but perhaps not yet. The market must tell us what is hidden and must be revealed.
This strikes to the heart of what I have called the credibility trap.
The US government cannot effectively deal with the financial crisis and the required credible reforms because in fixing the problems they would necessarily expose the underlying fraud, and endanger the very powerful status quo that funds them and their political campaigns.
This is more difficult to manage than a liquidity trap because the very means of remedy have been co-opted. The doctors caused the illness, and cannot pursue a cure without admitting their malpractice, which may not have been done in simple error but with complicity.
So this malaise and period of selective recovery will continue until there is a another, more destructive crisis that finally clears away the fog of corruption. Or there is some exogenous event to distract the people to some other problem, to change their focus. 'Never waste a crisis' as they say in the Washington Beltway.
