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The US markets were moving lower after a warning by Intel on their forecast. As you may recall I had said last week that my tech sector information was that sales were going to be weak. This has nothing to do with a lack of hard drives, which was the excuse presented.
The stock markets are still within their triangles and I would expect them to stay there unless something really happens to break them lower. The reason is the huge vested interest that the Street has in getting the Zynga IPO out the door, along with a few other IPOs this week.
But Zynga is significant because it sets the tone for Facebook. Zynga is virtual and produces zynga dollars and fun games, and Intel produces products for the real economy. The divergence is interesting.
FOMC issues its last rate decision of 2011 tomorrow. I am not sure I expect them to introduce QE3 at this meeting. It may already be underway with the de facto flow of swaps to Europe. But typically they do not wish to take such an action in a Presidential election year.
Let's see what happens.
Tom McClellan put forward a hypothesis today on Bloomberg TV that the spread between gold lease rates and LIBOR has been extraordinarily wide, and therefore it has been difficult to short gold. This sustained gold at an unusually high price. But now it is correcting so gold will fall much more in price as the shorts pile in.
I cannot speak to LIBOR, but the gold lease rates have hardly been unusually expensive of late. There is a theory that gold lease rates are the difference between LIBOR and gold swaps.
What these charts imply to me is that someone dumped physical gold into the paper markets, with the emphasis on 'dumped.' The same thing happened to a lesser extent on Dec. 8 to silver.
I also include the six month trend on lease rates for your review.
If this is true, then the same should apply to silver. Does it? I think that mixing paper and metal interchangeably does not necessarily work as well as it does with other paper currencies.
This is a delivery month for gold and silver.
The Fed will be giving its last rate decision for the year tomorrow.
This is one of the more active weeks for stock IPOs of the year.
I came into today heavy on the stock short side and lighter on gold. I have lately taken about half those shorts off and picked up more bullion near 1660.
Let's see which way the stock and precious metal triangles choose to break.
There are several unconfirmed reports of US troops deploying on the Jordanian border with Syria.
Note: RSI has not been updated for today
