Stocks and Precious Metals Charts - Watchfulness - Stock Option Expiration on Friday

 

Another well-crafted bubble, shot to hell?

"The period of financial distress is a gradual decline after the peak of a speculative bubble that precedes the final and massive panic and crash, driven by the insiders having exited but the sucker outsiders hanging on hoping for a revival, but finally giving up in the final collapse."

Charles Kindleberger 

 

"Simply put, a market dislocation is when a sustained bubble begins to wobble and fall apart, and the realization comes generally that it is collapsing, with all participants remaining invested heading for the exits in a mass panic.  These patterns of collapse tend to have a common framework. 

The challenge is separating a market dislocation from an ordinary correction.  In our work, we have arrived at some hallmarks that characterize a market dislocation, which as you know is always a low probability event.  

The setup for a market dislocation begins with a sustained increase in price (the Ramp) to a significant new high (the Top) over a period of time which is multiples of the subsequent decline. US equity markets saw such a top late last year in October. 

From there the first assault in confidence occurs as profit taking, creating a decline more significant than the declines serving as corrections up to the Top.  It is usually an initial decline of ten percent or greater. Often we get an uncharacteristic decline. The rally back from this first low not exceed the Top (obviously) and is referred to as the Second High (with the TOP being the first or highest high). It can be equal to the TOP. The next low must set a lower low, ruling out a double bottom.  It is preferable but not necessary that the Lows be noticeably lower than the Highs. 

The lower the lows, the more likely that the dislocation will mark the start of a bear market rather than just a market clearing event like the Crash of 1987.   It is not uncommon to reach this point, and the vast majority of times will merely be an A-B-C correction.  The next step is a critical differentiator, the Failed Rally.  If there is a bounce of 2 to 5 percent that fails to gain momentum, and drops back to a lower low, and fails to rally again from there, it sets up a higher than normal probability of a market dislocation which we define for our purposes as a market decline of 30 percent or greater within a one year period." 

Jesse, Crash: the Rally that Fails as Hallmark of Major Market Dislocations, 27 January 2008 

 

Stocks continued a leg lower today after the release of the Fed Minutes showed additional discussion of instituting a taper in purchasing towards the end of the year. 

This looks so far to be just a correction for 'technical reasons' ahead of the stock option expiration. 

Gold and the Dollar were unchanged. 

Silver was off a bit. 

Have a pleasant evening.

 

Stocks and Precious Metals Charts - The Fat Lady Is Clearing Her Throat - Stock Option Expiration on Friday

 

"Over the last thirty years, the United States has been taken over by an amoral financial oligarchy, and the American dream of opportunity, education, and upward mobility is now largely confined to the top few percent of the population.   Federal policy is increasingly dictated by the wealthy, by the financial sector, and by powerful (though sometimes badly mismanaged) industries such as telecommunications, health care, automobiles, and energy.  

These policies are implemented and praised by these groups’ willing servants, namely the increasingly bought-and-paid-for leadership of America’s political parties, academia, and lobbying industry.   If allowed to continue, this process will turn the United States into a declining, unfair society with an impoverished, angry, uneducated population under the control of a small, ultrawealthy elite.  Such a society would be not only immoral but also eventually unstable, dangerously ripe for religious and political extremism." 

Charles Ferguson, Predator Nation, 2012 

 

"Poverty wants— but greed wants everything, and more. They can never have enough, because their acquisition is driven not by any need, but by a sick and overpowering lust for more, and more. More than any other, more than their neighbors, their family, even themselves." 

Jesse, 18 April 2019

 

"These violent delights have violent ends  And in their triumph die, like fire and powder, Which, as they kiss, consume." 

William Shakespeare, Romeo and Juliet

Stocks slumped again today, but unlike yesterday were not able to recover their losses and close in the green. 

This sort of up and down action is the sign of unstable markets.

 However, there is a stock market option expiration on Friday so we need to consider the shenanigans effect of these corrupted markets.

Gold and silver were off a bit, after an impressive string of rallies off the Dr. Evil bottom.

The Dollar rallied, and retook the 93 handle.

There will be a stock market option expiraton on this Friday.

Next week we find out how many holes it takes to fill Jackson Hole.

Have a pleasant evening.

 

Stocks and Precious Metals Charts - And the Beat Goes On

 

"As millions of struggling Americans face eviction this fall; as children are dying in hospitals from a raging pandemic; as his political party is facing a brutal fight in the upcoming midterms — what does former President Barack Obama do?   He throws himself a lavish, celebrity-studded birthday bash at his $12 million waterfront mansion on Martha’s Vineyard with a sprawling dining tent potentially creating a super-spreader event.

Obama had one key job to do as President: Reform Wall Street. He punted. Instead of breaking up the mega Wall Street banks by restoring the Glass-Steagall Act, Obama signed into law the toothless Dodd-Frank financial 'reform' legislation that has allowed all of the worst abuses of Wall Street to continue. At the time the legislation was signed into law in 2010, Democrats controlled the House, the Senate and the Oval Office. 

The brutal truth is that the Obamas have been in tacky, let-them-eat-cake mode for a long time now." 

Pam Martens, Barack Obama's Fall From Grace

 

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

Jesse, May 2009

 

It was painfully evident even in the first 100 days that Obama's candidacy was a marketing meme backed by billionaires and the Wall Street money crowd.   His economic appointments made that very clear, and the legislation that the corporate Democrats enacted to 'reform' the financial system was a means of deflecting the public outcry for genuine reform of a corrupt financial system..

The GOP is worse, and even more servile to corporate and moneyed interests given their turn.  But that is just another chapter in the story of how we got to where we are now.

Stocks managed to 'recover' from a fairly significant selloff and closed green for the day.

One wonders if the markets will be soothed by barrels of money poured on them into the lead up to Jackson Hole.

Gold and silver both gained, continuing to rebound off the sharp and most likely illegal price manipulation of last week, which we have labeled 'Dr Evil' on the charts.

The dollar was up ten cents.

The VIX is rebounding off its lows.   The markets continue to be edgy, and vulnerable to a shock.

I think the likelihood of an 'event' in the markets is rather elevated here because of the reckless lack of management by the Fed and the regulators to rein in their cronies in the Banks and hedge funds.

Have a pleasant evening. 

Stocks and Precious Metals Charts - Slouching Towards Jackson Hole

 

“They (economists) must set aside their contempt for other disciplines and their absurd claim to greater scientific legitimacy, despite the fact that they know almost nothing about anything.” 

Thomas Piketty, Capital in the Twenty-First Century 

 

“An economist is an expert who will know tomorrow why the things he predicted yesterday didn't happen today.” 

Laurence J. Peter

 

“Some student asked if he [Larry Summers] didn’t have essentially the same relationship with Bob Rubin. Wasn’t Summer’s opposition to capital controls just a sop to Wall Street banks, which wanted to recoup their risky investments regardless of how doing so affected the country in which they had invested?

'Summers just lost it,' said one audience member, a business school student. “He looked at the person and said, 'you don’t know what you’re talking about and how dare you ask this question of the president of Harvard?'” 

Richard Bradley 

 

"When the economy was very obviously building towards the financial crisis of 2008, how many economists were ignoring the bubble conditions, preferring to keep their noses in their statistics, a willful condition that I call data blindness. 

It is not safe to see too much, and even less safe for the career minded to speak out against the actions of powerful insiders who control the benefactions of position, and the perks of the privileged class.  It is much more judicious to hide one's nose in a selective book of statistics, ignoring the reality, and relying instead on being data blind or ideologically blind to what is really happening. 

It is easier to say 'I didn't know of this injustice' and afterwards, 'who could see such a thing approaching?'

And then let it happen all over again."

Jesse 21 August 2014

 

And so here we are.

Stocks managed to move higher, with the SP 500 reaching another new all time high.

The tech heavy NDX and the broader Russell 2000 continue to lag.

Gold and silver continued to rebound sharply from the painfully obvious price manipulation of last week. 

The Dollar dropped quite a bit, back down to the mid 92 area.

The equity market is on shaky underpinnings.

Something is going to knock it over, probably by about 10%, or more, most likely  in September, maybe October.

In the end it could be something even relatively trivial in retrospect, as trigger events go. 

A stiff market decline is no sure thing, if never is.  

But if current behavior holds, the probabilities will increasingly favor such an outcome.

The Fed symposium at Jackson Hole starts on August 26^th.

Chairman Powell speaks on the morning of the 27^th.

Have a pleasant weekend.