Stocks and Precious Metals Charts - Risk /On - Jackson Hole and a Comex Metals Option Expiration

 

"Doubtless each individual housing bubble has its own idiosyncratic characteristics and some point to Federal Reserve monetary policy complicity in the US bubble.  But the US bubble was close to median world experience and the evidence that monetary policy added to the bubble is statistically very fragile."

 Alan Greenspan, The Fed Is Blameless on the Property Bubble, 6 April 2008 

 

"Some men weave their sophistry until their own reason is entangled."

 Samuel Johnson

 

"A senior Bank of England official today compared the banking system over the last 20 years to the South Sea bubble of the early 18th century and said bankers had merely 'resorted to the roulette wheel' to keep up with each other.  The Bank's executive director for financial stability, Andy Haldane, said in a speech in Chicago that having been stable over much of the 20th century, returns in the banking system relative to the wider stock market shot up after 1986 until 2006.  'Banking became the goose laying the golden eggs. There is no period in recent UK financial history which bears comparison,' he said." 

Ashley Seager, Guardian: Banking System Like South Sea Bubble, 1 July 2009 

 

 "The crash has laid bare many unpleasant truths about the United States... Recovery will fail unless we break the financial oligarchy that is blocking essential reform." 

Simon Johnson, The Quiet Coup, May 2009 

 

Stocks went on a tear higher today, with the storied tech stocks leading the charge to new equity bubble highs.

Gold and silver caught a bid and took back some of their highly contrived losses from last week's Dr. Evil smackdown.

Gold took back and held the 1800 price level, which is mostly big number emotional.

The Dollar fell back to the 93 handle.

The Fed will have their Jackson Hole Symposium this Thursday and Friday. 

There will be a Comex precious metals option expiration for the September contract this Thursday the 26^th.

We were deluged with rain as hurricane Henri parked itself just north of NYC and pump a fire hose of rain onto New Jersey.   Our rain gauge topped out at 5" and just overflowed.

Our garden has been enjoying this hot wet weather, and I have started canning different kinds of jelly and tomatoes, among other things, which is something we have not done in many years.

Have a pleasant evening.

 

Stocks and Precious Metals Charts - On to Jackson Hole - Option Expiration

 

“It appeared that the whole world was one elaborate system, opposed to justice and kindness, and set to making cruelty and pain.  And he and his father were part of that system, and must help to maintain it in spite of themselves.  Their frail human nature was subjected to a strain greater than it was made for; the fires of greed had been lighted in their hearts, and fanned to a white heat that melted every principle and every law.” 

Upton Sinclair, Oil 

 

"I am not Prince Hamlet, nor was meant to be;
Am an attendant lord, one that will do
To swell a progress, start a scene or two,
Advise the prince; no doubt, an easy tool,
Deferential, glad to be of use,
Politic, cautious, and meticulous;
Full of high sentence, but a bit obtuse;
At times, indeed, almost ridiculous--
Almost, at times, the Fool."

T. S. Eliot,  The Love Song of J. Hayden Powell

 

The way stocks were correcting in a downward plunge, only to rally back up today, makes it feel like there was some sort of technical event, like an option expiration.

Oh yeah, there was.  How unusual.

Gold and the Dollar were mostly unchanged, with silver edging lower.

The Kansas City Fed will be sponsoring a grand economic soirée in Jackson Hole, Wyoming next week.

I doubt that anything will be said to roil the markets.  

But let's see what happens.

Have a pleasant weekend.

Stocks and Precious Metals Charts - Cults of Moloch and Mammon - Option Expiration Tomorrow

 

"It was incredible. It was distressing to me how simple and outrageous it was. It wasn't so complicated that you said, 'Wow, at least they're smart in the way they're doing it.'  It was simple.  It was brazen.  The evidence of it was overwhelming. It's just that it hadn't been revealed to the public, and that's why could get away with it... 

One of the things that is eminently clear from our investigation is that all the compliance departments, all the self-regulation is nothing.  They watched it, but they did nothing. So we've got to think this through, and it's not only the financial community. There are a lot of sectors where we have said self-regulation is the answer. We've got to think about it." 

Eliot Spitzer, The Wall Street Fix, March 16, 2003

 

"And in some ways, it creates this false illusion that there are people out there looking out for the interest of taxpayers, the checks and balances that are built into the system are operational, when in fact they're not. And what you're going to see and what we are seeing is it'll be a breakdown of those governmental institutions. And you'll see governments that continue to have policies that feed the interests of -- and I don't want to get clichéd, but the one percent or the .1 percent -- to the detriment of everyone else. "

 Neil Barofsky, 2012 interview with Bill Moyers

"People of privilege will always risk their complete destruction rather than surrender any material part of their advantage.  Intellectual myopia, often called stupidity, is no doubt a reason.  But the privileged also feel that their privileges, however egregious they may seem to others, are a solemn, basic, God-given right." 

John Kenneth Galbraith 

 

"Most of them became wealthy by being well connected and crooked. And they are creating a society in which they can commit hugely damaging economic crimes with impunity, and in which only children of the wealthy have the opportunity to become successful."

Charles Ferguson, Predator Nation

 

Stocks dove again today in the morning, but were saved back into the green in the afternoon.

There will be the monthly stock option expiration tomorrow.

Gold and silver were off a bit.

The Dollar rallied into the middle of the 93 handle.

Have a pleasant evening.

 

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.