SP 500 and NDX Futures Daily Charts - Rinse Cycle May Be Almost Done

Stocks continued to decline on mediocre economic news and international jitters. VIX rose a bit as shown on the chart below.

Even with the declines, led by the momentum stocks which are the agitator in the wash cycle, we are falling back to the lower bound of the upward trend channel.

I think that if this is going to be a major correction, which it is not yet but is still possible, we will have to see some serious support levels below here break down.

I would look at the techs to lead and SP to confirm downwards if this correction turns into something more significant.   And alternatively,  the SP to lead a rally back up with the techs confirming if that should happen instead.

Although it may look good, this market is like a piece of fruit going bad from within:  soft, unpalatable, and infested with vermin.

But for now this looks like a thorough rinse after a first quarter washing.

Have a pleasant evening.

Remembering the 46th Anniversary of Martin Luther King's Last Public Words

“The tyrant dies and his rule is over;  the martyr dies and his rule begins.”

Søren Kierkegaard

Martin Luther King gave this speech on 3 April 1968 at the Church of God in Christ, in Memphis, Tennessee.
 

On 4 April 1968, Dr. Martin Luther King, Jr. was assassinated.

"O Jerusalem, Jerusalem, you who kill the prophets and abuse those whom God has sent as messengers to you.

How often I have longed to gather your children together, as a hen gathers her young under her wings. But you would not let me.

As you willed, your house is now yours— but is made desolate.’”

Gold Daily and Silver Weekly Charts - Pop Go the Weasels - Thank You To Zerohedge et al.

Stocks dumped hard on post end of quarter selling, even though the economic news was not too hot and not too cold.

The metals came roaring off their oversold conditions with gold leading the push higher.

There was little activity in the Comex gold warehouse, and a few more traders stood for delivery.

I explained again the other day that not all those who stop a futures contract for delivery actually end up taking the physical gold. And further, if they do take it, that may not be reflected immediately in the warehouse report, because they take the title to the gold if you will, but may not move it or change its status right away. So we can see a lag, or even nothing.

But again, as I seemingly have to say again and again, the Comex setting gold prices is the tail wagging the dog. It is just that the tail is easier to see.

Gold is moving from West to East, and the glimpses we get of that trade confirms its size. And I think we understand why it is moving, because a great change is taking place in the world's thinking on international currencies.

It appears that the currency war may be heating up on a number of fronts:  Russia Prepares To Attack the Petrodollar. If someone is going to attack something, why would they preannounce it? Most likely in response to the threat of increased sanctions I would imagine. The US has expressed its displeasure that Russia is crafting a bilateral trade deal with Iran, and has threatened additional sanctions if they break the embargo on that country.

There are some increased international tensions certainly, and some of the most recent movement in gold, which is outpacing silver, *might* be due to a flight to safety or supply pressures in the markets where physical supply really makes a difference. 

This is playing out and we have to be patient in watching it, and try not to fill in the blanks too aggressively with what can be or might be. But as for what is, I think we have a decent idea of the longer term reasons why things are happening the way that they are.

I have included a special thanks to Zerohedge and the other bloggers in my stock market commentary today.  I started to thank ZH for publishing an interesting stock valuation chart from JPM, and then I started thinking about all the other sites I look at every day, and felt a need to just say 'thank you.'  They are included in my blogroll, and there are quite a few.  You can scroll down or simply click here for the stock market comments. 

It is easy for us to criticize each other, and find those areas where we might disagree, often on details and interpretations.   But I think we can all agree that without the internet, and the bloggers and columnists who work long hours for relatively little reward, the void created in the news by the mainstream media would be even more intimidating and daunting than it already is.

Have a pleasant weekend.  Spring is in the air.

SP 500 and NDX Futures Daily Charts - And Here Comes the Rinse

On Wednesday in the stock market commentary I said that "the wash cycle is almost done."

And indeed is was, as on little weak economic news today the stock market took a serious nosedive, led by the momentum stocks. Stocks peeled off much of the paint that was applied to the tape just recently for the end of quarter.

Live by the scam, die by the scam.

So what next? Overall the market is going to continue feeding on hot money and thin volumes. Also on Wednesday I said that the exchanges would be embarrassed if they stopped all the HFT hot potato trading, because the lack of participation in stocks would be all too apparent.

The market is a bit lofty and will remain vulnerable to exogenous shocks and news, which are difficult to predict. There are certainly plenty of tensions in and around eastern Europe and the Mideast. Today we saw a newsflash about US objections to a Iran-Russia deal that some saw as motivated by an attack on the petrodollar. I was watching this develop since February, and it looks more like the US is objecting to Russia ignoring the sanctions designed to bring Iran to the negotiating table over their nuclear program.

I include a valuation chart put out by JPM that likens this market valuation to some others including those that preceded that last two big market selloffs.   I picked this chart up at Zerohedge.  

While I may not always agree with their interpretation of some things, and certain some policy preferences,  I cannot help but thank them for all the hard work that they do in supplying the latest news, and acknowledge their often very valuable insights and context to the financial news and economic developments.  I use their site every day and I am glad for it.  I am glad and grateful for the work that all the bloggers provide, in addressing the yawning void in the financial news that is left by the mainstream media.   I try to give them any exposure and encouragement that I can.

Have a pleasant evening.

 

NAV Premiums of Certain Precious Metal Trusts and Funds

Gold is still outperforming silver by quite a bit with the ratio at 65 to 1.

I think that is either the sign of a developing bottom, with the high beta of silver not yet having kicked in with the return of positive sentiment, or possibly that this is more of a 'flight to safety' phenomenon.

A third possibility is that gold is starting to show the effects of a squeeze on physical supply. 

Sales of silver eagles are certainly robust. 

John Ralson Saul: Re-evaluating the Current Approach To Trade and Globalisation

Does globalization actually deliver what we thought it would?

There are a range of choices between free trade and protectionism.  Ideological commitments and purity may prevent a meaningful discussion of the situation.

Is there really a surplus of goods, or is trade organized around a plutocratic economic model that is providing a scarcity of wages for labour?

When local laws are leveled by the economic realities of globalization, can nations retain their own character and choice of government and guiding principles?

Can there be genuine 'free trade' in a world in which only the US is a major military and monetary superpower, owner the world's reserve currency, with Russia and China alone presenting some effective counterbalance, while many other nations, among them much of Europe and Japan, have become essentially incapable of exercising enough military power to defend themselves and preserve order in their own regions except for minor police actions?    Are the assumptions about the benefits of free trade founded on assumptions as unrealistic as those that drove domestic free market policies?

Is global free trade 'lifting all boats,' or merely spawning a proliferation of oligarchs because of its inherently lawless and borderless character?

Although the title of the video is in German, the presentation by JRS is in English.