Stocks and Precious Metals Charts - Between the Crosses, Row By Row

"One of the common failings among honorable people is a failure to appreciate how thoroughly dishonorable some other people can be, and how dangerous it is to trust them."

Thomas Sowell

Today was an option expiration, and we had an additional pop in stocks in order to complete the routing of the bears who piled on to the 'Trump dump.'

The putative reason for today's rally was a statement by the Fed's Bullard about the role that additional QE may play.  I am not sure if this was 'real' or just another reasons to wash and rinse the public.

Next week will be the June option expiration for precious metals on the Comex.

Stocks are at a bit of a crossroads here.  The SP 500 futures and big cap tech in the NDX, for example, have retraced approximately fifty percent of the recent drop, and are both at the midpoint of their respective bull trend channels.

There will be the second estimate of Q1 GDP next week.  I do not think it will be a big mover, since we tend to be forgetful of where we have been, even most recently.

Memorial Day is coming up at the end of this month.  As the poem says, 'take up our quarrel with the foe.'  

Who is 'the foe' of liberty and the pursuit of happiness?  In the answer to that question lies maturity, and wisdom.

Have a pleasant weekend.

Stocks and Precious Metals Charts - Burning Down the House

"Most of us are still too sane to piss in our own cistern, but we allow others to do so and we reward them for it. We reward them so well, in fact, that those who piss in our cistern are wealthier than the rest of us. How do we submit? By not being radical enough. Or by not being thorough enough, which is the same thing."

Wendell Berry


"Our future could be one in which continued tumult feeds the looting of the financial system, and we talk more and more about exactly how our oligarchs became bandits and how the economy just can’t seem to get into gear.

Recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time."

Simon Johnson, The Quiet Coup, May 2009


"But there is a sort of 'Ok guys, you're mad, but how are you going to stop me' mentality at the top."

Robert Johnson, Audacious Oligarchy


"Isn't it a riddle and awe-inspiring that things can be so beautiful, despite the horror? I've seen something wondrous peering through my joy in the beautiful, a sense of its creator...Only people can be truly ugly, because they have free will to separate themselves from this song of praise. It often seems they will drown out this hymn with cannon thunder, curses, and blasphemy. But I have realized they will not succeed. And so I want to throw myself on the side of the victor.”

Sophie Scholl, Munich 1942

Stock options expiration tomorrow, and a precious metals option expiration on the Comex next week.

The action today looked like a dead cat bounce, with a little whiplash to give the amateur options betters a thrill. Here's a suggestion. At least the booze is free in Las Vegas.

Steve Mnuchin and Paul Ryan proved one thing in their respective testimony and press conferences today.

Trump is not the problem— he is a symptom. And so is Hillary.

Let's see what happens tomorrow.

Have a pleasant evening.

Stocks and Precious Metals Charts - Mind the Gap

"Starting around 1980, American society began to undergo a series of deep shifts. Deregulation, weakened antitrust enforcement, and technological changes led to increasing concentration of industry and finance. Money began to play a larger and more corrupting role in politics. America fell behind other nations in education, in infrastructure, and in the performance of many of its major industries. Inequality increased.

As a result of these and other changes, America was turning into a rigged game—a society that denies opportunity to those who are not born into wealthy families, one that resembles a third-world dictatorship more than an advanced democracy."

Charles H. Ferguson, Predator Nation


“When the system is rigged, when ordinary citizens are powerless, and when whistle-blowers are pariahs at best, three things happen:

First, the worst people rise to the top. They behave appallingly, and they wreak havoc.

Second, people who could make productive contributions to society are incented to become destructive, because corruption is far more lucrative than honest work.

And third, everyone else pays, both economically and emotionally; people become cynical, selfish, and fatalistic. Often they go along with the system, but they hate themselves for it. They play the game to survive and feed their families, but both they and society suffer.”

Charles H. Ferguson, Inside Job

It was a risk off day in the markets.  No doubt about it.

The purported reason was the disclosure by the ex-FBI Director Comey that President Trump apparently asked him to forego the investigation of the ex-Security Advisor Flynn.

Personally I am stunned that the markets were able to overextend as far as they had gone.  This Trump drama is just the trigger event.   The more extended the market becomes, the less significant of a trigger event is required to begin the reversal.

If Trump were impeached, then the Tea Party Conservative Mike Pence would assume the presidency.  He is a GOP old boy and friend to Paul Ryan.   It would almost be better for the GOP if he did become president because he doesn't use twitter.

In other words, the problems are far more substantial than the egos and personal power trips of a few Washington plutocrats and pundits.   Without a serious overhaul, the financial system is going to go off the rails again.

There was late day commentary here about the action in stocks and metals.

Have a pleasant evening.

SP 500 Futures - Gap Filled Intraday - The Gathering Storm

"Sometimes I wonder whether the world is being run by smart people who are putting us on, or by imbeciles who really mean it."

Mark Twain

The gap in the SP 500 futures continuous chart that we left behind a few weeks ago has just been filled intraday.

As a reminder this is a stock option expiration week, although as I recall May is not a particularly significant month.

I imagine a lot of enthusiastic call buyers have just been smoked out of their seats and their June positions.

The tension on the tape the last few days was palpable.  It just took some small event to trigger it giving its overlong duration and extent out of balance.

I don't think impeachment is on the table for President Trump, except in overheated Democratic rhetoric.   Although I would not rule anything out while The Donald has access to twitter.

The NDX has a quite a way to go to close its gap, but that is another matter. For my purposes the SP 500 futures are the bellwether.

I have pulled in my short positions, and just left some other risk off positions run, mostly in gold. No silver at this time for a trade.  It just doesn't work as well in a panic because of its precious/practical nature.

My cynical side says that this market pullback is just a long overdue correction in the Trump rally. But we will have to wait and see where the stock markets finds a footing, or if contagion of selling starts to trigger liquidations and some sort of selling feedback.

As I noted the other day, this is a concern for me because the nature of this rally has been narrow and price driven.  People were throwing money into passive index funds, which were rising steadily thanks to speculation in about ten stocks.

The 'big one' for the markets, as opposed to a major correction, will gain the most damaging momentum from the erosion in quality of private debt loads which are once again back to record levels, along with the extreme leverage in financial derivatives exposure held by just a few financial institutions.  That is the real nitro in this chemical mix.

If any financial breakdown spreads to the $222 trillion dollars in derivative exposure then it is time to hit the exits.   There is no way to bail out that sort of malfeasance gracefully without imploding the currency, theories about the ability to print money without limit notwithstanding.

Speaking of rotten fundamentals, the average growth in loans exceeds the average growth in hourly wages.  Thanks to Tony Sanders at Confounded Interest for that chart below.

Let's deregulate The Banks even more and hand out tax breaks to the one percent!  And spend all our time looking for Russians hiding in the shrubbery so we can blame them.

Sleep well.

Net Asset Value Premiums Of Certain Precious Metal Trusts and Funds - Smokin'

"Here Homer with his nervous arms
Strikes the twanging harp of war,
And even the western splendour warms,
While the trumpets sound afar:
But, what creates the most intense surprise,
His soul looks out through renovated eyes."

John Keats, Ode to Apollo

There is an obvious safe haven trade in precious metals, notably gold, and US Treasuries this morning as the accumulation of political and geopolitical risks have finally penetrated the consciousness of the denizens of the markets.

The stock indices I track have not yet violated any major trendlines to the downside.   I am watching this carefully.

I have a largish short position on stocks and long gold in my trading account.  But so far this looks like just a trade and not yet a trend.  And so I have peeled that short back a bit this morning and taken the profit.

Note the subdued variance to NAV exhibited by these funds and trusts below.

Stocks and Precious Metals Charts - As Time Goes By

"For I behold the heavens, the works of your fingers: the moon and the stars which you have made. What is man that you are mindful of him? or the Son of Man that you dwell with him?  You have made us a little less than the angels, and you have crowned Him with glory and honour, And have set Him over all the works of your hands."

Psalm 8:3-5


“Narcissistic personality disorder is named for Narcissus, from Greek mythology, who fell in love with his own reflection. Freud used the term to describe persons who were self-absorbed, and psychoanalysts have focused on the narcissist's need to bolster his or her self-esteem through grandiose fantasy, exaggerated ambition, exhibitionism, and feelings of entitlement.”

Donald W. Black, DSM-5 Guidebook

Stocks continued their sideways trade, except for the big cap techs which lead the NDX to new highs.

The rally has narrowed considerably, and is being driven by less than ten stocks which have an overweight influence on the indices.

And as the stock indices go higher, they attract more money into them through index funds.

The ending will be swift, and sudden.

Gold and silver remain quiet, although silver has been showing some serious ability to rebound back towards the 17 handle.

Washington and New York are focused almost exclusively on themselves now, and their intramural political power struggles.

And their hysteria with their own issues is almost boundless, while the country languishes.

Trump seems determined to sabotage himself. Yes, he has 'enemies'. But his biggest enemy is himself.

When this goes into the ditch, no one will have seen it coming.

That is because they can only see the rest of us and the world through their own reflections, darkly, if at all.

Lord have mercy on us.

Have a pleasant evening.