SP 500 and NDX Futures Daily Charts - T'was the Witch of November Come Stealin'

When suppertime came, the old cook came on deck
Sayin'  Fellas, it's too rough to feed ya
At seven PM a main hatchway caved in
He said, Fellas, it's been good to know ya
The captain wired in he had water comin' in
And the good ship and crew was in peril
And later that night when his lights went out of sight
Came the wreck of the Edmund Fitzgerald.

Gordon Lightfoot, The Wreck of the Edmund Fitzgerald

I have included the two stock index cash market charts with technicals.

There is a potential 'island top' forming on the NDX, and the SP 500 looks like it might be testing the 200 DMA.

Bottom line is if stocks start rolling over with some real selling, and not this tissue thin HFT shell game that has taken the place of actual price discovery, then we could be in for a very rough ride.

Let's see how much more the Fed is willing to spend to support their latest paper asset bubble. And let's see if they can raise rates fast enough to have enough room to lower them again in response to another crisis which they have themselves would most likely have caused.

Today is the 40th anniversary of the wreck of the Edmund Fitzgerald during a fierce November storm on Lake Superior.

I remember it fairly well.  At the time I was in my senior year of college, and was living in the heights area east of Cleveland, Ohio, which was also the 'snow belt' for lake effect snow caused by moist winds rising up off the lake.  So the news of the ship lost at sea was very big on the local news, and affected families in the area from Ashtabula to Toledo.

Erie itself is a relatively shallow and narrow lake, with an average depth of only 30 feet. We used to fish for walleyed pike around the western islands to Pelee in Canada.  But the storms out on the open water could kick up the waves very quickly, and you did not want to be out too far in a 16 footer if a storm came in from the northwest.  The waves could lift you up and then smash you down on the partially submerged rocks.  More than a few times we raced a pop up thunderstorm to Put-In-Bay, and the safety of the old Roundhouse Bar.

I like to think I have a reasonably well-honed sense of potential danger.  And I feel that dangerous potential in this market.  Whether it comes to be or not is another matter.  It is more possible than probable for now, and the Fed is spreading the oil of printed money over Wall Street's troubled waters.

Have a pleasant evening.

Deep State at Home and Abroad: Mike Lofgren and David Talbot

"Behind the ostensible Government sits enthroned an invisible Government, owing no allegiance and acknowledging no responsibility to the people. To destroy this invisible Government, to dissolve the unholy alliance between corrupt business and corrupt politics, is the first task of the statesmanship of the day."

Theodore Roosevelt, The Progressive Platform


"As societies grow decadent, the language grows decadent, too. Words are used to disguise, not to illuminate, action: you liberate a city by destroying it. Words are to confuse, so that at election time people will solemnly vote against their own interests...

Any individual who is able to raise enough money to be considered presidential is not going to be much use to the people at large. He will represent whatever moneyed entities are paying for him. Hence, the sense of despair throughout the land as incomes fall, businesses fail and there is no redress."

Gore Vidal, The Decline and Fall of the American Empire, 1992


"Last year, pressed by progressive donors at a dinner party to act more like the progressive they thought he was, Obama responded sharply, 'Don’t you remember what happened to Dr. King?'”

Ray McGovern, Doubting Obama's Resolve To Do Right


"The TPP, along with the WTO and NAFTA, is the most brazen corporate power grab in American history. It allows corporations to bypass our three branches of government to impose enforceable sanctions by secret tribunals.

These tribunals can declare our labor, consumer and environmental protections unlawful, non-tariff barriers subject to fines for noncompliance. The TPP establishes a transnational, autocratic system of enforceable governance in defiance of our domestic laws."

Ralph Nader


"Citizens in many countries wonder how certain government policies can persist in spite of widespread popular opposition or clear perceptions that they are harmful. This persistence is frequently attributed to a 'deep state.'

'The Establishment,' as it’s been called in the United States, where it evolved from the Washington-New York axis of national security officials and financial services executives. They are said to know what is 'best' for the country and to act accordingly, no matter who sits in the White House."

Philip Giraldi, America's Establishment Has Embraced 'Deep States'

Gold Daily and Silver Weekly Charts - Incompetence, Coverup, and Felony

"It is difficult to get a man to understand something when his job depends on not understanding it."

Upton Sinclair


"The problems we face did not come down from the heavens. They are made, they are made by bad human decisions, and good human decisions can change them."

Bernie Sanders


"Throughout my long service life in the Department of Defense, first as an army officer and then as a member of the Defense Intelligence Senior Executive Service, there was a phrase in common usage: 'I will fall on my sword over that.' It meant that the speaker had reached a point of internal commitment with regard to something that his superiors wanted him to do and that he intended to refuse even though this would be career suicide. The speaker preferred career death to the loss of personal honor.

This phrase is no longer widely in use. What has taken its place is far more sinister in its meaning and implications. 'I drank the Kool-Aid' is what is now said. It signifies that the person in question has given up personal integrity and has succumbed to the prevailing group-think that typifies policymaking today. This person has become 'part of the problem, not part of the solution.'"

W. Patrick Lang, Drinking the Kool Aid, 2004

Gold had a little bounce today. Silver, not so much.

There is intraday commentary on why I think this is happening now as it is. It its titled An Almost Perfect Storm of Incompetence and Felony.

Incompetence is probably much too kind an interpretation.

There are now 666.11 tonnes of gold in the GLD ETF.

The decisions that these public servants are making are not so often out of well intentioned ignorance and ideological blindness, as a former Fed Chairman seems to suggest.  That is what I call the CEO-defense.  Rather they are made as a price of power and privilege, and selfish betrayal of trust.

See who is getting the sinecures in the financial sector, and the enormous fees for speeches after their 'public service,' all out of proportion to their real value.  And then you may understand why there is no reform, and no sustainable recovery.

And this is why the great mass of voters are feeling 'restless' with things as they are.   And the people of privilege do not know what to make of their growing discontent.

Have a pleasant evening.


P.S.  Gold is moving from West to East.  And there will be consequences, as there always are, not so much with the original misdeeds, but the ongoing coverup.

SP 500 and NDX Futures Daily Charts - Retracement, For Now

US stocks were rolling over today, in recognition that the asset bubble rally which we had just experienced was over, at least for now.

Right now we are in a very overdue retracement.  The depth of the decline will give us some information on the chart about a potential move higher into year end.

Fundamentals rare matter in the short term, and with the reckless monetary policy of the Fed and the fiscal malfeasance in Washington, the fundamentals are a barely heard voice of conscience.

We stand two bubbles in, and on the verge of another, at least according to the IMF, and you know that I have had that forecast for some time now.

There is no reason why we cannot have a fourth or fifth bubble and crisis as well.   They are serving a purpose.  If you do not know what that is, then you have not been paying attention to the growing chasm in economic and political equality between the elite and the rest in the 'free world.'

Have a pleasant evening.

An Almost Perfect Storm of Incompetence and Felony

"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, Age of Uncertainty


“Misdeeds, once exposed, have no refuge but in audacity. And they have accomplices in those who are fearful in their complicity.”

Tacitus, Annals

I was discussing the markets this morning with my friends Dave and Bill Murphy as we generally do.  This is what I just wrote back in response to a question from Bill.

We just saw a very historically significant decline in the precious metals in terms of days lower without relief. And we have seen a remarkable rise in the US dollar index against the Euro and the Swiss franc that cannot possibly be good for the real economy of the US, when every other developed nation is trying to devalue their currencies to stimulate their exports and inhibit imports.

I believe that a portion of the gold selling in particular is an effort to knock down the open interest in gold for December. If there was any serious attempt for holders of those contracts to stand for delivery, even JPM, which has been obviously building up its stores of gold to act as the 'fixer' in that market, would not be able to cover the demand.

JPM was consistently taking delivery for their house account in gold, and just transferred 70,000+ ounces over from Nova Scotia's warehouse, from whom they had been taking delivery.

As we know, in the last big delivery month, JPM stepped up with an enormous amount of their gold, 400,000+ ounces, to provide enough real bullion to satisfy the contracts standing for delivery. Even now their inventories remain somewhat depleted.

The dollar has also been soaring, because the Fed is trying to pretend that the US is recovering so that they can raise rates.  A strong dollar and higher rates are very harmful to what is almost undoubtedly a fragile economic recovery in the US.

And it is fantasy to think that the US can somehow go it alone, and continue to improve while the rest of the world is cutting rates because their economies are slowing.

The Fed wants to raise rates for their own policy purposes, so they can cut them, without going overtly negative, when their latest financial bubble starts to collapse, which it may already be doing. They cannot really raise rates in a Presidential election year past June, so they will push ahead, to serve their own purposes, even as they harm the real economy.

There will be another financial crisis as the IMF warned today. There will be a serious dislocation in several financial markets, including the precious metals and the bonds at some point, that will rock the current system to its foundations.

It is the credibility trap which ensnares the ruling class that inhibits any meaningful remedy and reform.

It is an almost perfect storm of incompetence and felony.

Gold Daily and Silver Weekly Charts - Anti-Knowledge of the Elites - Credibility Trap

After dinner, Larry [Summers] leaned back in his chair and offered me some advice. I had a choice. I could be an insider or I could be an outsider. 'Outsiders can say whatever they want. But people on the inside don’t listen to them.

Insiders, however, get lots of access and a chance to push their ideas. People — powerful people — listen to what they have to say.

But insiders also understand one unbreakable rule: They don’t criticize other insiders.'

I had been warned.

Elizabeth Warren, A Fighting Chance


And he said to me, he said, "Neil, you're a smart guy. You're a young guy. You're a talented guy. You got your whole future in front of you. You've got a young family that's starting out. But you're doing yourself real harm.” And the reason why you're doing yourself real harm is the harsh tone that I had towards the government as well as to Wall Street, based on what I was seeing down in Washington. And he told me that if I wanted to get a job out on the Street afterwards, it was going to really be hard for me.

And I explained to him that I wasn't really interested in that. And he said, "Well, maybe a judgeship. Maybe an appointment from the Obama administration for a federal judgeship." And I said, "Well, again, that would be great. But I don't really think that's going to happen with my criticisms." And he said it didn't have to be that way. "If all you do is soften your tone, be a little bit more upbeat, all this stuff can happen for you."

And I felt a real obligation and sense of duty to fulfill the oath that I took in Secretary Paulson's office on December 15th, 2008 to do the job that I was sent down there to do. But I wasn't really tempted with a big job on Wall Street. And frankly, if it meant getting a judgeship, compromising the job that I needed to do and was supposed to do, it just wasn't interesting to me.

When I had my incident with the assistant secretary that my deputy, who had come down from-- who's another former federal prosecutor, who did narcotics work, said to me, Kevin Puvalowski. And he said to me, "Neil, you were just offered the bullet or the bribe, the gold or the lead."

That's kind of what happens in a society where the rewards and incentives are, again, nobody's getting shot in the head thank goodness. But it's a breakdown of the system.

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, Interview with Bill Moyers


"He prompts you what to say, and then listens to you, and praises you, and encourages you. He bids you mount aloft. He shows you how to become as gods. Then he laughs and jokes with you, and gets intimate with you; he takes your hand, and gets his fingers between yours, and grasps them, and then you are his."

John Henry Newman

Here is a must read piece about the current flavor of kool-aid being quaffed by the acolytes of the credibility trap in Washington and New York.   The Anti-Knowledge of the Elites.

It has never been more important in the twin power areas of foreign policy and finance. You must believe to be an insider.

The precious metals markets are becoming dangerously over-leveraged and unstable.  The cause of this is a conscious mispricing of risk that is being overlooked by the regulators because of who is doing it, and why.

We cannot maintain a sustainable economic system on a financial system grounded in the actions of a few, very powerful financial crime families and serial felons.

What are we thinking?  Why does this not bear discussion?   Why do we feel the need to distort our own realities to the point of our own destruction?

Gold and silver were hammered lower right on the release of the Non-Farm Payrolls report.  So needless to say we have still not seen any short term buy signals.

The number looked like an outlier to me based on a overly generous seasonal adjustment. If they had applied the same seasonality factor which they used last October the headline number would have been around 144,000.

There was one more business day in October last year, but jobs are not jars, and production of new jobs is not a linear daily function.

This is not to say that the NFP number was 'wrong' or even purposely fat in order to provide confidence to the markets and useful cover for the Fed.

Rather, these headline numbers for a single month are very noisy as we have discussed before. They get revised several times in the short term, and then often radically so in whole revisions that go back years.

This is why I like to look at the six and nine month moving averages for jobs to get a feeling for the trend. And the trend is still fairly sluggish.

But at the end of the day, the Fed wants to raise rates for all the reasons we have discussed, mostly having to do with their own policy mechanics.

And the financiers want to do what they wish to do, and they have their way for now. Winning.

As I suggested they might, JPM has transferred their recently acquired 'house account' gold from Nova Scotia's warehouse to their own as shown in the report below.

The Bucket Shop was otherwise quiet, with the usual slow bleed out of the silver warehouses.

The precious metals are still a relatively 'small tent.'  When they go mainstream, as I think that they will, I suspect that the metals will be as agnostic with regard to value, politics, and philosophy as any other form of wealth.

But perhaps not now, in these politically divisive times with the financial engineers and their courtiers in the ascendancy.  All the very serious player learn soon enough to serve the world, and the will to power.  They want to have access, connections, recognition, approval.

They sell themselves more cheaply than you might imagine.   Not for the world, but for position, the faint praises and approval of others and, above all, for the appearances of power.

Have a pleasant weekend.

SP 500 and NDX Futures Daily Charts - Huzzah!

Stocks went sideways today on the 'better than expected' Non-Farm Payrolls report.

Consumer Credit expanded more than expected as well.

Odds of a Fed rate hike in December went higher.

Have a pleasant weekend.