SP 500 and NDX Futures Daily Charts - The Tension on the Tape - My 'Agenda'

'The wind in the wires made a tattle-tale sound
When the wave broke over the railing
And every man knew, as the captain did too
'Twas the witch of November come stealin.'

Gordon Lightfoot, The Wreck of the Edmund Fitzgerald

This nautical map of eastern Lake Superior shows how close the Edmund Fitzgerald was to the safety of Whitefish Bay in the lee of the north wind when it foundered.  It really was only about fifteen miles from safer waters.

Stocks were in an edgy trade today, as they continue to digest their outsized gains from the last month. The SP futures rallied, almost non-stop, from 1860 to 2110, where they failed, at least for now, to set a higher high.

The big questions are twofold.

First, are stocks and bonds being set up for a serious correction after a fairly impressive run higher in paper asset prices? And secondly, can the real economy continue to hold a weak pulse of recovery in the face of a much stronger dollar and increasing interest rates, even while the rest of the global economy continues to falter?

I do not have the answer to this, obviously. And hardly anyone else does as well, especially those who would sell their judgement on it to you. They might feel they have a good grasp of it, but the question then is why are they not putting their own money on it, rather than getting paid to watch you play yours on their opinion?

As the question arose elsewhere about this cafe, my 'agenda' here is to share my thoughts on the markets in the hopes of getting back more knowledge, and also to subject my thoughts to the rigor of the printed word. It is easy and rather sloppy just to think these things without committing them to paper, and public exposure.

The impedance of expressing thoughts in words gives them more substance, and also has the nice effect of introducing you to other peoples' thoughts on similar subjects.  Or just to find and converse with some very nice people who have the same interests.  Yes, you run across some sour apples, but at the end of the day, you learn that they are just fighting with themselves, and are not yet ready to let it go, whatever it is that compels them to be miserable.

I do not wish to have power or excessive money. Although my wife would like that because she would give it all away. Seriously.  My goal is to live a life 'hidden in God' in which I have 'enough' only because I need little, want less, and love more. That's it.

And I confess, and maybe I am just mostly talking out loud to chide myself as much as anything most of the time, that I feel a duty to remind all who believe as I do of the heart of the message of the Gospel, and not just the portions that are easy and convenient and flattering.

"If you love those who love you, what reward will you get? Are not even the money lenders doing that? And if you are kind only to your friends and family, what are you doing more than others? Do not even unbelievers do that? Be good, therefore, as your heavenly Father is good."

If I have any wish in the world, it is never to never hear these words below spoken, to myself, to any of mine, and to any of my friends. To anyone at all, if possible, but that may not be a realistic expectation.

"Lord, when did we see you hungry, or thirsty, or a stranger, or naked, or sick, or in prison, and did not provide help to you? Then he shall answer saying: 'Amen I say to you, as long as you did it not to one of the least of these, neither did you do it to me.'"

And more than anything, I do not wish to see my Lord weep for those whom he would gather to himself, as a hen would for her chicks.  What a heartbreak that must be for a loving father.

As Léon Bloy observed in La Femme Pauvre, 'that is the only real tragedy.'

Have a pleasant evening.

Gold Daily and Silver Weekly Charts - Check, Check, Check

Nyet! Nyet! No More! No! Not tonight! This son of bitch, all night he, 'Check. Check. Check.'

Teddy KGB, Rounders

Gold and silver largely marked time in place today, after the regular and rigorous pounding that they took for the last fifteen days or so, depending on how you wish to count the start of it.

The dollar seems very toppy and overbought at this point, and I have included its chart below as well.

It is a fallacy to say that the metals are declining because the dollar is moving higher.  Sometimes the metals and the dollar move inversely and sometimes they move together.  In this case they are clearly moving in opposite directions.

There were no deliveries to standing contracts in The Bucket Shop yesterday.  And the action in the metals warehouses was more of the usual 'weak leak' that seems to be the order of the day, at least this month.

We are seeing the kind of clumsy, puerile commentary about 'gold being stoopid' from the porcine auxiliary that often appears when there is a  kind of bottom developing here.

Or not.  When the dealer and the house are dealing from the bottom it is hard to predict what will happen next.

But at some point they will start to more visibly run out of chips, and will be called.  And then we will see what is thrown down on the table.

Until then we are waiting for a short term buying signal, and holding all the long term positions.

Patience and caution are our friends.  And time, given the steady flow of bullion from West to East.

And the propensity of these high-flying propeller heads to overplay their hands, and eventually come falling back to earth.

China calling. I think it's for you.  

And check.

Have a pleasant evening.

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.