SP 500 and NDX Futures Daily Chart - Zynga Pops 'n Flops on the Quad Witch

Today was a quad witching day and the SP and Russell are also re-balancing after the bell. So much of the volume today is back end loaded.

Zynga popped at 11 and flopped below its IPO price of 10. Not exactly bullish for US equities.

See you Sunday evening.

Gold Daily Chart - Gold Rally and Decline Tracks Chart Formation From First Half of Year

This formation, if activated and valid, would target gold to a much higher level than the previous high.

Let's see how this develops. I will be tracking both this and my normal scenario obviously. Both are bullish but this alternative view promises a wilder ride.

The similarity between the big accumulation-liquidation cycle and the previous cycle from March to July is remarkable in many details.

That does not necessarily mean that the next move will be of the same magnitude. But if that pattern holds we get a target of between $2,800 and $3,000 for the next leg up.

I would wait for this to unfold therefore and strongly advise that you not try to get ahead of it.   Any successful trader would gladly give up the first ten percent of the next bull move to wait for confirmation to make sure, as Bernard Baruch used to say among others.   The first level of key resistance is $1620.

Once the current decline is over and the positions have been liquidated, market participants will be sitting on their piles of paper in fear and trembling of what comes next. And 'what comes next' is the key variable.  Will it be a continuation of this pattern, or a repetition of a series of formations in complete recycle?

That is hard to see now, and what might provoke it. Will it be a major quantitative easing in the dollar and euro, or a further liquidation and collapse in the banks and stock markets?

I would prefer a measured bull market move higher, but we must carefully observe and accommodate the changes in the structure of world currencies and the evolution of what we call 'money.'

This is a major engagement in what we have come to call The Currency Wars.

Gold Daily and Silver Weekly Charts - A Market of Pros and Schmoes, With Investors Sidelined

Hermes: 'Alas?' This word of regret the mighty Zeus does not understand.

Prometheus: Time in its aging course teaches all.


Aeschylus, Prometheus Bound

I liked the silver action a bit today, and added back some protective stock index hedges to cover a dalliance into the beaten down silver and gold miners, while adding to the existing bullion positions as well.

This market is as phony as a politician's promise and a banker's smile. The best sector play for most people is 'out.' The further away from Wall Street your money is the better.

The children come home from school for the holidays today, so no more expansive updates tonite. Too busy preparing the fatted calf and all that.

Tomorrow is the Zynga IPO and the Street wants to feed it out to the market which these days is mostly pros and schmoes (daytraders) who flip shares to each other like an egg-tossing contest.

The MF Global story continues to grow more noisome each day.

Watch the action into the weekend. I remain highly defensive in mostly long term holdings, cash, and hedged trading positions.

SP 500 and NDX Futures Daily Charts

UK Public 'the Worst Off' of the developed G7 Countries With 4.5% Negative Interest Rates

Perhaps this is why the western Central Banks are so determined to prevent the price of gold from breaking out, and keep putting out disinformation from within a cloak of secrecy about their inflationary policies and money creation.

Negative real interest rates are very bullish for gold, and highly corrosive to the ordinary savings of those who lack the sophisticated financial instruments to otherwise protect themselves.

...Negative real interest rates occur when the inflationary rate, or CPI, is greater than the current interest rate. A quick account of the G-7 and E-7 countries shows that the majority have negative real interest rates.

Across the developed G-7 countries, British citizens are the worst off with real interest rates in the U.K. sitting at negative 4.5 percent. U.S investors aren’t doing much better with rates at negative 3.25 percent and the Fed has all but guaranteed rates will remain there. Only Japan has a positive real interest rate among the G-7 and that rate is barely above zero.

Conversely, the most populous nations making up the E-7 have mostly positive real interest rates. However, the grouping’s grandest economic powerhouses, China and India, have negative real interest rates sitting around negative 2 percent.

Frank Holmes, Central Bank Appetite And The Monetary Case For $10,000 Gold, Forbes

NY Fed Granted MF Global Primary Dealer Status Despite Concerns and Lack of Due Diligence

So how persistent was Jon Corleone in that private meeting?

Confidence begins with honesty, a sense of fairness, and respect for justice. Not just the letter of the law, but the spirit of the law as well.

"If we desire respect for the law, we must first make the law respectable...Our government teaches the whole people by its example. If the government becomes the lawbreaker, it breeds contempt for law; it invites every man to become a law unto himself; it invites anarchy."

Louis D. Brandeis

If the patience and trust of the American people was a checkbook, you could mark it 'Account Overdrawn.' This is something that the monied interests and their Beltway bandits just do not yet comprehend. Or perhaps they do, but do not have enough respect for the people to care.

Wouldn't it be a hoot if someone outré was elected President and went Andy Jackson on their pampered posteriors? I wonder if Ron Paul has it in him to be greater than himself, the leader of the whole nation and not a narrow slice of ideologues.  All the rest look like conmen, cranks, and stooges.

Reuters
A persistent MF Global won NY Fed dealer status
By Sarah N. Lynch
Wed Dec 14, 2011 8:36pm EST

(Reuters) - Now bankrupt MF Global lobbied the New York Federal Reserve heavily to become a primary dealer, eventually succeeding after a delay sparked by a regulator flagging internal control problems.

Thomas Baxter, the New York Fed's general counsel, revealed the regulator's behind-the-scenes dealings with the futures brokerage, including a personal meeting with former MF Global chief Jon Corzine, in testimony prepared for a congressional hearing on Thursday.

The Fed delayed approving MF Global's application for primary dealer status after the Commodity Futures Trading Commission warned the Fed in April 2009 it had uncovered major compliance issues.

Primary dealers are the financial firms authorized to deal directly with the government to help carry out monetary policy and distribute U.S. debt.

MF Global was eventually given primary dealer status in February of this year. Fed Chairman Ben Bernanke has previously said it did not constitute a "seal of approval."

Baxter is expected to face questions at Thursday's hearing by the House Financial Services oversight subcommittee about whether the Fed overlooked problems with the firm.

"We also have concerns with the apparent lack of due diligence conducted by the Federal Reserve Bank of New York in bestowing its primary dealer designation on MF Global - even as the firm consistently lost money," panel chairman Randy Neugebauer said in a prepared opening statement....

CFTC's Sommers: "We Know Where the Customer Money Went"

Ok, Jill, spill.  Don't bogart the 411 and go all Federal Reserve on us.

Where did it go, and when do the customers get it back?

Or do we have to wait until the dirty laundry comes out of the spin cycle?

And how come Bart Chilton says you DON'T know where all the money went?

Oh and if you find that missing money, can you also check and see where the investigation into manipulation in the silver market went? It seems especially timely this week.

Here is my guess.

Reuters India
Regulators know where MF Global funds went
By Christopher Doering
Thu Dec 15, 2011 7:05am IST

(Reuters) - U.S. regulators now have a more complete picture of money transfers in the final days of bankrupt brokerage MF Global, but must sort out which transactions were legitimate before more money can be released to customers, a top official told Reuters on Wednesday.

Jill Sommers, who is heading the Commodity Futures Trading Commission's review of MF Global, said regulators "are far enough along the trail" that they know where the money went.

"Now it's just finding out which ones of those transactions are legitimate and which ones of them are illegitimate," Sommers said.

The CFTC and the trustee liquidating the firm are under intense pressure from lawmakers and customers to provide answers about what happened to hundreds of millions of dollars in customer money that went missing as the firm collapsed.

MF Global officials, including former Chief Executive Jon Corzine, have told lawmakers they simply do not know where the money is, and deny authorizing any misuse of customer money.

"We certainly don't want to lead anyone to believe we don't know what happened. We do know, and we see where all the transactions went," said Sommers, a Republican commissioner, in an interview on Wednesday.

She declined to reveal details on the fund transfers until investigators have determined the purpose of all the transactions. Sommers could not estimate when regulators will complete their investigation, but said "really good progress" is being made.

Fellow CFTC Commissioner Bart Chilton, a Democrat, tempered expectations. Chilton said in a statement after Sommers' remarks were published that a thorough accounting of all customer funds remains a work in progress.

"Based upon the most up-to-date information available, I do not have confidence that we know where all the money went," Chilton said.   (Hello?  Are these guys playing for the same team? Did Bart forget to pay for a premium subscription to intra-office memos? - Jesse)

MF Global filed for bankruptcy on October 31 after it was forced to reveal that it had made a $6.3 billion bet on European sovereign debt, spooking investors and customers.

The ensuing search for missing money has sent reverberations through the farm belt and trading floors, and has attracted the attention of the FBI and federal prosecutors.

A trustee liquidating the firm has estimated the shortfall could be as high as $1.2 billion...

Chicago Sun-Times
Regulator: We know where MF Global cash went
By David Roeder
December 14, 2011 6:18PM

The investigation into the collapse of MF Global and its estimated $1.2 billion shortfall has narrowed to a key question: Were any transfers of customer money the firm conducted in its waning days legitimate?

The main U.S. regulator of the brokerage knows where the missing money went and now is trying to determine if the transfers were proper, a top official told the Reuters news agency Wednesday.

Jill Sommers, a member of the Commodity Futures Trading Commission who is heading the agency’s probe, told Reuters, “We are far enough along the trail that we know where all the money went.”

She also was reported to say, “We certainly don’t want anyone to believe that we don’t know what happened. We do know, and we see where all the transactions went.”

Her comments came one day after surprise testimony from the executive chairman of CME Group Inc. provided evidence that Jon Corzine, former MF Global chairman, knew about the transfers from customer accounts. In his own testimony, Corzine has denied ordering anyone to “misuse” customer money....

Gold Daily and Silver Weekly Charts

The US Dollar continued to benefit today from weakness in the euro.

Gold was hit hard, and silver confirmed the breakdown in a determined bear raid.

Intraday commentary on the metals here.

The long bullion - short stocks paired trade continued to work today. I added some metal positions during the battering. And I took off the short hedges, but I may put them back on depending on how things go.

Jim Sinclair had some interesting comments on the gold trade at King World News today.