SP 500 and NDX March Futures Daily Charts - End of Month and January Indicator

The futures achieved a nice bounce off the big dip this morning to close the month on a positive note. As January goes, so goes the year, and it appears that we are in for eleven more months of clumsy price manipulation, central bank subsidies for their pals on the Street, and accounting fraud.

I might have been more impressed if the VIX had fallen more, if tech had followed more strongly instead of the usual SP futures wiseguy jam-boree, and if the stock touts were not out so aggressively and desperately banging their drums with the same old clichés to entice mom and pop to take the handoff here. Stocks are good for 10% per year, so just close your eyes and buy (now). That is what passes for financial wisdom on the extended informercial that is US financial television.

The divergence between the SP and the Russell is worth watching. The SP 500 tends to be a showpiece for the carnies to lure in the fish. And that divergence became a small chasm around mid-month and never really recovered.

Thin market, suseceptible to exogenous shocks. Maybe it will grind higher, but I do not like it. I put stocks shorts back on today on the late day strength after having taken down all my gains on Friday afternoon. These are balanced with a slightly different beta mix of some select longs in the precious metals sector.

Gold Daily and Silver Weekly Charts

Premiums for Physical Gold Bullion Bars Highest Since 2004 - Reuters

"Men judge more from appearances than from reality. All men have eyes, but few have the gift of insight." Niccolo Machiavelli

Quantitative Easing and Relative Asset Performance From 2008: Gold, Silver, SP 500, US Dollar

Note the extreme volatility in silver. It was actually underperforming gold until the short squeeze breakout began in the second half of 2010. It is quite possible that this short squeeze was triggered, at least in part, by the Fed's announcement of a second round of quantitative easing and the further debasement of the dollar. That second round was a signal of their monetary policy intentions. The Fed will print to the limit of the bond and the dollar in a de facto default on the debts. And this is what has China angry.

When it becomes clear that the Fed will be doing quantitative easing for quite some time, it will be progressively harder for the bully boys in the bullion banks to keep 'a lid on things,' with a wink and a nod from the regulators. And then it gets even more interesting to say the least.