What is a proper disposition towards life? It is to accept God as a loving father, who is full of tenderness and forgiveness for us, despite our willful blunders and hardened hearts. He yearns for us, as a father and mother yearn for the return of their most beloved child. It is to accept that we are not lost, we are not abandoned. We are wandering like a wayward child, full of our own headstrong delusions. And our father waits expectantly, calling out for us through the darkness. Jesse, 2018
"MIT and Wharton and University of Chicago created the financial engineering instruments which, like Samson and Delilah, blinded every CEO. They didn't realize the kind of leverage they were doing and they didn't understand when they were really creating a real profit or a fictitious one."
Paul Samuelson
The precious metals were remarkably quiet again at The Bucket Shop®.
There were no gold contracts taken, and although there were 242 silver contracts stopped, customer to customer, which is much more than we have seen so far in this off month for silver, I don't see any particular significance to it. Sometimes some metals sites do go overboard with trumpeting these little jiggles. Maybe something is there, but not that we can see yet.
There was intraday commentary last night about the setup for a short squeeze in the metals titled Spec Flambe. I do think that we will see more about this, and I will be watching the Commitments of Traders composition a bit more carefully for the next few weeks.
It is unusual for the private speculators to be so short this market, and it generally gives the commercials, the professional market makers and takers, to give them a bit of a run.
I suspect today was a lot of gold bulls taking profits ahead of the weekend. Profits have been so scarce that one can hardly blame them.
I have included the economic calendar for next week below. GDP seem to be the biggest thing.
We will have a precious metals option expiration on Wednesday the 26th which may be more of a thing for silver than for gold.
We had a nice rally off an oversold bottom this week. Follow through is everything, so eyes on next week.
It is hard to believe that the end of Summer is nearly in sight, and the harvest time. We will be reaping what we have sown soon enough.
Please try to remember the poor, and those who have none to care for them. And for each other, in our daily thoughts and prayers. Life can be hard for everyone, but particularly for those who are burdened by the emptiness of their own hardened hearts, broken by disappointment, and lost in a misunderstanding of what it is to be human and to love. Theirs is the greatest poverty of all.
For those who are caught in a time warp of the recent present, what we are seeing in US equities is known as a 'ten percent correction.'
We have not seen one of those ever since the Fed decided to inflate financial paper three or more years ago.
The selling in Europe continued over into the US sessions, and once support was broken it seemed to be just a matter of how much downside traders could tolerate while bailing out of positions ahead of the weekend.
VIX spiked up to a high we have not seen since last October.
I am somewhat pleased that I was determined enough to carry those low points for so long on the charts, along with their trendlines, because they proved to be very handy. I have extended them on the updated charts below.
We also see an actual chart formation work on a chart. We have not seen that since the Fed started playing with the markets in quite some time. Stock broke down out of a nicely formed symmetrical triangle formation, a topping formation as I have noted previously.
What was nice about it from a chartist's perspective is that the formations called out a target price very close to a 'ten percent correction' which I have also marked on the charts.
These are charts of the futures markets. The actual numbers may be slightly different on the cash indices.
We hit it almost on the nose with the NDX, which as you may recall led the way up, and so led the way back down again, with its narrow concentration of playable names that the players played.
The SP 500 futures have a little way yet to go, if they are indeed going to hit an even ten. But they are close enough for wet work on the Street.
And do not forget that today was an option expiration that helped to add some spice to the grift.
Now we are at the bottom, or near the bottom, of a long term trend channel. So a bounce of some sort next week, after perhaps a little more malingering here, might be expected.
One of the most ominous formations to watch going into the September-October timeframe is a market break followed by a rally back up that nears but does not exceed the highs, and then fails, badly. If we see that a cascade lower may follow.
It might be tougher than I even imagined for the Fed to ignore the real economy and raise rates off the zero bound in September, and perhaps even December, but they would certainly like to do so. And it would be very dramatic if they tried to pump asset prices back up to give themselves cover, and then the markets failed after the rate hike, as in the scenario described above. Policy error, par excellence.
What do you get when you add the volatile sauce of a 'flight to safety' to the hot pan of a record net short in the large and small speculators?
A short squeeze, also known as speculator flambé.
They probably caught a lot of the other peoples' money crowd as well, momentum players and the managed mayhem merchants.
But don't blame the poor beleagured goldbugs for this one. They are just glad for a break from the pounding they have been taking.
It requires some 'juice' to get the minions in the media and the pros on the exchanges to all dance to the same tune, and lure the specs in for 'Pee Wee's Big Adventure' with their Big Bad Short, not only on the metals, but the miners, the ETFs, yada yada.
Finger lickin' good.
A lot of cool money, and a lot of powerful connections. The grifters giveth to themselves, and the grifters taketh away, from everyone else.
Official reports will no doubt cite an excess of animal spirits in the bearish outlook that took them to an excess, and the markets, in their glorious efficiency, were merely reverting to the mean.
That might be plausible except that it took a lot of energy to drive the futures prices as low as they had gone, starting with that $50 overnight mugging in the quiet early hours of the gold markes few weeks ago. No one sees Mackie Messer, and no one knows.
Especially with China dragging gold in by the tonne. About 302 of them in July according to the second chart below. Nothing to see there, move along.
No one wants a pet rock, until you have to provide the one you sold but didn't have.
And lets not forget about silver. That's in chart three. Plenty of tinder for a short squeeze there.
Or a bonfire of the inanities.
Let's see how far it goes. Is it just a flash in the pan, or the first act in something different.
Must be nearly time to tighten up those margin requirements.
Gold and silver got legs today in what was clearly a 'flight to safety' led by gold to the upside.
The US dollar sold off, in a bit of a twist from its usual role as a haven, and helped the price of the gold-dollar cross.
Pet rocks. Who would have thought it?
The metals have a distance to go yet, as is clear from the charts, before they clear the bearish shoals into more bullish waters.
There was no delivery action yesterday at The Bucket Shop® . What a surprise.
And there was little enough activity in their 'stockpiles of bullion' as noted below in the reports.
There is still room for caution as the paper markets have not suddenly become transparent or honest, or tied closely to the physical supply and demand markets in the East.
And this bear market has taken its toll, along with the steady drumbeat of drivel from the usual sources. It is sad that so many who had ever dared to see the obvious have been pushed into despair and silent obscurity and given up.
But some are bound to keep on riding. And the road goes on forever.
"...The broken wall, the burning roof and tower,
And Agamemnon dead."
W. B. Yeats, Leda and the Swan
North and South Korea were exchanging live artillery rounds over their troubled border today.
And US equities were in a Daedalian swoon, falling through support lines on the charts as if they were merely insubstantial constructs.
Surprisingly to some, so far this is just a stiff rinse, certainly to be expected to clear the floor after this choppy back and forth action. What else is there to do after the long run up for the past few years on the back of the policy errors and malinvestments of the Banking system and their Fed.
The next moves if they go lower still will be much more significant. And we will have to wait for that.
This is where charts prove helpful. You can clearly see the big, big support on the SP futures chart below at about 2030. Even if we should gap lower tomorrow, it only really counts if we break that support and stick it on the weekly close, and fail to recover that support next week.
There is a similar position on the NDX futures chart, which is the key confirmation factor since the Nas has led the way up with a narrowing phalanx of big tech names that provided a fairway for the momentum players. The key support there is at 4340, about another 30 points lower.
At some point I expect the Fed to jawbone the markets in some manner, with the designated stooge of the day saying something essentially meaningless, but perhaps sufficient to 'whistle up a wind' in the windiness of the markets which they have blown into being.
If we break down further still, it may be a long, long time until September, and the stormy season in which the denizens of market crashes past tend to dwell. The deadliest pattern is a market break and then a rally back up that fails to make a new high. And then when it falls, enter the abyss.
So I would be quite careful in chasing anything here, up or down. Our markets are like the words of our politicians and economists: it is hard to be too cynical or too skeptical about their substance and veracity.
But if we should see a more serious break in the markets, and trouble and fear in the economy, then what rough beast, its hour come round at last, may slouch towards the November elections next year to be born?
Let us pray for those whose hearts are hardened against His grace and loving kindness by greed, fear, and pride, and the seductive illusion and crushing isolation of evil.
We pray that we all may experience the three great gifts of our Lord's suffering and triumph: repentance, forgiveness, and thankfulness. And in so doing, may we obtain abundant life, and with it the peace that surpasses all understanding.
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