Stocks and Precious Metals Charts - Because They Can - End of the Month

 

"First, an idea. The idea that capitalism, for all its considerable virtues, is inherently self-stabilizing, that government and private business are adversaries rather than partners; the idea that regulation, in financial matters especially, can be dispensed with. We tried it, and we see the result.

Second, a person. It would not be right to blame any single person for these events, but if I had to choose one to name it would be former Senator Phil Gramm.  I’d cite specifically the repeal of the Glass-Steagall Act—the Gramm-Leach-Bliley Act—in 1999, after which it took less than a decade to reproduce all the pathologies that Glass-Steagall had been enacted to deal with in 1933.

I’d also cite the Commodity Futures Modernization Act, slipped into an 11,000-page appropriations bill in December 2000 as Congress was adjourning following Bush v. Gore.  This measure deregulated energy futures trading, enabling Enron and legitimating credit-default swaps, and creating a massive vector for the transmission of financial risk throughout the global system.

Third, a policy. This was the abandonment of state responsibility for financial regulation... This abandonment was not subtle: The first head of the Office of Thrift Supervision in the George W. Bush administration came to a press conference on one occasion with a stack of copies of the Federal Register and a chainsaw. A chainsaw. The message was clear. And it led to the explosion of liars’ loans, neutron loans (which destroy people but leave buildings intact), and toxic waste. That these were terms of art in finance tells you what you need to know.

The consequence is a collapse of trust, a collapse of asset values, and a collapse of the financial system. That is what has happened, and what we have to deal with now."

James K. Galbraith, Causes of the Crisis, May 1, 2009


"The suspicions that the system is rigged in favor of the largest banks and their elites, so they play by their own set of rules to the disfavor of the taxpayers who funded their bailout, are true.   It really happened.   These suspicions are valid.”

Neil Barofsky, TARP Inspector General


"America is caught in a confidence or credibility trap, in which the changes, investigations, and reforms necessary to restore trust to an economy or market are rendered unlikely because doing so would expose a pervasive corruption that the principals fear would destroy any remaining trust.  It could also endanger the careers of politicians and business people who may have permitted and even appeared to facilitate the control fraud that caused the financial crisis in the first place.  Personal risk trumps public stewardship.

The fraudulent activity is covered up and therefore continues or at the very least appears to continue, crowding out most productive business investment and activity which cannot possibly hope to compete with the highly profitable fraudulent activity ad asset bubbles under such opaque and uncertain circumstances.  Informed market participants are unwilling to invest their liquid assets in a system which they suspect is riddled with accounting fraud, insider trading, and regulatory weaknesses, except of course in a few situations and somewhat ironically in some existing frauds, such as a bubble in equity valuations for example, which they think they understand.

The American government is indeed acting as if it is involved in a massive coverup of a control fraud and corruption that could perhaps be the worst in its history.   I think many people who are looking at this know in their hearts that all is not well, that there is something not quite right in the current situation.  How else can we explain such massive and widespread financial fraud, with so few meaningful indictments, or even ongoing investigations with credible disclosures?   And the worst perpetrators appear to be dictating the remedies and reforms to the system for this government sponsored recovery.

Jesse, 22 January 2011


"They worshiped the beast and asked, 'Who is like the beast? Who can stand against it?'”

Revelation 13:3

Stocks managed to hold their ground today despite another wide ranging day with some fairly impressive intraday declines.

VIX held support along its 50 DMA.

The Dollar apprciated slightly.

Gold and silver were hit, particularly in the latter part of the end.

And so the paint goes on for the end of the month.

Have a pleasant evening.

Memorial Day 2022

 

"But in a larger sense, we cannot dedicate, we cannot consecrate, we cannot hallow this ground. The brave men, living and dead who struggled here have consecrated it far above our poor power to add or detract. The world will little note nor long remember what we say here, but it can never forget what they did here.

It is for us the living rather to be dedicated here to the unfinished work which they who fought here have thus far so nobly advanced.  It is rather for us to be here dedicated to the great task remaining before us — that from these honored dead we take increased devotion to that cause for which they gave the last full measure of devotion — that we here highly resolve that these dead shall not have died in vain, that this nation under God shall have a new birth of freedom, and that government of the people, by the people, for the people shall not perish from the earth.”

Abraham Lincoln, Gettysburg Address, November 19, 1863


“Those who have long enjoyed such privileges as we enjoy forget in time that men have died to win them."

Franklin D. Roosevelt


“Every gun that is made, every warship launched, every rocket fired signifies in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed.  This world in arms is not spending money alone.  It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children.  This is not a way of life at all in any true sense.  Under the clouds of war, it is humanity hanging on a cross of iron.”

Dwight D. Eisenhower


"One of the common failings among honorable people is a failure to appreciate how thoroughly dishonorable some other people can be, and how dangerous it is to trust them."

Thomas Sowell


"The only way to smash this [war] racket is to conscript capital and industry and labor before the nations manhood can be conscripted.  One month before the Government can conscript the young men of the nation -- it must conscript capital and industry and labor.  Let the officers and the directors and the high-powered executives of our armament factories and our munitions makers and our shipbuilders and our airplane builders and the manufacturers of all the other things that provide profit in war time as well as the bankers and the speculators, be conscripted -- to get $30 a month, the same wage as the lads in the trenches get."

Major General Smedley Butler


"War against a foreign country only happens when the moneyed classes think they are going to profit from it."

George Orwell


"Wars do not usually result from just causes but from pretexts.  There probably never was a just cause why men should slaughter each other by wholesale, but there are such things as ambition, selfishness, folly, madness, in communities as in individuals, which become blind and bloodthirsty, not to be appeased save by havoc, and generally by the killing of somebody else than themselves. 

You don’t know the horrible aspects of war.   I’ve been through two wars and I know.  I’ve seen cities and homes in ashes.  I’ve seen thousands of men lying on the ground, their dead faces looking up at the skies.  Some of you young men think that war is all glamour and glory, but let me tell you, boys, it is all Hell."

William Tecumseh Sherman, address to the Michigan Military Academy, 19 June 1879

Stocks and Precious Metals Charts - Fearless, Into a Three Day Weekend - CrashTrak

 

"Bear market rallies, or 'relief rallies,' are sharp upward spikes in prices on the US equity markets.  They are fed by short covering.  Those who are short, or have positions based on the assumption that the stock market is going lower, are forced to buy stocks either from fear of losses, or because they are undercapitalized and overleveraged.  The leverage may be in terms of time (as in the case of stock options) or money (margin).

The bear market rally consists of a violent opening spike.  That spike will be up to the nearest strong overhead resistance as the short sellers panic.  Then the market will pull back, because there are no serious buyers yet to sustain the prices, and the early shorts have covered.  Also, insiders will begin to feed their dog stocks into the public markets.

The prices will pull back to the nearest support.  Once the bulls feel confident again, the buying will resume, this time more slowly as naive speculators begin to succumb to the 'good news.'  The highwater mark of the opening price spike will be a definite target for this secondary move higher.  Often the initial effort to find support fails, and the bullish sentiment will pull back and try to find stronger support from which to resume the price advance.

Very infrequently there is a 'failure to rally' and a failure to find support at a near support level.  Buyers (also known as 'the greater fool') are not to be found, and the dip buyers panic, and a freefall ensues.  This also can be quite breath-taking, as the insiders are selling not buying, and the small speculators are exhausted and starting to panic.  This is an uncommon event, but can be quite damaging if you are caught on the wrong side of it.  This is how we came up with the term 'chasing nickels on the freeway' to describe it.  Buying the dip in price in bull markets is easy money; buying the dip in bear markets is for gamblers.

The best way for most traders to play these markets is to stay out. The opportunity to be whipsawed is very high. Take a break. Go for a walk. The market will always be there. The greed of 'lost profits' pulls you back in, and then fear will take you out, on a stretcher if you are not careful. 

Controlling one's emotions in volatile markets is the primary challenge for experienced traders."

Jesse, Bear Market Rallies, 17 July 2008


US markets will be closed on Monday for Memorial Day observance. 

Stocks were in rally mode today, what looked like a proper bear market rally.

Considering we have seven weeks of weakness and declines as we *finally* set that second low we have to say that it's about time.

Now let's see if bully can keep the squeeze going, or not.

With the general risk on atmosphere, the Dollar and VIX were lower.

The VIX is now back down to its 50 DMA which has marked a support level in the recent past.

Gold and silver were trying to break out this morning, but were smacked down lower in the general exuberance. 

Next week may be pivotal.

For the rest of the world, try to carry on with US guidance on Monday.

Have a pleasant weekend.