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wndysrf

Unfilled Downside Gap

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The weak action in gold, which has slid about 9% since its year-to-date high on Feb. 5th, suggests that Al and the GSEs aren't pumping as much liquidity as the market wants. Or it's leaking into real estate prices instead of traded goods.

 

It seems like another lifetime when the central banks of the rich countries used to all pump at the same time, like a team of Clydesdales pulling the Budweiser wagon up a hill.

 

These days Uncle Al is limping up the road, Fukui-san is asleep at a cafe table, and Dim Wim is riding down the sidewalk on his bicycle, oblivious to both.

 

Does anyone smell a currency crisis coming this fall? Something is bound to happen to shake these functionaries out of their complacency. The Chinese and the middle eastern oil producers are getting restless about accumulating all that green funny money with the off-center pictures of old guys with long gray hair. I wouldn't trust that shit either.

Best bet is to dump toilet papers and buy the Chinese currency since it?s pegged any dislocation will favors the Chinese side.

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Good point feed. Has anybody considered the idea that china might be at it's zenith as well? After all if we stop buying all their shit and the EU does same whoare they going to export to? Just a thought for now.

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Machinehead:

 

The rate of acumulation of $ reserves in the Asian Countries is staggering. In fact all the liquidity created by Al ends there. This was the cause of the demise of Breton Woods.

How can they rebalance? If the buy Euros, Europe will complain. The only alternative, now as in the 70,s is gold.

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For those cheap seat stoolies. This guy has been good and he is free.

 

http://www.eldinril.com

 

He called for 985 as well.

For those of you that are expecting an OE rally, that last chart in his "Thoughts for the Week" seems to fit the bill.

 

I've got the same count, FWIW.

 

http://www.ttrader.com/mycharts/display.ph...=E-waves&id=571

 

Double top, my friends. No fear yet in the relative VIX.

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Tonight's Federal Reserve releases show that excess reserves in the banking system -- a shorthand indicator of Fed ease -- expanded to $2276 million, the highest figure in the table covering the past year.

 

M3 also popped a cool $63 bil to $8828 billion. The Fed discourages using these weekly figures, because they are volatile. Uncle Al prefers the sleekly smoothed 4-week and 13-week moving averages of the M's. They furnish the seductive illusion that the banking system is a well-tuned muscular machine, responding with nuanced alacrity to Al's maestro touch on the levers. If only it were so ....

 

The boss will be blowing back into town in a few days. And boy is he pissed. For one thing, Al's idiot nattering to the rubber-stamp parliamentarians this morning just cost some important campaign contributors 26 cents per thousand cubic feet on their revenues. But worse, we aren't creating any damned jobs.

 

Some folks whose opinions count are getting pretty damned annoyed at these effete PhD economists, who can't seem to spend their way out of a recession even with a printing press. Maybe a guillotine next to that press would light a fire under their skinny rumps.

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Since everyone else is taking and giving credit to other poodits all the time, here's what Doc wrote in YESTERDAY's intraday comments in the Anals.

 

1:30 After turning down following a 10:30 high, right on schedule and on cmap, the market made a 1 day cycle low around 12:00. Also no surprise to cycle followers. The up phase looks weak, consistent with downturns in the 3-5 day cycles and apparently the 8 day cycle as well. It's still too early to tell if these will be sideways down phases leading to another upleg, but I'd bet against it. Liquidity conditions are worsening and the boolish hysteria looks old and decrepit. The greater potential is to the downside so long as one uses protection.?

 

Start looking for a 5 hour cycle high around 2:30. It's due by 3:30. If it starts to break lower this afternoon, the 5 hour cycle is dominant, and it would confirm the downturn in the 8 day cycle. That should lead to a break below 1000 and an increase in boolish profit taking that would take the SPX down to the next shport level at 985. The alternative would have the 1 day cycle up phase carry into tomorrow AM. We'll need to watch the indicators closely for signs of a downturn in the 2:30-3:30 slot. The earlier the downside break, the more bearish it is.?

 

4:00Another day where an obedient market followed the cycles like clockwork. The PM up phase was a little stronger than expected but not enough to change anything. The 5 and 8 day cycles have topped out. The 5 hour cycle probably peaked in the last half hour. We should be alert for a 1 day cycle high by 10:30, although it's not a given that it will be higher than this afternoon's action. The next 5 hour cycle low is due anywhere form 10:30 to 12:00 tomorrow. This afternoon's up phase hit cmaps of 1006.25 to 1008.75 on the SPX and 32.45-32.52on the QQQ, as well as 5 day cmaps of 32.40 on the QQQ. They fell a little short of the 5 and 8 day cmaps of 1012-1015 on the SPX. That's bearish. Look for more downside over the next couple of days, with initial shport around 985 and  31.63 on the QQQueers.?

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M.H.,

 

You are one great writer.

 

Doc,

 

I mentioned you in my praise.

 

You get my $$$, they don't get anything extra. I love you man. :)

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Good point feed. Has anybody considered the idea that china might be at it's zenith as well? After all if we stop buying all their shit and the EU does same who are they going to export to? Just a thought for now.

 

Try Japan and the rest of Asia, including India.

 

Also, going by the measure of population, China has an internal market larger than the US, the EU, and Japan combined.

 

While coastal China is well advanced, the further west one goes, the further the development lags. Lots of room for improvement.

 

Btw, China exports value-added manufactured goods to the US. The shit goes the other way.

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M.H.,

 

You are one great writer.

T. E.

 

You are one great rocker. Your lyrics have expanded my musical horizons.

 

Someday there will be a Stool Woodstock. :)

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Sold half my puts this afternoon, took the profits and added to BGO...now LARGE positions in GG, WHT, and BGO. Stoolies remember the gold bull is just getting started, forget the day to day noise and hop on the train. Check out any long term chart of the above miners ...you will like what you see. Bullish trend reversal last week on most of the pm's WEEKLY charts...jump on soon before its too late. Also closed mxim short today for a pt, was fairly solid actor for a down day...keeping some coin free for the short opp of the year next week!

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The weak action in gold, which has slid about 9% since its year-to-date high on Feb. 5th, suggests that Al and the GSEs aren't pumping as much liquidity as the market wants. Or it's leaking into real estate prices instead of traded goods.

I think a lot of gold investors don't understand that if the Fed prints up 20% more dollars every year, the dollar is weakening relative to gold.... REGARDLESS of how many Yen and Euros are printed. Many people hear that the dollar is strengthening, so they sell or short gold. It's going to take years to get gold up to $1000, IMHO.

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