Monday, May 20, 2013

Morning Charts 05/20/13

Wednesday the Bernank speaks. A plethora of speculation around ease on/off that began last week will continue till his testimony Wednesday. To cut to the chase 1) we all know they can never stop easing, and 2) well there is no 2 other than any such announcement will automatically trigger a massive sell off. There is no question that they have to stop, but they can't. Amazingly enough the overly dovish board appears to be turning a bit hawkish.

As for the budget talks, the joke rolls on as any sort of fiscal prudence would be political suicide to almost every politician in DC. Any budget noise here would be to distract from the AP, IRS and Benghazi issues.

I found this post interesting (especially since it was on CNBS) - Why This Week Could See the Start of Risk-off. It is a silly post on how the rising bond yields across the EU and instability in the region could be damaging to equity prices. I mean really, how can bonds effect equities? A 10% correction by June? "the "Draghi put" which was established in August 2012 when the euro-dollar exchange rate was at 1.21, is likely to virtually evaporate." Sarc on of course.

Maybe they are on to something? "The irrational game goes on based upon one thing and one thing only which is the creation of capital by all of the world's central banks.The money must go somewhere and so it does but the disconnect between the equity markets and bond yields from the real world is frightening." France? Most dangerous? The place where taxes on income can top 100% of income? Say it ain't so.

Silver has been a headliner recently. In this No Love for Precious Metals post on CNBS. It really is a worthless post adding little insight to anything with quotes like this from some dude named Shamu (no not the whale, but could beIMO), ""We feel silver weakness has been a liquidation trade as investors grow increasingly wary of precious metals and traders are forced to close positions to meet margin calls elsewhere," said Stan Shamu, strategist at trading firm IG Markets." That is complete horse crap and every reader here knows that.

Maybe Shamu's take was a kinder and gentler way of saying, "Not a moment after someone was slammed with a massive margin call following the hit of 102 USDJPY stops as we noted moments ago, was that same someone(s) forced to dump a whole lot of silver in thin, no volume trading taking out the entire bid stack on what can only be described as "get me the hell out and pay me anything" liquidation" which is the way TD at ZH put it. If anyone is wary of PM's it is the paper holders, surely not those holding physical. The only fear physical holders have now is of real theft, as in someone breaking in your home. A rash of breakins recently hit my neighborhood (same dudes have been prowling the southeast). What were they looking for? Real silver. They passed right over the plated crap and took only one thing - solid goblets and flatware.

Silver - Clear as day, the LT yellow support busted back in February and it has been all downhill since then forming the green channel down. Support area started here at $21.50 and runs down to the $18.50 area. Price could dip below that to find channel support. I'd be buying with both hands there. A backtest of the $27.50 area would be preferred, but the JPM shorts are gonna take this where they want it to go. Remember that this is a fictitious price quote as real physical on the street, if you can find any, is selling at quite the premium to paper. This in no way represents reality.

On to the markets-

Not much to discuss today or tomorrow as I suspect things go into hibernation waiting on the Bernank to speak Wednesday. If fear should be sparked, a long shot but possible, of a move away from easing things and this market will get interesting. Does the Fed test the waters and try and see just how nervous this market is? Friday had some really good charts in the post. Go check that out if you want more detail.

Daily SPX - When I look for targets, all the ones I see and really like are way down, like way down. More on that later if it becomes necessary. One would think this thing has to blow, but then again you must remember nothing is real and nothing has to happen at all. The markets are 100% controlled.

More to come below.

Have a good day

GL and GB!

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