GLD SLV $DXY

Dollar gapped up a few days ago and is testing its upper channel, looking for this to be faded by the currency technicians, should give the metals, energy, and softs etc a boost (much needed boost). Look for that gap to fill and test the lower end of range by middle of next week.

Barely hanging on here at some minor support levels seem to be stock in a channel since the highs of November remains to be seen where we go from here, don't think things are any better out there, no fundamental changes in the economy so remaining long buy back around 128-130 range. 

Silver keeps getting sold off it sure looks like the big volume sell off is yet to come. This low volume selling may be a fake out to suck people in before they really blast the longs. 50dma in sight lets keep an eye on this key level and see how people react. There has been good physical buying as silver prices have come down, same goes for gold.

Thursday's Recap: A look inside the market

Stock futures continued to work higher Thursday morning as most of the foreign markets were up and expectations for a strong Nonfarm Payroll number today. The Labor Department reported that initial claims for unemployment insurance for the week ending January 1 rose by 18,000 to 409K. The week’s total was just above the consensus for a reading of 406K. Continuing Claims for unemployment for the week ending December 25 were above consensus at 4.103M vs. expectations for 4.057M and last week’s revised (higher) 4.115M. These unemployment numbers took a lot of steam out of the futures.

The session began without any significant gap and traded sideways in a two point range for 45 minutes before making a four point move higher and putting the high of the day on the chart at 10:39. For about half an hour bears (remember them?) took control of the tape and moved the index down eight points putting the low of the day on the chart at 11:08. That ended the excitement as the index then proceeded to trade within tight two point range for a couple of hours before gently ramping higher before 2pm. But sellers again appeared and took the index down five points during the 2pm hour. The final hour was a bit bumpy but as we have seen so often recently, dip buyers were on the scene to hold the index from falling.

For the SPX Index there were 200 components advancing and 283 components declining. On the NYSE 3,136 issues were traded with 1,211 advancing issues and 1,837 retreating issues, a ratio of 1.52 to one declining. There were 199 new highs and 6 new lows. The five day moving average of New Highs is 178 while the five day moving average of New Lows is 6 and the ten day moving average of Net Advancing is 189.
 
Declining volume was higher at a ratio of 2.04 to one. The closing TRIN was 1.34 and the final tick was 328. The five day average of TRIN is .89 and the ten day average of TRIN is 1.01. The NYSE Composite Index lost -0.48% today while the SPX lost -0.21%.
 
For the NYSE, relative to the previous 30 session average, volume was 15.52% above the average. Of the last 15 sessions 5 sessions ended with volume greater than the previous rolling 30 day average volume. Of the last 30 sessions, 19 sessions ended on a positive tick, 5 of last 10. For the SPX, the day's volume was 105.9% of the average daily volume for the last year. Volume was 174.2% of the last 10 day average and 102.9% of the previous day’s volume.
 
We see this pattern yet again: Today’s market breadth was more negative than yesterday’s was positive yet yesterday gained more than twice as many points as today lost. This is a symptom of a market ready to decline. And look at the broad NYSE Composite index losing more than double what the SPX lost today.
 
Total tick for the day was -121,000 and the average tick for the day was -78. There were 15 ticks greater than 600 and 96 ticks more extreme than -600. There were no ticks greater than 1000 and 7 ticks more extreme than -1000. The tick action suggests institutional distribution.
 
Volume today dropped significantly midday after a spike upward during the late morning selling spree. Volume then spiked again with the 3pm selling. Looking at the Nightly Breadth indicators its interesting because the McClellan Oscillator quickly fell below zero. Remember how long it took to climb above zero early in December? 
 

Metals Bonds $DXY

Dollar has had over a 1.5%  move against major currencies as people seem to think that all is well in the US or getting better. The ADP report and other recent economic reports have people dumping the Euro and Yen and piling in to Dollar. I think this move ends today or doesn't go beyond the 81 mark. The 150dma shows that the dollar is in a continued bear market phase and until the 150 starts to slope upwards and the price is above that mark it will stay in bear mode.

The weekly chart clearly shows people were dumping the dollar since may and it fell hard week after week till the euro crisis started to unfold. DXY attempted a rally to the 150dma in July and failed and we are once again rallying to that level. This is going to important level especially if you are long the CCI/Metals. 

As I mentioned yesterday that the technicals will win in the short-term as the retail investors level of handling short-term pain or pain threshold so to speak is low at the moment. The FED and its cronies like JPM have deep pockets and they have been manipulating the currency, bond and metals market especially silver. Silver is down big this week as is Gold and major technical damage has been done to the metals. Gold is below its 50dma for the first time in months and it has various levels of support, I expect it to trade down to its major level of support at the 50dma where the strong hands will load up the truck once again. So no new buys until then or if GLD holds recent level and builds a base over the next month or so would give the investor time to come in and build a position. 

Silver has been just hammered in the last three days, its violated the 20dma for the first time since its breakout a few months ago and even as it rallied hard off the lows yesterday I remain skeptical in that bounce. The only positive note I can make on this sell-off is the low volume, if you look at the previous sell-off's the volume was much higher. Not sure what it means when the most chart damage has been down on lowest volume. I have to look that up. Next level of support 27.20, hope we don't see that any time soon but I fear we will. 

The Long bond fell over two percent yesterday an is firmly in the grips of a strong downward trend channel, you can see how the 20dma steadily has declined crossing below 50, 150 and 200dma's. The 150 is just beginning to turn down. This is telling me that there is a long way to go (lower) in the long bond. Long TBT!

Wednesday Recap: A Look Inside the market

This is a head scratcher! Sell-off what sell off, over bought who cares, technicals don't matter right now
so I surrender, not going to try and predict whats happening here.

Stock futures were following European markets lower in response to a poor auction in Portugal and continued strength in the dollar. However, things picked up a bit in response to the report from ADP. ADP reported that the private sector job market expanded again during the month of December. The report shows that private sector jobs rose by 297K jobs during the month, which was well above the consensus expectations for a gain of about 107K. November’s report was revised lower to a gain of 92,000 jobs, up from the initial report of +93K.

The session began with a modest two point gap lower and quickly moved three more points downward to put the low of the day on the chart just two minutes after the open. The dip buyers quickly arrived to begin to run the tape higher; from noon through 3pm the index traded sideways within a two point range as momentum died and sellers were already absent. The closing hour briefly broke above that two point range by a quarter point but even that was a brief excursion putting the high of the session on the chart at 3:14.

For the SPX Index there were 313 components advancing and 169 components declining. On the NYSE 3,130 issues were traded with 1,821 advancing issues and 1,231 retreating issues, a ratio of 1.48 to one advancing. There were 176 new highs and 9 new lows. The five day moving average of New Highs is 179 while the five day moving average of New Lows is 6 and the ten day moving average of Net Advancing is 321. The Net Advancing data indicates a bullish trend.
 
Advancing volume was higher at a ratio of 2.37 to one. The closing TRIN was 0.62 and the final tick was 879. The five day average of TRIN is .86 and the ten day average of TRIN is .98. The NYSE Composite Index gained 0.22% today while the SPX gained 0.5%.
 
For the NYSE, relative to the previous 30 session average, volume was 10.4% above the average. Of the last 15 sessions 5 sessions ended with volume greater than the previous rolling 30 day average volume. Of the last 30 sessions, 18 sessions ended on a positive tick, 5 of last 10. For the SPX, the day's volume was 104.2% of the average daily volume for the last year. Volume was 178.9% of the last 10 day average and 105% of the previous day’s volume.
 
Breadth was reasonably strong today. But New Highs continue to be rather weak for a time when the indices are continuously putting up 52 week highs. Yet it is what it is, for now the bulls are having their way. There are two or three of these extended no-pullbacks-allowed periods every decade and this is one.
 
Total tick for the day was 143,000 and the average tick for the day was 92. There were 60 ticks greater than 600 and 1 ticks more extreme than -600. There were no ticks greater than 1000 and no ticks more extreme than -1000. The tick action suggests institutional accumulation.
 
The Nightly Breadth Indicators have a bullish look to them tonight but we can't escape the fact that market breadth continues to not be as strong as it should be at 52 week highs. For now, this means little. But if and when a pullback should begin, the weakness in the market breadth could come to the front and make any pullback sharp and quick, probably down to 1220, its going to take some sort of event.

Metals and other commodities sell off

Gold and silver are starting off the New Year with a sell off, from what I am reading is that many professional traders expected this move but were looking for it between Xmas and new year when in fact at that time gold and silver rose and silver down right soared. This is an expected pull back from overbought levels and is extremely healthy to shake out the weak hands in the first few weeks of the year there is also re-jiggering by funds and some new shorts are seemingly being emboldened by the theory that the economy is actually improving. 

Some of this is rebalancing associated to the changes in the commodity indices that but there is definitely a bit more to it than that. For whatever the reason, commodities are experiencing a general wave of selling today after the CCI went on to make yet another all time high yesterday. It’s not just gold and silver; crude oil, the grains, the meats, etc, all are seeing a wave of selling as the algorithms trip into the sell mode for the time being. We’ll just have to wait and see where the buyers surface in the sector. The “buy commodity” strategy will be in effect as long as the FOMC does not change monetary policy or scale back its QE2 program which based on today’s release of their minutes, suggests is not going to happen anytime soon see article previous post.

Silver needs to find enough buying support to climb back above the $30 level to cement that as a base and prepare it for a leg higher right now it has found support at the 20dma and this has been a great support area since 8/10, failure to hold it will cause a drop to next support at 28.45 to 28.65 area. I wouldn't like to see it any lower than that or I will have to sell out and reevaluate at that point.  

Gold is sitting right on the 50 day moving average which has been a great area of support since 8/10 as well. In the bullish scenario it needs to hold this and climb back above $1400 to give the gold bulls some momentum for another push to $1420. I would not like to see gold get a close below $1380 as that would lead to a deeper setback towards $1365 area. 

Momentum has been declining in gold which has been making a series of lower highs as the price has moved up this is disconcerting and something I am watching closely as I am sure are the hedge fund guys who are all about MoMo. From what I am reading the physical buyers of gold are still buying and they would prefer cheaper prices for entry. As we all know this is a small market and is far easier to manipulate than the SPX.

Yesterday I read that the US debt topped $14 Trillion which has got to make you wonder what people are talking about when they say the economy is improving. 

I heard on CNBC, "that as long as there is demand for US Treasuries, it shows that the US can continue to run these deficits because it is obviously not hurting demand for our IOU’s". 

But they don't tell you that most of the demand is coming from the Fed itself. Taking money from Peter to pay Paul. ARE THEY OUTTA THEIR MINDS. The current crop of financial talking heads seem to think that being a creditor is a curse while being a debtor is a blessing. I must have missed something back in COMMON SENSE SCHOOL (Since I didn't go to business school).Continue to short the bond market.

All the interviews heard and articles i read from people like Robin Griffiths, Jim Rogers, , Jim Rickard's and countless others remind me technicals win in the short run but fundamental realities always win in the long run – always. I have to keep in mind that the Fed has powerful allies (REALLY DEEP POCKETS) on its side –  those who want to do business with it. There are lot of people who want the current policies to continue, why because they are making loads of money from them what else and these are the very people we have to contend with in the markets. To be successful as a long term investor (Know your opponent/enemy), I have to recognize the fact that they will bully and push markets wherever they want, they can push pain a lot longer than I can stand it.  

I have to exercise price discipline, have exact entry and exit points, take profits on the way up and then add at support levels. Set stops below the new entries, be vigilant. This ain't 1980-2000 (reference to US equity bull market) and you just cant buy and hold, because even in this current 10 year Gold bull market that has seen gold go from 300 to 1400 hundred plus we have had long periods weeks where it looked like the end of the bull. 

"All men can see these tactics whereby I conquer, but what none can see is the strategy out of which victory is evolved." -Sun Tzu

QE Not working! REALLY ?!?

WASHINGTON (AP) -- Federal Reserve officials stuck with the pace of their $600 billion Treasury bond-buying program last month because the economy wasn't improving fast enough to make a noticeable dent in unemployment.

Spending by consumers and businesses had improved heading into the final month of 2010, and Congress was on the verge of enacting a tax-cut package that would bolster the economy, Fed officials said. That made them more confident the economic recovery would gain momentum, according to minutes of the Fed's closed door meeting on Dec. 14.

Risks still loomed, the minutes said, particularly a weak housing market and spending cuts and layoffs from state and local governments. So the Fed voted 10-1 to stick with its plan to buy the bonds through June to try to lower interest rates, spur spending and lift stock prices. Read more http://finance.yahoo.com/news/Fed-minutes-Economy-needs-apf-1790712586.html?x=0&sec=topStories&pos=6&asset=&ccode=

2011 Predictions

Well, last year the SPX closed 12% higher than the year before but commodities like silver up 77% (SLV), gold 35% (GLD) and coal (KOL) 29% . Other outperforming sectors were the Industrials (XLI) 24%  , retailers (XRT) 35% and consumer discretionary (XLY) 25%,  and there are many other like crude oil and oil services (OIH), Agriculture (DBA, MOO), Soft commodities like sugar, cotton, and rice were up smartly in 2010. Under performers, included Financials, regional banks, bonds and healthcare to name a few. The US Dollar ETF (UUP) was only down 0.7% against other currencies, and we still had a huge move in commodities and stocks.

QE TO INFINITY: As I have been writing for a few weeks now the  FED's plan is not working. So why would they stop printing money. Lets take a look at their goals, they want to keep long end (yield curve) rates low, but they are rising.

• They want housing market to stabilize and grow, not happening.

• Job growth not happening.

• Prevent deflation (what deflation), what about inflation (reference CCI)? 

• Promote business lending not happening.

• Direct results of QE: Promote gains in the stock market (happening) and give people sense of improved wealth.

• Promote consumer spending, happening.

• Dollar debasement and subsequent loss of bond holder confidence. Leading to debt default/ economic crisis. (TBT)
• All these will go up as printing continues: Silver will be over 50 by June (SLV or AGQ), Gold over 1500 (GLD), Copper (JJC), Crude Oil/Energy stocks (XLE), Ag commodities and fertilizer stocks (DBA, MOO), Miners (GDXJ, SIL).

CONTINUED HIGH FINANCE CRIMES/FRAUD: The banksters will continue to rob the tax payer blind, and will get away with it. They will bust people with a nickel bag of weed, but will let banksters steal billions, they will just call it something other than stealing (loop holes, you know how they do this). eg. Bond market primary dealers (GS), Silver Manipulation (JPM and Cronies).

POLITICAL BICKERING AND BLAME GAME (this one my kid could call, he's 10) The politicians will back stab one another and glad-hand at photo op's. The Donkeys and Elephants will swear they will work together but it will be business as usual. Flip-Flopping by President, Senators and Congress, not really a stretch

OIL prices will skyrocket: Alternative energy will be huge as OIL prices (XLE) will skyrocket this year, Clean and Green: nuclear energy (URZ, UEC, CCJ), depleted uranium stores, 25 years of under mining in this sector (I will elaborate in posts to follow); there will be a seed change!

Cold fusion related stocks will flourish (SWC and PAL). There will be the cry for wind and solar, but I don't think anything will pan out there for long-term, too unreliable. Solar, Nat Gas, and wind to gain and lose popularity, as oil goes up and down.

HIGHER UNEMPLOYMENT & HIGHER FOOD PRICES
As there is continued job loss, and food and energy inflation everyone except the rich will be severely strained this will lead to a rise in crime (Hungry bellies will revolt).

Global Food Inflation leading to unrest worldwide, especially the poorer nations.

Higher inflation, you will get less and pay more for the same things, goods and services.

States that are bankrupt will layoff Police and Firemen and our taxes, (state and municipal) will rise (get less, pay more).

THE WORLD WILL BEGIN TO MOVE AWAY FROM KING DOLLAR. We will grow not as a superpower but as a nation of debtors. Loss of status around the world.

END OF JAPANESE BEAR: Finally, the 20 plus year Japanese bear market will end as sales of Toyota(TM), Honda (HMC), and electronic goods from Sony (SNE) and Panasonic(PS) will increase dramatically, sales will be to china, India, Malaysia, Indonesia, Vietnam, and Thailand. Japanese banks like MTU will do very well.

INCREASE IN CYBER CRIME: There will be cyber crime, and cyber espionage and near the end of the year the crazies will come out talking about 2012 and the end of the world etc.

CHANGE IN CHINESE SPENDING CULTURE: Chinese consumers, especially the 20-30's age group will spend more and save less. They will want to eat out more and be more fashionable, Chinese Hip Hop & Gangsta rap will be a craze! Consumers will want less of their own food, they will save less, and spend more and eat more McDonald's and Pizza and look to buy Coach, Gucci and BMW's.

I hope most of this does not happen but hope and 5 bucks won't get me a Cafe latte grande at Starbucks by year end.