To stimulus or not to stimulus = Rollcoaster

Unless Bernanke's rhetoric on stimulus changes we go to 50 ( http://seculartrends.blogspot.com/2011/07/silver-update-anit-no-stoppin-us-now.html ) An hour or so after I wrote that Bernanke did just that, and everything reversed stocks, gold silver etc etc etc... FRUSTRATING

Silver was down to 38 early this morning and gold down another six dollars, S&P futures are flat.

 Check this out where do you think the money is going to go if its coming out of bonds

S&P 500 Recap

Good morning, S&P Futures are up 3.5 points with lots of economic reports to be released at 830am. On Wednesday morning after finishing lower for the third-straight session as optimism about the global economy improved despite the continuing euro zone debt crisis. China's GDP came in at an annual rate of 9.5%, which was down from the Q1 level, but above expectations. In addition, the strong number on China's Retail Sales in the first half was giving traders reason to be a bit more optimistic about the country's outlook. Moody's downgrade of Ireland was a problem for the markets yesterday afternoon but this morning's announcement by Italian officials that the country will pass austerity measures by Friday was also a positive factor in the early going. The government reported that Import Prices for the month of June fell by -0.5%, which was above the consensus for an decline of -0.7%. Export prices rose by +0.1%, which was below last month's revised level of +0.2%.

 
The Wednesday session opened with a gap higher and traded lower for the first half hour. Then the SPX erupted for a quick twelve point surge to put the high of the day on the chart at 11:28 am. But once again, bulls could not hold the gains. The index slowly began to decline and as the afternoon wore on, the decline accelerated. By the end of the day the index was thirteen points off the highs and closed lower than the open. This session was much like the previous one and it is hard to see anything really bullish in a session with morning highs and late day lows.

There were 296 components advancing and 171 components declining. On the NYSE 3,136 issues were traded with 2,049 advancing issues and 981 retreating issues, a ratio of 2.09 to one advancing. There were 61 new highs and 24 new lows. The five day moving average of New Highs is 97 while the five day moving average of New Lows is 23 and the ten day moving average of Net Advancing is 387. The ADX is still is a bullish uptrend (my charts site down)

Wednesday’s volume was lighter than Tuesday's volume. The intraday volume pattern shows a large spike in volume along with the late afternoon sell-off. MSI and MO remains bearish after Wednesday's action MSI is bearish and the McClellan Oscillator continues to be overbought.

SILVER UPDATE: Ain't no stoppin us now, were on the move!

Ain't no stoppin us now!

Silver cleared the all important 38.5 over night and screamed higher, I didn't expect this move until Friday, James Turk spoke about the speed at which it will climb (will surprise people) if it holds 38, wow! The shorts will be begging to get out when they see the print this morning. We may be at 50 by next week unless they raise margins 10 times or Bernanke's rhetoric turns bearish on stimulus.

THIS IS CLASSIC VOLATILITY EXPANSION AFTER SQUEEZE

Silver: Volatility Expansion

Physical Silver current price is 38.12 and the SLV is up 5% today and this chart shows that a big move in Silver is about to happen, there is a slight curl or upward curve developing the upper Bollinger band and a downward curl in the lower band, its a beautiful thing. 


“We’ve seen yet again support at $35 was tested successfully.  This is a huge and powerful base and with gold already probing record highs, silver won’t be far behind"  James Turk


“One never knows exactly how the markets will unfold, but my sense is that we only have several more days of silver in the 30’s.  Once silver clears $38 on a closing basis, you are going to get back into the mid 40’s in a heartbeat.”  James Turk




“I totally agree with James Turk.  I think the thing (silver) has been abused on the downside and it’s just like a coiled spring ready to explode.  I think silver will go back to those highs we saw before that May raid faster than most people can imagine". John Embry

Silver at 37.25 WOW!!

Time to become a cheerleader! 38.50 next by Friday is entire possible if we hold 37 today, Stimulus Stimulus Stimulus, its all about stimulus, no stim we nose dive.

SPX Recap

S&P futures are up 5 points right now but as you know the real action is in the metals arena. Gold and silver are up nicely again today. Its all about stimulus! Stimulus will put a floor under stocks and make PM's skyrocket and its as simple as that everything else is just noise. Its going to be next to impossible to short this market if the Fed is behind it, I learned that the hard way.

Yesterday, traders shrugged off news that the trade deficit jumped more than expected. Traders had been concerned over the spreading debt crisis in Europe in addition to an ongoing struggle to break the impasse over a reduction in the U.S. deficit. Rumors that the ECB is stepping into the currency markets also helped to create a bounce in the futures. A newspaper report saying six Spanish banks had failed new European banking stress tests—the results of which are due to be released on Friday—added to nervousness. The U.S. trade deficit surged in May to the highest level in almost three years, due to a big increase in oil imports, according to the Commerce Department. The deficit increased 15.1 percent to $50.2 billion in May. The NFIB Small Business Optimism Index fell -0.1% in June to 90.8.

The Tuesday session opened without a significant gap then SPX had a quick five point surge followed by a choppy hour with a downward bias. But the hour before noon was again upward about six points followed by two hours of slowly giving it back. Then the FOMCminutes were released hinting at QE3 and the SPX exploded higher ten points within just minutes before the euphoria disappeared about as quickly and just as sharply as it came. By the end of the session the index had surrendered all gains plus almost six additional point and closed at the lows of the day. 

 

 There were 176 components advancing and 295 components declining. On the NYSE 3,140 issues were traded with 1,278 advancing issues and 1,752 retreating issues, a ratio of 1.37 to one declining. There were 46 new highs and 37 new lows. The five day moving average of New Highs is 117 while the five day moving average of New Lows is 20 and the ten day moving average of Net Advancing is 465. The Net Advancing data indicates a bullish trend.

Tuesday’s volume was similar to Monday's volume. The intraday volume pattern shows a large spike in volume along with the release of the FOMC minutes. The Breadth Indicators are bearish after Tuesday's action but the McClellan Oscillator ten day average continues to be overbought. This would seem to suggest that this correction could have plenty of room to run lower, but then again you have the Fed to worry about if you are going to short.

Bonds and DXY are both at the top end of the range the dollar printed a big reverse (upside) hammer began after FOMC minutes but the long bond rallied. Bond action is a bit confusing or are they thinking the Fed will buy bonds, I don't know. 

Debt Default, Stimulus = PM Catalysts

Gold is up 12 dollars this morning and silver up 72cents. Finally a morning that reminds me of the good old days (LOL) you know Feb-end April 2011. Monday morning when I saw Silver down a dollar I was ready for it to go all the way back to 33-34 as I thought the Fed would try and drag this out to the end of August but they do not have the luxury of time, they need to act now (see below). We had a gorgeous reversal in silver and gold made an all time high, could it be that the downturn in our beloved silver is over. I don't think we have an all clear to buy with both fists however until we get over 38.5 in Phys Silver, I have no position is gold.

SILVER 5 day 5 minute chart, clearly shows importance of getting over 37

10 day 5 minute chart

Range 38.5 to 33.5, silver needs to clear that 38.5 level then this rally is confirmed as resumption of trend

Federal Reserve Chairman Ben S. Bernanke takes his push for long-term deficit cuts to Congress today as a fiscal-policy deadlock threatens to reverse the decline in borrowing costs he gained through record stimulus.

Should Congress fail to avert a U.S. debt default by Aug. 2, the 10-year Treasury note’s yield, now 2.93 percent, would rise 0.5 percentage point within a month, said Priya Misra, head of U.S. rates strategy at Bank of America Merrill Lynch. Stocks and the dollar may tumble and the 10-year yield would rise to nearly 9 percent during the next decade, former Fed Governor Laurence Meyer said.

“We’re flirting with catastrophe,” said Meyer, senior managing director and co-founder of Macroeconomic Advisers LLC. “Bernanke is going to emphasize that. Irresponsible fiscal policy is a threat to the economy and makes Bernanke’s job more difficult.” ~Bloomberg

Gold makes new all time high: Fed hasn't ruled out further stimulus

 Silver gapped down big after being down 2.5% from the day before and then began to recover as the day wore on. Shorts started to cover before the release of the FED minutes, Gold then made an all time high and stocks also recovered. So as I have been writing since last Monday, some kind of news was coming and today was the day.

BREAKOUT!!!

Stocks Rise as Fed Hasn’t Ruled Out Stimulus~ Bloomberg

All about fear

You see stocks and commodities falling off a cliff, all but gold which has held up nicely. People are in fear mode and capital preservation, with debt worries and no talk of QE were almost right back where we started from in  stocks. I really think that technicals do not matter at this point at all.  I have written about the US stock market as a house built on a poor or weak foundation and you would think its an ideal situation to short it and then you get a 5 day rally that takes out three weeks of gains (if you were short). Best to sit in cash or physical metals if you are nimble and i certainly am not nimble enough to fool around in this environment.

SPX futures are down over a percent this morning again, debt worries, really?!? There was a point when I thought this market would just fall off a cliff because of end of QE but now I see a range can be had till end of August when there will be enough bad data for the fed to justify more easing. Lower range 1260 upper 1350. and so here we go treading water unless you wanna trade that range, its big enough but it looks too easy and that scares me, i'm not fooling around with it. 

Dollar Metals Bonds etc

Stocks are getting hammered at the open on debt worries bonds which have defended the 150dma very well are in rally mode since Friday as is the dollar. What is interesting to me is that Gold is up 12 dollars, more bailouts to come I suppose. Silver which was off about 40cents since Fridays close is up three cents and that is encouraging. This is working out to be a pivotal week for the precious metals if Silver can get above 38 and Gold break out above 1550 we can start getting excited. Some people have be calling for a huge summer for the PM's , so maybe we are just watching that unfold. 

S&P500 Recap

S&P futures are down over a percent this morning due to the PIIG worries, today in particular Italy or so they say. As for Friday'se recap, it could have been far worse than what we ended up seeing but looks like a follow through day today for the bears, will remove the significance of that hammer print.

On Friday we had an awful employment number and that dashed the naive hopes of a recovering economy. The Nonfarm payrolls rose only 18,000, the weakest reading since September, according to the Labor Department, well below economists' expectations for a 90,000 rise. The unemployment rate climbed to 9.2 percent, the highest since December, from 9.1 percent in May. The government also revised April and May payrolls to show 44,000 fewer jobs created than previously reported. The private sector added 57,000, accounting for all the jobs created, with government employment shrinking 39,000 because of fiscal problems at local and state governments.

The Friday session opened with a large gap lower and continued lower another ten points to put the low of the day on the chart at 11:15 am. Then the market found some buyers keeping a bid under things and a gentle rally followed which recovered about six points before the final half hour of the session saw a burst of buying as the index surged four more points to close at the high of the day.

For the SPX Index there were 73 components advancing and 399 components declining. On the NYSE 3,119 issues were traded with 900 advancing issues and 2,104 retreating issues, a ratio of 2.34 to one declining. There were 57 new highs and 15 new lows. The five day moving average of New Highs is 169 while the five day moving average of New Lows is 9 and the ten day moving average of Net Advancing is 755. The Net Advancing data indicates a bullish trend.

Friday’s volume was lower than Thursday's volume. The intraday volume pattern is difficult to discern but volume did tail off late in the day. The Breadth Indicators are much more mixed after Friday's action as the M O continues to be overbought and MSI is Bullish