17 May 2017

SP 500 Futures - Gap Filled Intraday - The Gathering Storm


"Sometimes I wonder whether the world is being run by smart people who are putting us on, or by imbeciles who really mean it."

Mark Twain

The gap in the SP 500 futures continuous chart that we left behind a few weeks ago has just been filled intraday.

As a reminder this is a stock option expiration week, although as I recall May is not a particularly significant month.

I imagine a lot of enthusiastic call buyers have just been smoked out of their seats and their June positions.

The tension on the tape the last few days was palpable.  It just took some small event to trigger it giving its overlong duration and extent out of balance.

I don't think impeachment is on the table for President Trump, except in overheated Democratic rhetoric.   Although I would not rule anything out while The Donald has access to twitter.

The NDX has a quite a way to go to close its gap, but that is another matter. For my purposes the SP 500 futures are the bellwether.

I have pulled in my short positions, and just left some other risk off positions run, mostly in gold. No silver at this time for a trade.  It just doesn't work as well in a panic because of its precious/practical nature.

My cynical side says that this market pullback is just a long overdue correction in the Trump rally. But we will have to wait and see where the stock markets finds a footing, or if contagion of selling starts to trigger liquidations and some sort of selling feedback.

As I noted the other day, this is a concern for me because the nature of this rally has been narrow and price driven.  People were throwing money into passive index funds, which were rising steadily thanks to speculation in about ten stocks.

The 'big one' for the markets, as opposed to a major correction, will gain the most damaging momentum from the erosion in quality of private debt loads which are once again back to record levels, along with the extreme leverage in financial derivatives exposure held by just a few financial institutions.  That is the real nitro in this chemical mix.

If any financial breakdown spreads to the $222 trillion dollars in derivative exposure then it is time to hit the exits.   There is no way to bail out that sort of malfeasance gracefully without imploding the currency, theories about the ability to print money without limit notwithstanding.

Speaking of rotten fundamentals, the average growth in loans exceeds the average growth in hourly wages.  Thanks to Tony Sanders at Confounded Interest for that chart below.

Let's deregulate The Banks even more and hand out tax breaks to the one percent!  And spend all our time looking for Russians hiding in the shrubbery so we can blame them.

Sleep well.








Net Asset Value Premiums Of Certain Precious Metal Trusts and Funds - Smokin'


"Here Homer with his nervous arms
Strikes the twanging harp of war,
And even the western splendour warms,
While the trumpets sound afar:
But, what creates the most intense surprise,
His soul looks out through renovated eyes."

John Keats, Ode to Apollo

There is an obvious safe haven trade in precious metals, notably gold, and US Treasuries this morning as the accumulation of political and geopolitical risks have finally penetrated the consciousness of the denizens of the markets.

The stock indices I track have not yet violated any major trendlines to the downside.   I am watching this carefully.

I have a largish short position on stocks and long gold in my trading account.  But so far this looks like just a trade and not yet a trend.  And so I have peeled that short back a bit this morning and taken the profit.

Note the subdued variance to NAV exhibited by these funds and trusts below.




16 May 2017

Stocks and Precious Metals Charts - As Time Goes By


"For I behold the heavens, the works of your fingers: the moon and the stars which you have made. What is man that you are mindful of him? or the Son of Man that you dwell with him?  You have made us a little less than the angels, and you have crowned Him with glory and honour, And have set Him over all the works of your hands."

Psalm 8:3-5


“Narcissistic personality disorder is named for Narcissus, from Greek mythology, who fell in love with his own reflection. Freud used the term to describe persons who were self-absorbed, and psychoanalysts have focused on the narcissist's need to bolster his or her self-esteem through grandiose fantasy, exaggerated ambition, exhibitionism, and feelings of entitlement.”

Donald W. Black, DSM-5 Guidebook

Stocks continued their sideways trade, except for the big cap techs which lead the NDX to new highs.

The rally has narrowed considerably, and is being driven by less than ten stocks which have an overweight influence on the indices.

And as the stock indices go higher, they attract more money into them through index funds.

The ending will be swift, and sudden.

Gold and silver remain quiet, although silver has been showing some serious ability to rebound back towards the 17 handle.

Washington and New York are focused almost exclusively on themselves now, and their intramural political power struggles.

And their hysteria with their own issues is almost boundless, while the country languishes.

Trump seems determined to sabotage himself. Yes, he has 'enemies'. But his biggest enemy is himself.

When this goes into the ditch, no one will have seen it coming.

That is because they can only see the rest of us and the world through their own reflections, darkly, if at all.

Lord have mercy on us.

Have a pleasant evening.




15 May 2017

Stocks and Precious Metals Charts - No Worries


As a reminder there will be a stock option expiration this week.

There will be a Comex precious metals options expiration next week.

The commodities were rallying a bit today on a lower dollar and higher oil.

The SP managed to stick a cash close over 2400.

No worries in the markets. As long as the volumes are low and the news is less than a punch in the face.

Have a pleasant evening.


14 May 2017

US Gold Reserves and the Adjusted Monetary Base


Here is the value of the US Gold Reserves in Dollars based on the market price versus the St. Louis Fed's Adjusted Monetary Base.

This chart is from goldchartsrus.com.