MFN - still chugging toward target

I liked getting one weekly close above resistance.  Two turns it into strong support.

Maybe every dog does have its day if this young gold and silver producer stays on track.

Edit (1:53) In typically smarmy newsletter writer style, I will note that this opportunity was illustrated for NFTRH subscribers by email update when the stock was around 10, yet still within a nice constructive pattern.  Ultimately, I am a chart guy after all.

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http://www.biiwii.com

30 yr yield & the SPX

TYX remains below resistance and SPX is at a new level of resistance.  It is a good bet that yields are going to lead the S&P one way or the other.  So, how does the chart for yields look to you?

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http://www.biiwii.com

Back from a business trip to Wisconsin...

Observations:

• Wisconsin is much nicer than I thought.  The drive from Milwaukee to Madison is farm land and I would imagine quite picturesque once the leaves come out and grass grows. 

• Yes, sitting at a bar, a group was debating quite loudly about the political situation surrounding Gov. Walker.

• Meeting customers face to face is much better than going it remote by phone and email.  My midwest rep passed away late last year so now these trips are necessary for me.  Actually, they were before his passing as well.  But now, more so.

• ISO 9001 is a pain in the rear and IMO breeds very average and unspectacular company cultures, but it is what it is and I may finally have to look into it as the suits at an important customer's corporate office are beating the drum.  ISO = International Organization for Standardization.  

• Playing Space Cop on an iPad reduces perceived travel time by as much as 70%.  What?  We're landing??

• It is sometimes not a good thing to watch the markets too closely.  I felt neither interested in, nor compelled to look at the markets for 2 days, made no trades and things worked out just fine.  Better than fine, really.

• I am glad I did not get to watch the Rangers-Sabres last night.  

Okay, back to the circus we call the financial markets.  I just loved Jonathan's interpretation of the Whack-a-Moles this morning. Utter caricatures, to be listened to only in an abstract way with regard to agendas and strategies.

http://www.biiwii.blogspot.com

http://www.biiwii.com

Gold This Morning: A Rose is a Rose is a Rose --Jon

Undeterred by yesterday morning's vertiginous and nauseating selling bash the gallant and diminishing holders (as of Tuesday gold open interest declined ~4,000 contracts for a current absolute holders of ~492,000 contracts) of COMEX gold brought prices back up $10 bucks by the close and as of this morning we have tacked on an additional $10 bucks in active trade. So again we find ourselves at the portals of recent all-time highs and if you have made it this far do not succumb to ubiquitous blogosphere admonitions of multiple tops, seasonal highs, and dogmatic cycle adherence. We are here because our dear CBs continue to overtly diminish their currencies through various seductive and veiled policies of debt monetization...what else can they do? Earlier this week one of Uncle Ben's altar boys from Our Lady of St. Louis was sent out to remind us that higher short rates were still a handy tool to bludgeon inflation...  another Paul Volcker wannabe who can't deal with the concept that this time it's different. Today: Stay the course as the quarter ends, the facts remain unchanged and compellingly directional.


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http://www.biiwii.com

Gold This Morning From Jonathan...

Modest overnight trade including the last scraps of the APRIL-JUNE roll. Given the typical stormy activity on the confluence of roll week, option expiration, end of quarter, government auctions, and NFP when our boyz who never met a bottom-line flagrantly attempt to manage gold prices, (just in case a move higher might tip off some unsuspecting sod that the reason his kid's morning Wheaties box has shrunk by 10% just might be inflation) we really have performed remarkably over the past couple of sessions. GSR this morning is at a new low ~37.90; the posse is quenching its thirst at this punch bowl and Uncle Ben can't get close to taking it away. Down in the COMEX ring yesterday there were a series of very bullish option strategies...a major global bank bought ~4500 red (the following year i.e. 2011) JUNE 2000 calls outright f0r ~$10 million. Gold open interest continues to deflate and is ~496,000 basis Tuesday and relative strength is ~53.0. Today: Under-owned and apparently unloved it's time to fill out your gold dance card; don't be a wallflower.

Gold This Morning from Jonathan

Straightforward overnight trade reflecting the continuing APRIL-JUNE roll pushed prices heedlessly within ~$12 buck range with sellers having the upper hand for most of the evening. The facts: GSR slightly easier at 38.50 continuing, we hope, our steady stream of non-toxic liquidity...RSI is ~51, hardly a pogo stick level, but leaving plenty of headroom for a retest of our recent nuzzle with overbought levels...gold open interest to my dubious mind is shockingly under 500,000 contracts again (basis last Friday); did those bailing get an early glimpse of Barron's front page gold abuse over the weekend or perhaps selling is again coincident with large UST auctions today and tomorrow? 'Whatever' as my sons are fond of saying when they remain honestly sceptical of anyone's party line. Today: Given the above mentioned media disrespect and the technical position be alert to frisky sellers assuming they can bully gold lower and remember our mantra...You can only manipulate a market in the direction it wants to go.

USD

Then there is this sad picture.  Any wonder why they are managing expectations?

There may be one or two dollar bulls out there.  Usually I am one of them at times like this that are ripe for some contrary action, but I can't make that claim based on this chart and based on the untenable situation policy makers find themselves in; caught between and inflationary rock and a Treasury yield hard place.

Okay, posting to be sparse for a couple days.  Just see this mess for what it is and hopefully we come out okay on the other end.

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http://www.biiwii.com

Expectations Management Continues...

You know, it would be comical if not for the fact that investors positioned as I am lose money during these squalls of activity that see the various Whack-a-Moles popping up in mechanized or coordinated fashion.  It is comical because we have been expecting them and it just strikes me as funny when they actually play to their roles with such precision and dependability.

Fed's Bullard Says QE2 Exit DEbate Likely 'Key' 2011 Issue 

The U.S. Federal Reserve may need to decide on when to tighten monetary policy before the outlook for the global economy clears up later this year, St. Louis Fed President James Bullard said.

Ya think, Jim?  Funny thing about those rising short term Treasury yields, they don't leave much wiggle room do they?

“The process of normalizing policy, even once it begins, will still leave unprecedented policy accommodation on the table,” he said according to a statement on remarks he was to deliver at a financial forum in Prague today. “The FOMC may not be willing or able to wait until all global uncertainties are resolved to begin normalizing policy.”

Why not go all the way?  Copper around all time highs... Oil beginning to piss off the electorate again... US manufacturing is going well... just do it.  Pull it all back and see what happens.  QE policy has nothing to do with 'global uncertainties' and everything thing to do with legacy leverage, new leverage and a long standing habit of living for today, on ever increasing debt and a 'screw the future' ethic.

Boston Fed President Eric Rosengren said yesterday that high unemployment and low core inflation mean record monetary support is still necessary. Chicago Fed President Charles Evans said he believes data suggesting a more sustainable recovery won’t prompt an alteration in the bond-purchase program.

Whack-a-Moles everywhere.  Very confusing.

Bullard said last week that he wants a review of the bond program, while Charles Plosser of the Philadelphia Fed laid out a strategy to sell holdings in conjunction with raising interest rates.

The effects of the Fed's own inflation have directed them to talk this way.

Noting the improved economic outlook since the plan was implemented, “the natural debate is how and when the exit should begin,” Bullard said. “However, additional uncertainty has clouded this picture.”

He said four areas in particular are raising “macroeconomic uncertainty.” These included turmoil in the Middle East and north Africa, the natural disaster in Japan, “the U.S. fiscal situation and the possibility of a government shutdown,” and Europe’s sovereign debt crisis.

No it hasn't, just do it.  Don't make excuses with outside events.  Steady as she goes, the economy is improving and inflation is getting out of control... live up to your mandate!

Fed officials have purchased $1.7 trillion of mortgage debt and Treasuries through March 2010 to pull the U.S. out of the recession. The Fed’s second round of purchases has come under fire from Republican leaders in Congress who say it risks inflating asset-price bubbles and stoking inflation.

In other words, exponential moral hazards have been layered upon the previous cycle's moral hazards in the name of saving the economy from a deflationary crash.  This has helped us how?  Oh yes, by making it worse and pushing it out into the future for a bit.  Lovely.  

Separately, it's funny how Republicans did not seem to mind so much 'stoking inflation' when the political spectrum was aligned differently.  Whack-a-Moles everywhere.  

Chairman Ben S. Bernanke has given no indication the central bank will deviate from its plan to buy bonds through June to spur economic growth and reduce 8.9 percent unemployment.

Good cop.

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A few more Treasuries to sell...

Security	Auction Date	Issue Date	Offer Amt.
4 wk Bill	03/29/11	03/31/11	40B
5 yr Note	03/29/11	03/31/11	35B
7 yr Note	03/30/11	03/31/11	29B

Daily HUI parameters

Meanwhile, Huey looks like he might test the moving averages and neck line once again.

Subscribers:  Please use this along with the weekly analysis in the email update that just went out.

All:  Posting will be light over the next few days.  My other business needs me to act like a business man this week.

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http://www.biiwii.com

UST... Satan plays defense

I think the 10 year note is being defended, don't you?

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http://www.biiwii.com

Fuel Tech (FTEK)

China opens a new coal fired power plant approximately each week. Domestically, we wreck the atmosphere with this stuff too.  The chart of cleaner coal guy FTEK looks okay too, as it flags above support.

http://www.biiwii.blogspot.com
http://www.biiwii.com

Gold This Morning From Jonathan

Lively overnight activity in the electronic market manifesting significant April contract unwinds rolling into June, the new active contract. Prices held firm until around 0300 when buyers suffered a giddy blackout and extinguished ~ $10 bucks of gains; I shall refrain from pointing fingers or listing 'noise' from many quarters other than to note that Irish Agriculture Minister Simon Coveney, God bless him, said Ireland wants to share bank losses with senior bondholders (i.e. those scurvy European banks) as part of a final solution for the country's debt-laden financial system. We understand that Angela even while punished and thrashed in a local election was ROTFLHAO at what she and her Brussels's groupies see as unnegotiable...obviously Ms. Angela hasn't spent a Joycean evening in a Dublin saloon understanding how the Irish bring reality to the improbable. The facts: GSR is unchanged at ~38.70; gold open interest is unchanged, and RSI has slipped below 50 approaching oversold. COT numbers showed large specs flat and commercials slightly to the sell side...a push. Today: April option expirations will create fun and games. I won't even discuss the $1400 line in the sand. Gold is oversold here.

http://www.biiwii.blogspot.com

http://www.biiwii.com

Uncle Buck...

Here is a good illustration of what's going on in the previous post.  USD has threatened to lose support by daily charts, used so often to make points in a frenetic market environment featuring short attention spans.  A weekly chart showed that a loss of the Q4, 2010 lows, while not healthy, was not last ditch support for Unc.

While support remains lower at the 2009 lows of 74.23, one might think that powerful people in need of selling Treasury bonds (debt) would not want to have such theatrics interfering with the process.  Hence, the jawbones.  There is also the matter of rising 2 year (and other US Treasury durations) yields shining a negative light on current QE and zero interest rate 'official' policy.

The dollar indeed has not looked good technically, which is exactly why it needed to be defended near last ditch support levels.  If the dollar goes, if T bonds go, then the whole enchilada goes.  'Inflationistas' do not seem to understand this.  The inflation regime needs some measure of confidence in the current system to keep going, as is.

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http://www.biiwii.com

Expectations Management

http://www.biiwii.blogspot.com
http://www.biiwii.com

Here is a some expectations management as reported by AP.  Expectation management was a pretty big focus of NFTRH129 as gold got Plossered on Friday, and they are selling a bunch of Treasury bonds this week.

"Last Friday, the dollar enjoyed one of its best days in weeks after hawkish comments from leading Fed officials. One of the reasons the dollar has been in the doldrums of late was the prevailing view in the markets that the Fed would raise interest rates at a slower pace than its counterparts.

The comments from the Fed's Charles Plosser and James Bullard have reinforced market expectations that the U.S. will "normalize" monetary policy sooner than previously anticipated. At the very least, it makes a further monetary expansion following the expiry of the current $600 billion stimulus program in June extremely unlikely."

NFTRH129 Out Now

I think it said what it had to say, with no apologies.  I think it is a quality letter.
NFTRH129... out now.

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http://www.biiwii.com

CoT Gold & Silver Report

GOLD - COMMODITY EXCHANGE INC.                                       Code-088691
OPTION AND FUTURES COMBINED POSITIONS AS OF 03/22/11          |
--------------------------------------------------------------| NONREPORTABLE
      NON-COMMERCIAL      |   COMMERCIAL    |      TOTAL      |   POSITIONS
--------------------------|-----------------|-----------------|-----------------
  Long  | Short  |Spreads |  Long  | Short  |  Long  | Short  |  Long  | Short
--------------------------------------------------------------------------------
(CONTRACTS OF 100 TROY OUNCES)                       OPEN INTEREST:      741,348
COMMITMENTS
 245,124   34,589  181,368  232,886  495,729  659,377  711,685   81,971   29,663

CHANGES FROM 03/15/11 (CHANGE IN OPEN INTEREST:      5,933)
  -6,135  -11,054   12,919   -5,865    3,244      920    5,108    5,013      825

PERCENT OF OPEN INTEREST FOR EACH CATEGORY OF TRADER
    33.1      4.7     24.5     31.4     66.9     88.9     96.0     11.1      4.0

NUMBER OF TRADERS IN EACH CATEGORY (TOTAL TRADERS:      400)
     252       71      156       56       58      355      245

SILVER - COMMODITY EXCHANGE INC.                                     Code-084691
OPTION AND FUTURES COMBINED POSITIONS AS OF 03/22/11          |
--------------------------------------------------------------| NONREPORTABLE
      NON-COMMERCIAL      |   COMMERCIAL    |      TOTAL      |   POSITIONS
--------------------------|-----------------|-----------------|-----------------
  Long  | Short  |Spreads |  Long  | Short  |  Long  | Short  |  Long  | Short
--------------------------------------------------------------------------------
(CONTRACTS OF 5,000 TROY OUNCES)                     OPEN INTEREST:      196,407
COMMITMENTS
  48,017    6,563   66,308   43,963  104,541  158,288  177,412   38,119   18,995

CHANGES FROM 03/15/11 (CHANGE IN OPEN INTEREST:      5,910)
     281   -1,726    4,903    1,008    3,124    6,191    6,301     -281     -390

PERCENT OF OPEN INTEREST FOR EACH CATEGORY OF TRADER
    24.4      3.3     33.8     22.4     53.2     80.6     90.3     19.4      9.7

NUMBER OF TRADERS IN EACH CATEGORY (TOTAL TRADERS:      206)
     108       38       66       42       49      173      134
 
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http://www.biiwii.com
 
 

 

Expectations Management

Courtesy of Mr. Plosser...

Funds Rate Should Hit 2.5% In Year

As if that would stem the inflation...  meanwhile, some gold bugs use it as an excuse to scatter.

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http://www.biiwii.com

TYX-SPX Ratio

Meanwhile, here's the comp between 30 year yields and the SPX.  Which one is real and which is Memorex?

Time to go start writing now.  I'll get the gold and silver CoTs up just as soon as they are posted.

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http://www.biiwii.com

Checking up on the 30yr/2yr yield curve & GSR

Just looking at this for the first time in a while, and I don't like it one bit.  Readers are free to have their own opinions.

Everybody's getting bullish again, and the excuse is relief post-Japan, as decent economic numbers roll in (in some areas).  This is not an Armageddon blog and I am not a perma bear writer.  The fact is however, that the curve has turned down strongly, as it did in 2008, pre-crash.  Yet the Gold-Silver ratio has not yet responded (and may not, but then again...) by signaling an intense and acute liquidity suckage.

I am just saying, you have profits?  It's legal to book some of 'em.  Cash is a position along with whatever else one favors.  Me?  I will wait for HUI to confirm something one way or the other.  I am bullish the gold stocks either way, but then again, I can stand 50 to 100 point swings on the HUI because I manage risk.  Probably sad (for me) to say, but this may include short silver once again, although more likely I'll look to book cash and short other areas.

Sometimes it seems to be a curse looking at these below the deck indicators because they can sometimes scare the crap out of me while the party up on the upper deck rolls on.  Punch bowl and all.

Sometimes I feel a bit like Prechter, poor discredited and lampooned soul that he is.  Last week's thing with Otto sticks with me, and I do not like the surety with which bulls hold to their case.  I was weened on Prechter, Hoye and yeah, a bunch of crazy gold bugs.  Thus, I do not have such a sure feeling that policy makers can/or will continue to promote the inflation, uninterrupted.  I have to remind myself that I was generally bullish when many of today's loudest, most staunch bulls were sucking their thumbs.

So to repeat, I don't like this chart.  It may be nothing, but it may be something.

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http://www.biiwii.com

Gold This Morning: Violation of COMEX No-Fly Zone --Jon

Timid overnight trade after a concerted wing of organized sellers swooped in with a raid yesterday around 1230 strafing COMEX pits in a desperate attempt to disrupt the perseverance of gold's determined and well-reasoned buyers. We did caution you yesterday morning on the possibility of a frantic blitz by the dark side under the cover of the APRIL-JUNE roll and the APRIL options expirations and indeed they again lived up to their stale reputational predictability. This piracy, while provoking an inter-day high to low $25 collapse (and a few panicky calls), hardly grazed our plucky band on a technical basis and again showed gold's hardened resilience. The facts offer sinewy support of the growing impotence of the sellers as GSR and RSI remain virtually unchanged. Gold open interest came in as of Wednesday by ~4,000 contracts leaving us with a total of ~505,000 hard core defenders. Today: The roll and option expiration should continue to agitate trading activity through early next week and when in doubt close your eyes and think of Lisbon, Dublin, and Dallas Fed President "Tipping Point" Fisher.

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http://www.biiwii.com

HUI daily

Forrest threw off all the hardware and ran as fast as he could, only to trip and fall late in the day.  I suppose you could say that the evil cabal moved in and did its handy work.  Or more likely, a technical pattern like a bullish Symmetrical Triangle is worth waiting and working for and would logically find resistance at the top line.

All I can tell you is that in breaking above the 50 day moving averages, HUI has activated the Sym-Tri, which was first ID'd in last weekend's letter.  Here is the chart from #128, which was produced while Huey was still below the moving averages.  MACD has triggered, RSI has broken through resistance and now we await confirmation of a breakout or possibly, additional downside threats.  The trend is up however, in all time frames.

HUI sits in a much better position now than it did last weekend, but these are the markets, and technical patterns can fail.  So, the newsletter that does not play the 'lather 'em up' game will manage all potentials.  Most important will be the sector fundamentals.  Here I am not talking about Bernanke, or the US Treasury or global macro inflation regime, I am talking about the only thing that really matters to gold miners; gold's real price.  If the metrics continue to hold, I remain bullish and await the potentials of the Sym-Tri and beyond.  If not, gold stocks could be deemphasized, even as the world pursues its inflationary destiny.

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http://www.biiwii.com

Dow Status

Moving averages have been cleared, I am not short anything and the Dow has a test coming up at the under side of its broken wedge.

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http://www.biiwii.com

Run Forrest, Run...

Legions of doubters watch that runnin' fool Huey, and wonder if they should buy.  Decisions, decisions...

Edit (2:28)  The mean kids caught him this time.  :-(  Probably after the first batch of momos jumped aboard.

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http://www.biiwii.com

Emerging Markets on the pad

EEM is right at resistance and if it clears and holds, it is probably going to 50+

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http://www.biiwii.com

Gold This Morning: Every Man a King --Jon

Reasonably active overnight trade began innocuously around yesterday's close, a level which accomplished all of yesterday's targets. At around 0400 this morning buying clearly accelerated; unimpeded by any organized selling gold took out yesterday's high and we currently are ~$1442. GSR is ~38.10 after yesterday's scorching silver move driven by the ever rippling tides of liquidity and increasing media focus on the spectre of an unobtainium short. Gold open interest increased, basis Tuesday, by ~3,000 contracts; at ~509,000 total open interest is still 20% below last year's highs. Relative Strength (RSI) is slightly higher ~62.80 and well-positioned for our expectation of retesting recent overbought levels. Today: You are reminded again that we have a roll and an option expiration next week which can provide cover for sly furtiveness by certain parties somehow still mouthing adjectival band-aids for for what they claim are ephemeral price increases. So we might crab around these levels for a couple of days, but a move into the mid $1440s could certainly disrupt this provisional dealing to the upside.

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http://www.biiwii.com

HUI: Symmetrical Triangle it is...

NFTRH128 ID'd this thing last weekend as a caveat to its somewhat cautious stance.  A Symmetrical Triangle is a continuation pattern and this baby loads a target well higher, on the way perhaps to NFTRH's ultimate upside target of the 3 Snowmen @ 888.  Still, a decline to the lower line cannot be ruled out within a bullish set up.

The Snowmen are measured off of a massive pattern by weekly chart.  This is fun, especially since I welcome upside or down right now.  We always get where we are going with patience and perspective.

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http://www.biiwii.com

MFN: Look who's loading a target...

The update on gold and silver miner MFN went out on March 11th, including...

"Technically, this is thus far a healthy pullback, with the EMA 70 (9.70) as a target."

"Ultimately, the upside target would be 15.50 if MFN should exceed the noted resistance at 12."

It got down to 9.86 and support around the weekly EMA 70.  This was when people were selling down a stock for no good reason even though it was in a very interesting and bullish pattern by weekly chart.

Here is the MFN of today, 25% higher.  There have been many of these updates that successfully called such events during NFTRH's history.  Some clunkers too.

But it's the newsletter that knocks itself out trying to give subscribers the best combination of profit potential and risk management that it can.  In that regard, Mr. Cautious notes that MFN needs to close the week above resistance to load target.

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Gold by me & Gold This Morning by Jon

I tend to save most of the gold talk for NFTRH - sorry folks, but people pay their hard earned money for premium content - and indeed it can seem as if the blog is really big on uranium, a bullish or bearish stance on treasuries at any given time, or just railing about boneheaded (or worse) policy makers.

Nope, all along there is the one asset for the times, along with its wild little bro, silver I guess ;-). There are the miners of these metals and their sector fundamentals, based on ratios to the things of positive economic correlation; the 'investment' merit of gold stocks, or lack thereof as the case may be at any given time.  There is silver leading gold, or the opposite condition.  There are the very different implications of these conditions.

Maybe I should post a bit more on gold, because ladies and dudes, this is the one thing I am and have been bullish on for the long, secular haul.  Even as gold remains constructive measured in a host of compromised (or worse) currencies as hope plays out, gold is now breaking out of a long watched (in NFTRH) Cup & Handle as measured strictly in USD terms.  

Gold got a little frothy in February and somewhat compromised the Ascending Triangle by tickling above the top line, but we'll call this close enough for gov't work and target 1550 if the the barbarous relic breaks out, as it already has in terms of USD.  The next target, a long standing one based on a Cup & Handle is 1463.  This would presumably be on the way to 1550.  There is also another target well higher than that off of a simply massive Cup formed in and around Armageddon '08.

Here is the Gold-USD chart from NFTRH120, just for fun.

It is amazing how people come out of the woodwork to manage gold when things get too bullish or too bearish.  I assume this is because would be contrarians who missed epic buying opportunities on the metal just keep hoping and waiting.  I had downside targets of 1290 (1308 was the low) or lower, on the latest correction that I thought might get pinged, but it looks less and less likely.

If that Ascending Triangle breakout activates, if the USD loses last ditch support, if treasury bonds (TLT is a trade ONLY, and it is against PM longs) break down, which is just a matter of time IMO, if one day owning copper and oil just does not do it for the speculators who think copper is oil is wheat is hogs is silver is gold, there will only be one destination for the financial refugees.  And then the upside theatrics would begin for real.  This is the essence of why I hold PMs through thick and thin as long as policy makers are playing a game of 'hide the cheese' as some pals and I used to call it.

Ah, here's Jonathan, right on cue.  I'll kill my droning post here and let da man bring it on home.  I'll leave you with this... the value humans assign to gold goes up and down; sometimes with great ferocity.  Gold is acting as money, and people should respect this.

Gold This Morning:  Bom Dia... Good Morning Lisbon

It's a push to assess overnight volume as adequate, but adroit trading made it very difficult to get back in or to cover shorts as levels seemed to effortlessly glide toward the congestion zone of former all-time highs. Devotees of official and coordinated gold selling seem either disinterested or perhaps more preoccupied with how to continue sucking financial resources from already impoverished Portuguese, Irish et.al. Maybe these dabblers in manipulation are suddenly finding that their offerings of uncovered future sales are being absorbed by buyers intent on just being long gold like China which according to peripatetic economist David Hale has purchased almost as much gold in 2011 as they purchased in all of 2010. GSR this morning has the liquidity taps running bountifully with GSR ~39.20. RSI is ~60 and at current price levels could certainly support buying resiliency. Open interest rose by 5,000 contracts within Monday's soggy volume...visions of investors trying to get back in? Today: You know where we are, and irrespective of the fact that dealing with calendar mitigation as the April/June roll continues and options expire next week will provide challenging technical selling, activity is bouyant.

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http://www.biiwii.com

TLT looks bullish

I am very tempted to add TLT to the existing IEF position.  I know, I know... there is no deflation and Prechter is always wrong.  Heard it a million and one times.  But still, the Wizard does not continue the inflation unless the forces of contraction are allowed recalibrate the system.  I am going to add some TLT to go with IEF and some broad market bear positions to offset my precious metal and uranium/alt. energy longs.

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http://www.biiwii.com

Richmond Fed: Manufacturing continues to improve

Surprised?  Not if you keep up with this blog or its resident newsletter.  US manufacturing - contrary to the China outsource hype you hear in the abstract financial media - is dare I say, booming?  The problem I have, and have had since beginning my public writing is in the remote and inflationary management of the economy, which always injects inflationary distortions one way or another.  But it's a big reason that net bearish is a hard way to go through life... until one unpredictable day, that a given construct finally implodes.

5th District Survey of Manufacturing Activity

 

Overview

Manufacturing activity in the central Atlantic region expanded for the sixth straight month, according to the Richmond Fed's latest survey. Looking at the main components of activity, shipments and new orders grew more slowly, while employment growth held steady. Other indicators varied slightly but suggested continued solid activity. District contacts reported that backlogs grew at a slightly slower pace and that increases in capacity utilization and delivery times eased somewhat, while inventories grew at a somewhat higher rate.

Looking forward, manufacturers' optimism remained in place in March. Survey contacts at an increasing number of firms looked for solid growth in shipments, new orders, backlog of orders, capacity utilization, and capital expenditures in the next six months.

Survey measures of current prices revealed that both prices of raw materials and finished goods grew at a slightly slower pace in March. Respondents indicated that during the next six months they expected growth in raw materials prices to quicken, but they expected little change in finished goods prices from what they had anticipated last month.

30 Year Yields & Stock Market

Safe to say as the long bond's yield goes, so too goes the stock market?

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http://www.biiwii.com

Well here is a bearish headline...

Bloomberg trumpets All Clear Sounded as Markets Shrug off Multiple Black Swans.

So now they are even conjuring the most dreaded term ('Black Swans') in the financial market lexicon, as the caricature we call the main stream financial media once again get back on the job of mis-directing the public. 

My caution to a bearish stance (as I felt markets were rolling prior to Japan) was the violent upset that the events of the last week had injected into markets.  Lot's of opportunity for spin and bullshit to get into the analysis.  Lot's of opportunity for bull touts.

I think there is only one Black Swan, and it is swimming in a cesspool filled with the leakage from 55 gallon drums - thousands upon thousands of them - containing toxic debt.  It is toxic and there is no cure other than default through inflation.  But I digress...  There is a market to manage.

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http://www.biiwii.com

Gold This Morning: Rough Work, Iconoclasm --Jon

Overnight the attending waiters could only sweep up the crumbs and morsels remaining after the feast of the past few days. No real volume yet and very choppy trade within yesterday's range. Even the facts seem shallow and unprofound. GSR is unchanged ~39.60...gold open interest ~3,000 contracts to ~501,000...and RSI is groping for some springy support ~58.0. While the market encumbrance of  the active-month contract roll from April to June and the expiration of the April option contracts will be apparent for the next week do not slide into complacency that this could leave us in a short-term distributive process, instead reflect on the resolute recent behavior, as mentioned yesterday, by those with skin the game. Today: The former all-time high peaks remain just ahead as they did yesterday let's look to see them cleared out...target...the high $1430s.

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http://www.biiwii.com

Fuel Tech

FTEK is inexplicably sold down last week after rising strongly off a pretty decent Q release.  Why the opportunity manifested I do not know.  I only know I bought and may like to hold this unique company for a while.  Especially if I hold short the broad markets.  Let the PM's go on their own and stock picking against index shorts - sort of in makeshift Hussman style - may be the way to go for the balance of the portfolio.  Dunno yet, we'll see. 

It'll be interesting to see what FTEK does with this resistance level, because that is a pretty neat little pattern it is sporting.

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http://www.biiwii.com

GDX-SPY ratio

This ratio says 'hey Gah, be long gold stocks and short the broad market' (and if the market clears some moving averages, I'll be short basically nothing).  But more and more, based on fundamental and technical research in NFTRH128, and the letters leading up to it, I feel the risk is limited in the precious metals when taking an intermediate view.  I like the gold stocks in relation to the broads, let's put it that way.

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http://www.biiwii.com

U Bullish?

I am not sure whether I am or not.  But they taught me in stock trading wiseguy school that you buy when people are puking and knee jerking.  This is sort of like a mini version of the hurl fest that took place in the precious metals stocks in Q4, 2008.

I don't need to know whether I am bullish on the U's because I bought these on a reaction low.  All are very profitable and I have not yet decided what I am going to do.  Maybe sell a few, keep a few?  Regardless, the lesson is to always try to have dry powder and always try not to be part of the herd.  That is harder than it sounds. 

http://www.biiwii.blogspot.com
http://www.biiwii.com

Treasury to sell $142 bln MBS 'portfolio'

Portfolio?  Is that what they call it.  The government and the MSM continue to spit out these news releases as if people still believe they are grounded in something other than fantasy, manipulation and off the books chicanery. Who on earth are they going to sell to, another mole?

Treasury to sell $142 bln MBS portfolio

Wonderland folks, that's where we are.

Separately, but not really separately, the 'no QE3' story has gained enough traction over the last few weeks that maybe policy makers can ease off the jawboning for a bit.  As I think Jim Sinclair says, we're likely in for QE to infinity cause it's inflate-or-die, inflation onDemand.   Just take a look at the junk bond market today; there is no perceived risk. 

I will play their game and beat them at it.  No silly, not the junk bond game; the precious metals.

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http://www.biiwii.com

Gold This Morning: Revenge of the Contrarians --Jonathan

Sturdy trade overnight opened with ~$8 gap over Friday's close and prices have worked higher since with a blue collar hammering consistency. I want to focus immediately on several startling facts which occured over the past few days. Gold open interest as of last Thursday fell ~4000 contracts to ~498,000...given last week's lively exertion, that provokes visions of short covering or shaky sellers... why? Exhibit one... late Friday's COT release (basis always the prior Tuesday) had large specs selling long positions and increasing shorts... small specs, the odd lotters,were even more aggressive selling longs and increasing shorts. Exhibit two... in one of the strongest weekly moves since the days when Barrack was covering their short book, commercials, who never met a forward short they didn't like continued their contrary recent trend and increased their long book by ~10% and covered shorts. Meanwhile down at the COMEX, seats for the right to look eye-to-eye with other traders of gold, silver, and copper in the ring have risen sharply, since languishing ~$50,000 late last year, to a $90,000 print on Friday. Bottomline: compelling facts that those who trade gold for a living and not as a spec are putting their own dough up. Today: The combination of GSR continuing the liquidity high sign, RSI ~60, and current gold prices challenging a number of older high peaks is a salivating meal for a reminder that I often give my children...sit at the banquet table...don't be a waiter.

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http://www.biiwii.com

US Launches Military Action...

Obama: US Launches Military Action Against Libya

A personal feeling of mine is that, no matter the supposed justification, war always sucks.  And I am not sure there is ever justification for it short of direct threat.

Sad times, folks.  I cannot shake the thought that Gadhafi is playing to some sort of script, as if he is the next mole popping his head up when needed in the great macro game of misdirection and inflation. 

In the words of one subscriber:  "IMHO what all this chaos means is that QE3 or something similar (hidden off balance sheet) is now a completely done deal."

NFTRH128 Out Now

A rough plan continues to take shape.  There is bearish and there is bullish.  There are time frames, hints, indicators and a writer feeling like he is on top of things.  That is so, even if I need to implement some revisions next week.  That is because parameters are what they are; i.e. simply tolerance levels and guides to successful market management.

Portfolio is -2% for 2011 and +145% from baseline (9/28/08)

Go ahead, give it a try... http://www.biiwii.com/NFTRH/subscribe.htm  ;-)

MSM on the job, fans U hysteria

How close is your home to a nuclear power plant?

Meanwhile... I loved this song all those years ago, and still do:

Not exactly weekend party music...

But since the first segment of NFTRH128 is already in the can and it's about Uranium... here's Uranium, from Kraftwerk.  Now, off to get pizza with my kid and then watch the Rangers hopefully throttle Montreal tonight.

Don't Buy It!

Lame brained, lazy MSM headlines like this, that is...
Gold gains as doubts rise over Libya cease fire

Pure, unadulterated crap.  You are in gold because you are concerned about the terror being perpetrated upon the currency in which you denominate your life, and little else.  The rest is noise.  MSM simply love to ghettoize the barbarous relic.

Now, onto this week's CoT Report for gold and silver.  Gold lurches toward healthy with large and little spec's selling and commercials covering.  Silver does the same.

Have a great weekend.

GOLD - COMMODITY EXCHANGE INC.                                       Code-088691
OPTION AND FUTURES COMBINED POSITIONS AS OF 03/15/11          |
--------------------------------------------------------------| NONREPORTABLE
      NON-COMMERCIAL      |   COMMERCIAL    |      TOTAL      |   POSITIONS
--------------------------|-----------------|-----------------|-----------------
  Long  | Short  |Spreads |  Long  | Short  |  Long  | Short  |  Long  | Short
--------------------------------------------------------------------------------
(CONTRACTS OF 100 TROY OUNCES)                       OPEN INTEREST:      735,415
COMMITMENTS
 251,258   45,643  168,449  238,750  492,485  658,457  706,577   76,958   28,838

CHANGES FROM 03/08/11 (CHANGE IN OPEN INTEREST:     -5,562)
 -17,342    3,116    6,349   16,082  -15,634    5,089   -6,169  -10,651      608

PERCENT OF OPEN INTEREST FOR EACH CATEGORY OF TRADER
    34.2      6.2     22.9     32.5     67.0     89.5     96.1     10.5      3.9

NUMBER OF TRADERS IN EACH CATEGORY (TOTAL TRADERS:      402)
     249       80      155       54       56      350      248
 
 

SILVER - COMMODITY EXCHANGE INC.                                     Code-084691
OPTION AND FUTURES COMBINED POSITIONS AS OF 03/15/11          |
--------------------------------------------------------------| NONREPORTABLE
      NON-COMMERCIAL      |   COMMERCIAL    |      TOTAL      |   POSITIONS
--------------------------|-----------------|-----------------|-----------------
  Long  | Short  |Spreads |  Long  | Short  |  Long  | Short  |  Long  | Short
--------------------------------------------------------------------------------
(CONTRACTS OF 5,000 TROY OUNCES)                     OPEN INTEREST:      190,497
COMMITMENTS
  47,736    8,289   61,405   42,955  101,417  152,097  171,111   38,400   19,385

CHANGES FROM 03/08/11 (CHANGE IN OPEN INTEREST:      1,676)
  -3,647      563    2,221    1,579     -927      153    1,857    1,523     -181

PERCENT OF OPEN INTEREST FOR EACH CATEGORY OF TRADER
    25.1      4.4     32.2     22.5     53.2     79.8     89.8     20.2     10.2

NUMBER OF TRADERS IN EACH CATEGORY (TOTAL TRADERS:      199)
      99       40       64       40       49      162      134
 
 

Uncle Buck: Not good

They are hitting the Yen and yet the commodity currencies of Canada and Australia look pretty lame, while the USD is death warmed over. 

Here is a daily chart from a couple NFTRH ago, showing the dollar at a double bottom from November.  If 75.63 does not ultimately hold, next stop is the low 74's and a whole bunch of bearish potential.  Best for Unc to hang tough here. 

It seems that the world is voting for USD's competitive basket case, the Euro.  Yeh, I am sure that is going to work out well in the long run.  <<--sarcasm.  Gee, why do you think I am a gold bull on the big picture?

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http://www.biiwii.com

Nightmare Scenario for bears?...

They had it in the bag, man.  I am pretty sure the market was topping out into a healthy correction at the least.  The big question now is, can all the dust get swept under the rug by managers working feverishly to clean up the mess and to trumpet continued economic growth?

Japan actually helps this effort, as it is a perfect excuse for the correction thus far.  Short the Yen, get Libya to magically cease military action and put Ed Yardini out there with this pablum: 

“The global economy should pass these stress tests and see continued prosperity”

Nothing is decided until the hopeful rebound takes out some important moving averages.  Don't get sucked in by the touts.  Japan needs to clear, pumping G-7 monetary managers need to clear, and markets need to settle in so we can get a read on the nature of what would have been corrections of some sort, pre-Japan.

When policy makers and their market guru mouthpieces are on the tout, they are trying to influence you; trying to make you choose one side over the other.  It is probably a good idea to let the market decide, in its technicals.  The technicals have not yet given the 'all clear'.  Not in stocks, and not in Treasury Bonds for that matter.

Bears might recall the line from Blackhawk Down:  "A hiss means it's close... a snap means they're shooting at us" (I think that was it).  The snap is the moving average cluster on the SPX for example.  If broken, it's "okay, now they're shooting at us!"

Until such time, SPX has a more solid support down lower at around 1220.

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http://www.biiwii.com

Gold This Morning --Jonathan

Peppy overnight volume was vigorously to the buy side with hardly a break surprising many punters after yesterday's lethargic performance. Considering that Wednesday's open interest dropped by a meaningful ~6,000 contracts and option vols came in, this morning's resilience is stunning. Yes our G-7 suits had a St. Pats Day blarney hustle last night and while the news is limited you can be sure they have some aggressive incursions planned as we collapse into the weekend. The locals are equally stunned as we prepare for the 0820 opening and the tech gurus see a close today above $1421 for the April contract as the bulls taking control. A close over the old highs ~ $1435 could be deafening. GSR is slightly easier ~40.30 and RSI has a springy step. I see just now that the CBs are beginning to fess up...of course they know what they're doing, just be careful when you find them working your patch.

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http://www.biiwii.com

G7 Springs into action

Monetary and financial market managers at the G7 spring into action, markets react and the fantasy that bureaucrats can control markets to their desired ends lives on; for now.

G7 Sells Yen in First Joint Intervention Since 2000

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http://www.biiwii.com

Uranium... it's what's for desert

Yellow Cake, get it? 

Here's the story... blogger buys the fan breakout, blogger get slammed and publicly flogged by other blogger (you know who, the smart ass fundamental guy) for thinking he can see things in charts.  Blogger then unload to the momos coming in for gains of around 100%. 

Finally, upon terrible tragedy (about which I do not mean to make light), blogger buys the sector that is hated for very different reasons than it was last summer.  Starting a nice little Uranium fund within the speculative portfolio.  Chapter 1 of the Contrarian Handbook says I am supposed to be doing this.

http://www.biiwii.blogspot.com
http://www.biiwii.com

Long Bond

I believe treasury bonds were set to rise (rates decline) before the Japan tragedy, as were broad markets set to decline.  The punctuation may well have been the T bond sell out by the Bond King and the leaking threats of 'no QE3'.  Regardless, and noise aside, here is the parameter for a bullish T bond case, not to mention a bearish stock market one. Support noted.

Edit (5:51) From would-be commenter Bruce (if he figures out how to register w/ Disqus):

“Does that not look like a textbook inverted H & S bottom with a target of 126?  Also the fact that there seems to be tons of resistance at about 126, let alone the 200 MA.”

My answer:  Indeed, would agree w/ your target.  Maybe 127 for overshoot's sake.  This would argue against any kind of strong deflation impulse and boost the bullish intermediate scenario [assuming the SMA 200 holds as resistance].

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http://www.biiwii.com

NFTRH Promo...

NFTRH Email Update from March 11th.  Before and after charts are below.  While MFN has not exceeded resistance to load the target, it has appreciated nicely (over a buck higher) and some subscribers may wish to take profits.  NFTRH continues to hold, but also keeps its silver hedges intact.  This is reproduced to again remind all you undecided would-be subscribers ;-) that the service is not just a newsletter each Sunday.  It is email updates, focused on the macro and individual equities, as applicable.  And they are often applicable.

"MFN has been knocked down quite nicely with this week's correction.  I am going to add a bit to the position in the speculative portfolio and initiate one in the 'preservation' portfolio.

I like that MFN - long hyped and loved by too many in the PM arena - is a young producer of both gold and silver, given my hedging via SLV puts.  I am not a silver bear, remember.  ;-)
I also like that MFN has tried not disappointing shareholders of late, a tack that is opposite to their previous strategy of over promise, under deliver. 

Speaking of OPUD, here is some news from PDAC, and one really hopes Mr. Baily knows what he's talking about here.
 
* Output in first two months of year ahead of Q4 output

* Company suggests output tracking close to its forecast

* Analysts have said that guidance is too aggressive

TORONTO, March 7 (Reuters) - Minefinders Corp has already produced more silver in the first two months of this year than in the entire fourth-quarter of 2010, the company's CEO said, suggesting that analysts' skepticism over the company's forecasts is unfounded.

Speaking at the Prospectors and Developers Conference (PDAC) in Toronto, Chief Executive Mark Bailey said the company's silver output through February had already topped the 511,544 ounces is produced in the final three months of last year.

"We'll probably ship 300,000 this month as well," Bailey said.

That output suggests the Vancouver-based company is roughly in line with its projected output of 3.3 million to 3.5 million ounces of silver for 2011. That forecast was met with raised eyebrows from analysts when it was released in late February. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

For more stories on PDAC convention: [ID:nN02153893] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Mackie Research analyst Barry Allan said in a note earlier this month that Minefinders' 2011 forecasts - which include gold production of 65,000-70,000 ounces - seem "aggressive", while TD Newcrest's Steven Green forecast the company will produce just 2.6 million ounces of silver and 64,000 ounces of gold.

Minefinders produced a disappointing 1.2 million ounces of silver and 56,110 ounces of gold in 2010, as it ran into operational issues and weaker grades at its flagship Dolores mine in Mexico.

Technically, this is thus far a healthy pullback, with the EMA 70 (9.70) as a target.  I am going to do the usual and add now and not worry about a few pennies.  But I also remain prepared to add more SLV or other hedge protection as well as sell MFN if I sense that Mr. Baily is returning to the tried and true strategy of OPUD.  Ultimately, the upside target would be 15.50 if MFN should exceed the noted resistance at 12.

Regards,

Gary"

GSR bull flag?

This is jumping the gun a bit, but watch for a potential bull flag in GSR and bear flags in both gold and silver.  If this actualizes, we will resume downside market activity soon enough.

http://www.biiwii.blogspot.com
http://www.biiwii.com

10 Year T Note...

Big picture monthly $UST continues to hold support.  The hammer candle that ended February argued that it was ripe for an upturn (into potential... yes, deflation blip) and has been followed by upside driven by the events in Japan.  This has built in market distortions that may not be bearish at all and might actually have purged over bullish sentiment more handily than if markets had just rolled over naturally. 

This in turn, could extend the global rallies.  In this scenario, today's rebound would fail and new lows to SPX 1220 (per the chart posted yesterday) would potentially make a bottom, as Prechter is delayed well out into the future ;-).  As noted in the update, this will need to be managed week to week.  The Japan disaster has dealt a wild card.

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http://www.biiwii.com

Email exchange with my friend Otto...

Received after an NFTRH email update on gold stocks and the markets this morning, which included a brief mention of Robert Prechter's EW Theorist that I promoted here on the blog on Tuesday:

Edit (10:10)  Below is the part of the update that conjured Otto.  Note that it is not the preferred plan, but folks, it is certainly viable.  If it kicks in, this would be deflation overtaking all efforts to stimulate, even as inflation is promoted 24/7.  It is in fact, why I am only strongly bullish on one sector only.  But even there, the bullishness would only be outwardly substantiated after the fact as rising gold stock prices reinforce the herd, and a new cycle begins.  You know, wash, rinse... repeat. Gold stock fundamentals depend on a rise in gold's 'real' price, and that would be attended by deflation, manifested in declining prices of most everything else.  This is where Prechter continually fails to get the memo.

"The less favored plan calls for SPX to snap through 1220 support, gold stocks to lose 475 and a more pervasive deflationary 'event' kicks in sooner rather than later.  Be on guard for this.  Read the latest Theorist from Prechter (posted on the blog on Tuesday) and you will be on guard."

Otto:  

You read...too much Prechter.

It does not stand up to basic logic that his erroneous theory suddenly becomes right due to an external shock. It's an embarrassing chink in your market position just to see you mention his name...and that's even when you're using him as a contrary indicator.

Prechter is a marketing product built around one single correct call that happened 23 years ago. He's made himself a career and doesn't care about the derision he so rightfully gets because he gets rich off of it.

Me:

[Otto],

1)  He wrote it in mid february, well before Japan, which has nothing to do with fundamentals, but after Libya, which does (given that global strife is IMO an inflationary effect)

2)  He is continually wrong on gold, as I often point out and really, if he were a hack he'd have gotten aboard by now.  He believes what he puts forth, of that I have little doubt.

3)  Prechter, as one of the people I learned from, is an important factor in my analysis and has been all along.  I differ in some important areas, but the deflation case is vital to the analysis I do (deflation is a play, an intermittent impulse, not a structural thing; it brings opportunity).  This component of the analysis would not even exist if I had not digested EWI and let them influence me.  I respect the D case, even as I take it a step further and use it to my advantage.

4)  The always bullish inflation pitch-people are far worse.  'Stay long, stay strong... own assets'... until one day, a washout comes along, they puke and sell.  Then people like me, who awaited the event, buy.  Auto pilot long is not the way to go IMO.

5)  I rely on nobody, not Prechter, not Hoye, not you, not anybody.  I rely on my own honest view of things.  Embarrassing or not.  Everything else is noise, much of which I consider, but noise none the less because it comes from external sources. 

Dig?

Otto:

Dig.  But he's an idiot, you're not. You shouldn't allow yourself to be seen in the same room as him.

Me:

[Otto], first of all, LOL.

Second of all, I am telling you he is vital to my analysis (in some ways he might not find pleasing)

Third of all, he scares me and makes sense to me, which is healthy for me because when I pass his test, I am the strongest market player I can be, even as I remain 'inflationista'.

Fourth of all, I lightly promote his services, but always with the caveat that I believe the deflation case comes in events or impulses and should not be married (until the 'final deflation' of course, when the system ends).  I do so when I believe the threat of such an impulse is oncoming and measures EWI would suggest would be very sound - temporarily.

Fifth, I could be wrong and Prechter could be right.  One thing to be said for him is that he holds the 'contrary' ground and it is hard for me to believe a world full of copper bulls are such geniuses, when it is the bull trade that IMO carries the majority of the dumb asses.

Sixth, don't mess with my system man!  This is what works for me and for my service.  I want to be aware of what Prechter thinks, along with a host of others.  He's the poster (D) boy, and he remains vital to me.

Seventh, I am going to produce this on the blog unless you object.

Otto:

produce away, dude!

Listen, i know you use Prechter as some sort of counterweight. I have my own, but i keep them out of the overt picture. I noticed one thing in your last mail that i didn't comment on, but i will now. You mentioned him as "...one of the people i learned from". Fair enough. But note the past simple tense you chose while writing. As your resident cunning linguist i'd say that the choice of tense, whether subconscious or not, shows that you've moved on from the things Prechter was capable of teaching you. And rightly so because as noted previously, in the end he's an idiot and you're not. So don't drag yourself back down to his level in your public writings!! For sure keep him as part of your own checks'n'balances mechanism, the same way i have certain writers that do the same for me. But harping on about Prechter to your audience does you NO favours whatsoever, because the sophisticated people that read you and get you have long since dismissed the bad theory and stubborn refusal to admit error personified in that fool.

This one is also reprintable on your blog, it's up to you if you use it.

Me:

Thank you.  I'll include all.

Just be careful how strongly you call him a fool Mark.  This is the markets and none of us has THE answer.  Prechter remains in my toolbox and I will continue to reference him (and promote him) because I do not hold the view you do.  Again, I think I am the best that I know of with macro technical stuff, or at least I am more comfortable with my own process - as long as we are betraying things that we do not speak publicly.  And not messing with my formula means keeping things as they are.  I have continually been the first to highlight oncoming 'd Boy' events, and highlighting big daddy d Boy each time.  Then the door opens with Denninger, Mish,  Panzner, etc. to have their day.  It's all part of the stew my man.  No one size fits all. 

Last word to Otto:

He's smart at marketing. The rest? Fool, fool and thrice fool in the loudest voice you care to imagine.

Attn: New NFTRH Subscriber 'FD' @msn.com...

Hi, thank you for your subscription.  Unfortunately, the email associated with your PayPal account was kicked back as undeliverable.  Please contact me at gt @ biiwii.com with a valid email.  Thank you!

Gold This Morning: The Wearing of the Green, As in USD --Jon

Lively overnight volume has gold prices firm after an early evening fade by clearly unaccomplished traders, perhaps the anointed nocturnal operator's first team was getting an early start on St. Paddy beverages. The facts this morning, awash in copious ladles of new radio-active liquidity, remain compelling... GSR is slightly higher ~40.70...RSI remains under 50...open interest after Wednesday's massive volume fell ~4,000 contracts to ~508,000 a number down ~15% from last May and given recent anecdotal evidence of commercial covering the holders of gold futures are whittling down to a hard core. This morning, the CNBC wizards have already started a countdown clock for 0830 and the release of CPI. I can hardly stand the excitement of waiting to learn (will they roll Greenie out again?) whether core CPI is a sissyish rounded-up 0.2 or a sterner round-up which will morph into immediate analysis of the cost components of my son's egg mcmuffin. Today: should resume upside momentum, subject to the 0830 media rant, and one caveat, April gold options, which are very active, expire 3/28 and interested parties may clearly try to operate around the obvious round number, $1400.00

http://www.biiwii.blogspot.com
http://www.biiwii.com

S&P 500: Next support @ 1220

Here is a chart from NFTRH127.  Chart was created as SPX was rising to kiss the short term trend line goodbye after Friday's white candle.

http://www.biiwii.blogspot.com
http://www.biiwii.com

All you have to know about the Fed...

From yesterday's FOMC release:

"The recent increases in the prices of energy and other commodities are currently putting upward pressure on inflation."

This is the root of the entire game.  People who really believe that rising prices cause inflation must continually be off sides in this game because they do not even get out of the gate on the right foot.  Dis info like this is why I am always harping upon the MSM and the financial services industry in general, which seem to rest securely in the status quo and the ignorance of the masses.

Recovery - along with attendant rising asset prices -  was promoted through pure inflation, which is the same tool that has been used ever more intensely since the age of 'inflate-or-die', Inflation onDemand or whatever you want to call it, kicked in so acutely at around the turn of the century.

The most recent inflation has already happened and the effects are now being managed by the FOMC as perhaps a declining majority believe the robo-drivel, as noted above.  The troubadours on Wall Street are self-interested in the status quo, and have no problem seeing confidence in the Fed remain in force through as many bonus seasons as possible.

Now, it is probably time for a cooling of the [shameless metaphor alert] inflationary reactor as it has threatened to melt down.  This must be managed, and China is once again in the game helping out.

The reason this blog has been so concerned about long term US Treasury bond yields for months now is because a breakout of the long term trend would have meant the financial equivalent of a nuclear meltdown, which would have severely compromised the Fed's power.  Do you really think they are going to willingly let that happen?

So it is expectations management time, and time for really lame lines like the one quoted above from the FOMC.  But rest assured, the inflation is ongoing, whether bond yields indicate it or not.  NFTRH used a different metaphor in this regard; a game of Whack-A-Mole.  Right now, even as the US 'Bond King' ducks back down the hole, China pops its head up and yields are maintained.  This is not a sign of inflation containment however.  It is a sign of obfuscate and delay.

As NFTRH127 put it in the 'Wrap Up' last weekend:

What does all of the above mean? I believe that whatever the flash points (fear of no
QE3, toppling dictators, oil, earthquakes, etc.), the markets need a break. I have
questioned Bernanke’s ‘damned the torpedoes’ stance in the face of unquestioned
economic growth and now even he is talking of an end to QE one day.

Does he think we are all as dumb as the lowest common denominator? Is that how he
sees the huddled masses from on high in academia? Now policy makers issue some
talking points about the end to radical stimulus as if for no reason other than ‘growth is
on track, we have done our job and will now ride off into the sunset and… you’re
welcome’.

No, policy makers are exposed if speculation goes too far and the long bond yield gets
out of hand. China’s recent escalation of Treasury bond purchases likely comes within
the context of orchestration on a grand scale. Okay, I’ll play; we could get a whiff of
something nasty in here soon. This would puff up the deflationists and once again
embolden them to come out of the woodwork in admonishment of we stupid bulls and
inflationists. Therein will lay opportunity.

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