Blog Archives

A Funny Thing Happened on the Way to Market Complacency / Euphoria

A relatively reliable measure of complacency/euphoria in the stock market just hit levels last seen in late January, just before stocks reversed in a massive meltdown, surprising all the complacent/euphoric Bulls.

The measure is the put-call ratio in equities. Since this time is different, and the market is guaranteed to roar to new all-time highs, we can ignore this (of course).

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The Front-Line Is About to Shift To End This Gold & Silver Price War Stalemate

The fundamental news is nothing short of complete and total uncertainty. A month after the worst mass shooting in U.S. history, we had the worst mass shooting in a church in U.S. history. On top of the worsening domestic situation, Saudi Arabia is in utter chaos right now with dead princes, frozen bank accounts, war and war threats, and a petro-dollar that behind closed doors most certainly undergoing spats of violent convulsions.

So coming into Monday it seems there would be a lot of fear and uncertainty in the markets. And under normal circumstances it would, and it most likely does have a lot of fear and uncertainty in the markets right now.

Yet the “fear index”, the VIX, stayed under 10 all day long:

To anybody who does not understand how this is possible, let’s go over two things:

  1. Sell short “fear”
  2. Buy Index futures

Just like the cartel throws unlimited paper gold and paper silver a the markets, the cartel (as in the Fed representing the banking sector and the Exchange Stabilization Fund representing the government) can throw unlimited paper at the stock markets too. And they do. So it is not that there is no fear in the markets. Certainly there is more fear in the United States and globally right now than ever before.

But it’s nothing a little debt based fiat currency can’t solve when there is both a printing press and networked market control at the speed of light. Literally.

So not only is is no surprise that the VIX is so low, but, well, this:

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Gold & Silver Prices Have Held Steady Amid Market Mis-Matches

We have a nice pop in the pre-market today, Wednesday Oct 25th:

There’s good volume on that price rise too. Since opening on Sunday night, the silver price is down slightly:

As is the gold price:

Of course, we could see this coming from as early as Friday, so we have been in defensive posture anyway. But on the fundamental side of the equation, as the days go on, the fundamentals are going to become harder and harder to ignore.

The infamous “Trump Dossier” is back in the spotlight, and it has Hillary, the DNC, and the FBI’s fingerprints all over it. Then there’s Emperor XI and an oil for gold-backed yuan story that just won’t die.

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No Twist In This Friday The 13th Movie: Gold & Silver Are EPIC SLASHERS

Sure enough, gold and silver were the slashers this Friday the 13th…

As soon as the data releases hit the tape this morning, gold and silver caught a nice bid and the dollar dropped:

The volume was nice in both metals:

And both metals managed to go out on the highs:

Last week was all about gold and silver doing just what we needed and nothing more. Recall that what we needed was to see the gold price come down some to silver and the silver price come up in relation to gold. And that is exactly what we got.

If we look in terms of the GSR, we can see that the trend continued this week:

The Gold-to-Silver Ratio now shows that it costs less than 75 ounces of silver to buy one ounce of gold. Said differently, Silver has been outperforming gold for days now.

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A Golden Sunset & Silver Ripples Mean One Thing: SURFS UP

Today started out like all BLS Jobs Report Fridays. As the Nonfarms Payrolls Report was released, gold had an exceptionally rough time:

$2,605,900,000 worth of paper gold traded within just four minutes (20,600 contracts).

That was not the first hit, however:

Gold got a second helping of smashed potatoes when the markets officially opened.

Silver had the same hit in the morning as the first negative jobs number in seven years was released:

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SD Monday Outlook: Suspended Animation, Gold & Silver Smashing and Fed Radio Silence

First things first – when it doubt, smash:

Last time I checked, you can pick up a bunch more ounces at $17.75 than you can at $18.25! One look at the economic calendar one thing should immediately stick out like a sore thumb:

No Fed speeches at all this week. This is common the week before FOMC day. Next week Janet Yellen will hold a “press conference” in conjunction with the rate hike decision or indecision, so this week, there is nothing to for the market to take the wrong way. It’s not like the Fed, ESF and market manipulators won’t have their hands full behind the scenes anyway.¬† CME Group rate hike probability is showing the Fed will hold, with any variation to the “rate cut” side:

This is not to say there is not a ton of fundamental news brewing in the background. North Korea is still at it, Russia is conducting war games, the United States is dealing with a one-two hurricane punch, and Syria is front and center again. Not to our surprise, none of this is good for markets, but sure enough, one look at the charts will show that apparently it all is. In fact, uncertainty seems to be quelled. The “fear” barometer, the VIX, is subsiding, and the dollar is slightly up going into the week:

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Sorry, Central Banks: Risk and Volatility Cannot be Extinguished

The unspoken claim of central bank policy is that risk can be extinguished by intervention/manipulation: once the Fed has your back, i.e. is supporting the market, risk disappears, and the easy profits flow to those who buy the dips with supreme confidence in the Fed’s ability to magically turn risk-assets into risk-free assets.

Unfortunately for the credulous investors who believe this, risk cannot be extinguished, it can only be transferred to others or to the system itself.

This confidence in central banks raises a pernicious systemic risk:

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Is This a Blow-Off Top? Four Ways to Tell

Those who lived through the last two speculative blow-off tops know the impossibility of predicting the final top.

How can we tell if stocks are in the final blow-off stage of a bubble? There are four basic give-aways:

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Wedges and Triangles: Big Move Ahead?

The central bank high is euphoric, the crash and burn equally epic.

Just out of curiosity, I called up a few charts of key markets: stocks (the S&P 500), volatility (VIX), gold and the U.S. dollar (UUP, an exchange-traded fund for the dollar). Interestingly, all of these charts displayed some version of a wedge/triangle.

In a wedge/triangle (a formation with many variations such as pennants), price traces out a pattern of higher lows and lower highs, compressing price action into the apex of a triangle as buyers and sellers reach an increasingly unstable equilibrium.

As price gets squeezed into a narrowing band, the likelihood increases that price will break out of the triangle, either up or down, in a major move.

So which way will these markets break–up or down?

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Complacency Reigns Supreme–Nothing Can Possibly Go Wrong, Right?

So by all means, buy the dip now that the VIX soared in full-blown panic from 12 to 17.

One of the more remarkable features of the Bull market in stocks is the ascendancy of complacency and the banishing of fear. Take a look at this chart of the “fear index,” the VIX–more properly, a measure of volatility:

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Who Left the Crash Window Open?

Can stocks keep hitting new highs even as sales and profits fall?

Given that we live in a world where a modest 3% decline in the stock market triggers panicky demands for more quantitative easing (QE 4), few observers expect much a correction, regardless of the souring fundamentals such as sales and profits.

A correspondent notified me of a Puetz “crash” window (based on the analysis of Stephen J. Puetz) opening in late March-early April. (Since I am not a subscriber to Puetz’s work, I can’t confirm this.) As I understand it, while these windows do not predict a crash/sharp correction, such moves tend to occur in these windows, which are based on cycles and events such as eclipses.

So I decided to look for any evidence that a sharp correction might be in the offing.

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