IS THIS TIME DIFFERENT?

                                 No, I’m Thinkin’ Bigger Issues

Except for the occasional rally to blister the shorts, EURUSD looks set to go lower; much lower. At the same time, though, we got record short positions over at the Crimex CME in spec Euro positions. Will the universe let all these shorts be right?

Markets face this reality all the time; take gold bugs for instance. I know people who always buy the top in gold, swear they are never going to sell because the world is a mess, etc. and then sell the bottom days/weeks/months later.

What have we just seen in gold? Does 2 to 3 day rally [$50 - $75] that gets public long [again] meet $25 - $35 decline in 40 – 60 minutes a few days later sound familiar? Uhhhhh, yea.

Anyone that knows Forex history will tell you that one-way bets have a way of not being so one-way. Now, that doesn’t mean that can’t stay one-way for extended periods; what it means is that when it ends it will be ugly with a capital U. We had a 2000 pip rally at the end of 2008 [in 10 days] in Euro from about 1.26 to 1.46. The carry trades are notorious for disaster; go ask Mrs. Watanabe about GBPJPY that was a one-way street for years and then gave it all back [and more] within 3 months.

What gives the shorts in the Euro a better than even chance of being a long way from being over on the down side are the politicians; ever seen a bigger bunch of worthless blow bags?

Rumors and leaks are pieces of credibility that have to be saved, not spent so your mistress can get a new Mercedes Benz. As long as they blow smoke, and remain in denial, the Euro will not have any rally legs to take it anywhere.

Yes Virginia, this time MAY be different.

Have a good day everyone.

-vegas

WHEN GOOD NEWS IS TERRIBLE

                                         Take Notice Markets

All it took was a fantasy land slightly better housing number and you could here the QE3 air come out of the market balloon. Perceptions are everything; that and the fact Europe becomes more desperate and broken every day.

Catching a falling knife is always difficult and most retail specs can expect very bloody fingers for their efforts; the action below 1545 in gold was just brutal in terms of price change. So, here we are at the 1530 -1540 area as I write; remember 1599 Mrs. Watanabe? You know, rock up the hill, buy the dip sell the rip? I’m wondering where the remaining longs have their collective stops: 1520, 1500 maybe?

Any day the market is open seems like a good day to sell EURUSD. The root of the problem in Europe is that every politician over there has squandered their collective credibility over the last year and a half by bold-faced lying about the problem.

In a nutshell: when you loan money to deadbeats, don’t expect it back – EVER!

“I give you extra 1% - how that sound German swine?”

“Sure, here’s another €5 billion Euro’s.”

Every day they send out somebody to boldly lie where no man has gone before. How many times have one of them said everything is OK? If I had a nickel each time over the last 18 months, I could give the money to Greece and the problem would be solved!

Really, the whole point in having the Euro slime talk is to buy time and start short covering rallies that the big money can sell. With record shorts in the EURUSD [about 22 billion notational] all it takes is a small spark anywhere near the close and we start rallying like a dry Christmas tree on fire.

It will be interesting to see if gold can hold 1500. If it can’t I think it’s going to be an ugly, ugly affair going forward. I’m just going to throw this idea out there for you perma-bulls in gold to ponder. What if the gold market is factoring in a Romney win over Chalky Soetero and both houses of Congress are Republican? What if they slash taxes, let loose the energy industry, and balance the budget? Up until now, gold has been up 11 straight years; if that scenario plays out gold ain’t gonna be anywhere near 1500.

Have a good day everyone.

-vegas

STOP HUNT MONDAY

                              Some Days You Feel Like The Fox

Ever since gold rallied above 1580 the other day, the “nibble nibble BOOM!” orders from the Central Planners have been hot and heavy. The manipulations can especially be seen in the last 30-60 seconds of most 5M candlesticks; only somebody who could care less about price would consistently allow Blythe and her crew to butcher their orders in this way.

I don’t think I can ever remember another time when price, from second to second, has been so chaotic and disjointed in gold. Watching prices, you have no idea if the next second is going to quote a bid anywhere near where it was a second earlier. What looks good one second literally stinks the next.

“Run little fox, run!”

Overnight, as if on cue, the “Lemmings in Asia” took the market up to the 1599 level. I guess when you sell it from 1560 all the way down to 1528 the previous 2 days, 1599 looks like a bargain buy.

“Mrs. Wantanabe, please go find a job will ya?”

Over in the currency arena, we got the “Flying Wedge of Death” going on in some of the majors, particularly EURUSD. We got record short positions in the Euro, so until some of these weak hands get shaken out, the market is subject to quick, sharp, and vicious short covering rallies, especially in the off hours and near the European close [9:30 A.M. – 10;30 A.M. Chicago time].

After the $140 sell off [1670 – 1530] in gold, we’ve now rallied back half-way to just in front of 1600. I would expect a few attempts at 1600, but ultimately I think the market needs to step back and do some backing and filling below 1580 before it can really go higher.

Ultimately, it’s going to be the Fed June Meeting that holds the short-term key for gold prices. If Weimar Ben throws cold water on further QE, price action is going to get ugly quick. Until then, prices probably will be contained in the 1550 – 1610 area; price will move on perceptions of change in the QE dynamic.

Really, what choice do they have but to print?

Have a good day everyone.

-vegas

MRS. WANTANABE PLEASE STOP TRADING

                                          Is She Hurting You?

And while she is blowing up the Japanese bond market, she ain’t exactly doing gold any favors either. Somebody at the Central Planning prop desk over at JPM has obviously forgotten to email me and let me know she is back in the market.

“Mrs. who?”

[For your personal education and amusement I introduce you to her famed exploits.]

 http://online.wsj.com/article/SB10001424052970204422404576594493550582376.html

http://ftalphaville.ft.com/blog/2011/10/27/713866/but-what-does-mrs-watanabe-think/

She hasn’t been this active since she got caught on the wrong side of the GBPJPY carry trade in 2008 [June 2008 GBPJPY about 215.00 – January 2009 GBPJPY about 120.00] and took a 40% + haircut on a ‘sure thing”.

Amazing how many sure things ain’t that sure.

Think back a second to the Asian trading session following the “Leap Year Massacre” in gold on February 29; which in about 4 hours gold tacked on about $40 / oz. in price [1685 to 1725] on a straight up bargain of a lifetime massive demand spike from Asia.

They should have used my advice from yesterday: “If you are gonna buy the dip, you better be willing to sell the rip.” Sadly, no can do and/or no wanna do. Why sell it higher when you can easily sell it lower later?

Subsequent sessions since then have seen gold stage some pretty good 2 and 3 day rallies, only to be crushed by the Central Planners. Undaunted, Mrs. Wantanabe bravely kept buying. Interesting thing happened though the third time gold came back to the 1630 area from loftier heights; Mrs. Wantanabe and her pals [affectionately dubbed the “Lemmings in Asia” by yours truly] started selling, and selling, and selling some more.

Which brings us to the present day $140 haircut ain’t-this-fun-waterfall in gold. Not interested in seeing the mistakes of the past repeated, most notably the above mentioned carry trade and multiple trading debacles in Spanish and Irish bonds, they simply are doing what every trader at some point has to do: puke.

                             Bullwinkle J. Moose Shows The Way

“Hey Rocky, watch me pull a rabbit out of my hat. Button up my sleeve ...”

We all know how that turns out.

Have a good day everyone.

-vegas

BUYERS ON STRIKE

                           That’s Right; We Ain’t Buyin’ Nuttin’

I know it’s hard, but imagine this for a moment; Greece is totally out of money! They got about € 1.98 in the bank [if it’s still open]. I mean, who could have seen this coming?

Tomorrow sees a Greek bond auction, and if this somehow gets undersubscribed and they can’t raise the necessary scratch to pay the bills, I’m sure all the public sector union thugs employees not getting paid, the 40 year old philosophy students not getting their University tuition, and the pensioners who see their monthly checks slashed,  won’t be a problem. Peace and love in Syntagma Square.

So, the only thing left to do in Europe is sell gold. Even the “Lemmings in Asia” have caught on to the scam game. Yes, Mrs. Watanabe and all her pals, who have been accumulating gold from the 1800’s, 1700’s, and 1600’s, are now bailing in the mid 1500’s. As predictable as they were going up, they don’t disappoint on the way down either; only, on the way down it happens a lot faster.

Not to be outdone, that stellar Wall Street firm Morgan Stanley is telling muppets clients today that gold is still a buy and that the future looks bright for the “barbarous relic”. Seems their prop desk has more proprietary selling to do.

We’re due here, in just about everything financial and especially gold, for a smart 2 or 3 day rally that takes prices back up some. Whenever it finally does happen, look for the rally to start sometime after the Crimex Comex closes for the day. After all, the dealers and Central Planners have to shove the rock back up the hill, in the least volatile time of the trading day, to get everybody else to buy it in “prime time”. Rinse and repeat.

Meanwhile, at JPM …….

                                             Ina Drew Is Gone

Somebody had to fall on the”It’s-my-fault-the-firm-lost-2-large-on-the-trade” sword; making a paltry $15 million per year I’m thinkin’ soup kitchen isn’t in her future. Perhaps there is a good job in Chalky Soetero’s administration somewhere; Treasury Department would be appropriate.

Have a good day everyone.

-vegas