HOW THE FED STOLE CAPITALISM

                                  Your Government At Work

The world breathlessly awaits the new round of money printing & currency debasement easing from Weimar Ben today. Like kids tucked in their beds awaiting Christmas morning, thoughts of sugarplums dance collectively in the hearts of most market participants.

It doesn’t matter anymore to the collective crowd that the entire system of finance as we have known it has ceased to exist; all we are left with is the “up or down thumb signal from the emperor”. One guy, who has a track record that couldn’t land him a job as a greeter at Walmart, is going to decide what the economy needs and just how much it needs it. Markets used to decide such matters.

Remember, this is the guy who said back in 2008 that everything was fine regarding the housing market. Somewhere, Stalin is smiling.

What we are left with now is crony capitalism and the prop desks at JPM and Vampire Squid with more money to ramp stocks higher to make you feel good. In the real world, a place most Fed members rarely if ever inhabit, the situation is far, far worse.

My sense is that all that is happening now is a gigantic CYA exercise, so that when SHTF months from now, everyone can point the finger at someone else and say it wasn’t my fault.

I’m writing and posting this before the “magical” moment the world finds out what “The Bernank” has up his sleeve. In a very real sense, in the long run I don’t think it will matter much. The Fed wants interest rates as low as it can get them, thinking this is just what the economy needs. These people are stuck in the 1950’s.

What the economy needs is for Government, at every level, to get the hell out of the way and let people do what they want; this paradigm just isn’t programmed into the elites running things. No, I absolutely need for you to tell me what to do.

So, we wait for the skinny bald guy to tell us which way the wind is blowing and how he is going to make everything OK. Please, I can't stomach the Q & A session with the fawning financial press after the rate decision. Listening to guys like Steve Liesman makes me want to puke. I don’t know about you, but as for me, every time these guys lips move they are lying.

Only sure thing I know is that the math doesn’t lie. We are one day closer to that moment when the entire system collapses from its own weight. Debt doesn’t grow an economy; productivity grows an economy.

In the government dictionary, productivity is defined as money that someone makes that we can confiscate and then pass around to our political pals, who then donate back to us so we can favor those who “see the light”.

Welcome to the Ponzification of Amerika.

Have a good day everyone.

-vegas

IT’S QE OR ELSE

                              The Bernank: Man Of The Moment

Next week, the world literally turns its lonely eyes to the Mariner Eccles building for more “Hope & Change”.

“Ohhhhhhhh, Chalky Soetero is giving his umpteenth campaign speech?”

“Errrrrr, not quite.”

The world is hoping, praying really, that Weimar Ben opens the money printing monetary easing floodgates at the June Fed meeting. As with all things, the devil is in the details, and even if he comes through, the key will be if it was enough. Hide the kids if he does nothing.

The monkey wrench in the equation is Greece; with a newly elected socialist government only a couple of days old, and ready to tell the banksters in Brussels to go pound sand, how much of the taxpayers money does Ben give away?

Not to worry, Vampire Squid [GS] will let the moneycrats know what to deliver early next week before the meeting. The real question is which Belgian or French caterer is doing lunch. Remember, “The private sector is doing fine.”

Gold especially is subject to the “buy the rumor sell the fact” mantra of Trading 101. How many times have I warned [and been right by the way] that the rock gets rolled up the proverbial hill, only to be rolled back down when the Central Planners sense the public is now just a tad long the yellow stuff?

And on cue today, the EURUSD put on a blistering short covering rally because of course too many people are short the pair. Forget the disappointing retail sales figures; it’s all about QE and the “Hope” the Fed bails out Europe and saves the day; the “Change” of course is that something but failure will be the result. Now that’s what I call “Hope & Change” trader style.

Too bad it won’t change anything because Italy is next; say goodnight Europe, the party is over in 3 …. 2 ….. 1

Have a good day everyone.

-vegas

LET THERE BE LIGHT

                                       A Moment Of Clarity

Perceptions are everything; reality is nothing. The former is fluid; the latter is fixed.

Today, we know 2 things we didn’t know yesterday. The first is that Public Sector Unions are toast [thank you people of Wisconsin]. It was an impressive victory [about 8 points] for Scott Walker, the incumbent Republican Governor, and a total rebuke of spend, spend, and spend some more [of your money] union thugs.

Take away union vote rigging in libtard nation Madison, and decaying corrupt Milwaukee, and the margin of victory probably really was on the order of double digits.

A world away some hours later we get the Vampire Squid Alumni, Mario the Great, holding his usual ECB presser after the ECB formally met to discuss monetary policy for the Eurozone. Like Greenspan, and all true great economists, he said nothing better than just about anybody normal.

“Spin it all you want Mario, you have no clue what to do to get Europe out of its mess.”

Which brings me to gold: it’s now $100 off the lows on the heroin hopes of QE3 on June 20 from our buddy Weimar Ben. Anybody but me ever hear of the adage buy the rumor sell the fact?

From a trading standpoint, who isn’t already long gold looking for a pop up if we get the anticipated money printing easing? The Fed’s street mouth piece, J. Hilsenrath over at the WSJ [Wall Street Journal] confirmed it yesterday. This guy leaks more info from the Fed than “Deep Throat” ever did on Nixon back in the 70’s. So, when it comes, who’s gonna be there to buy it from you at a higher price?

And what if we don’t get it? Pleeeeeeze, don’t write me with what happened to your “protective” sell stop.

And what if that election in Dairyland is the start of something bigger come fall? With Chalky Soetero gone and a true Republican House and Senate, can and would the Amerikan economy be unleashed for growth and maybe a balanced budget? I dunno, we’ll see.

What I do know is this: gold is not a one-way street. Jumping back in the vegas hot tub time machine once again, I take you back to this exact moment on the calendar 32 years ago. Gold has come off its historic highs in January of $850 / oz.; pessimism is high, Carter looks like a shoe-in for re-election, and then gold bugs are talking about price levels for gold that make people’s eyes glaze over, and budget deficits are huge and growing.

Then, an interesting thing happened; Reagan was elected and set off the 80’s boom and gold went into a 20+ year bear market that saw prices back at the $250 / oz. level.

Funny thing about history; it tends to repeat itself.

Have a good day everyone.

-vegas

NFP UGLY

                                    Hey, Let’s Trade Some Gold

In an economy only Chalky Soetero could love, even the BLS [Bureau of Lies & Statistics] couldn’t make up enough births, new business start ups, and people dropping out of the workforce to give the needed spin on today’s job numbers.

But hey, running the economy into the ground is hard work when you have fundraisers scheduled day in and day out. You have any idea how hard it is to party with the Hollywood types all week and then have to come home to MOOOOOchelle and be lectured about eating broccoli instead of cheeseburgers?

Back in the real world, gold took off today on hopes Weimar Ben has enough bad data in his quiver to justify full throttle hyper inflation full speed ahead into QE3 [and then QE4, QE5, ad infinitum nauseum] later this month at the scheduled Fed June meeting. 

So, just another $70+ range day. Ho hum.

My only hope for those that are long gold is that they get their collective wishes, because if Uncle Ben disappoints, well … I don’t want to go there because there might be kids around reading this and I don’t want to scare them. But at least for today, it looks like gold has bottomed for a while, and the $25 gap up on the NFP news filled some shorts at prices that left some stuff in their shorts [if ya know what I mean].

Not to be outdone, with record short spec positions in EURUSD, first let’s open the hatch door down, freeze the quote and order tickets for 30 seconds, then light the fuse to take us up almost 170 pips. That dealers intentionally freeze the order boxes even once in your lifetime should be cause enough to have them all taken out back of the woodshed and shot; not in the head because that would be quick. No, everywhere else.

Meanwhile …. In news you can really use.

                                    Which Adults Are Peeing?

It’s gonna get warm this weekend, and in the interest of making sure my readers are well informed and safe, you need to know that according to a recent poll conducted by the “Water Quality & Health Council”, fully 20% of adults admit to peeing in public pools.

“So, who’s up for hiking in the mountains?”

And because it’s gonna get hot out there this summer, remember: Amerika is known for its ingenuity.

Have a good weekend everyone.

-vegas

CHOOM COUNTRY, CHOOM MARKETS

                                Official Presidential Limousine

Our Narcissist-in-Chief spent the better part of his youth using/abusing drugs and alcohol. I’m sure he still has a clear mind. After all, if you intentionally wanted to economically destroy Amerika what would you do any different than he has done?

It looks like the gold market too is in some kind of drug induced state. Take today for instance; where else can you get 4 $5 rallies, a $7 rally, 2 $5 breaks, and to top it off a $20 break, all within 2 hours? And, the day has barely started! Obviously, some people need to clear their collective heads.

Maybe it’s from spending too much time in the Preezy Limo trying to suck in “bud smoke” off the roof. I dunno, just askin’, because what we are seeing in gold is pure unadulterated account destruction going on at the retail level. Open interest is dropping for a reason; nobody can handle these wicked spikes/drops that come out of nowhere multiple times during the U.S. session.

As if you needed to be reminded, gold has always had a reputation for stop hunts and dealer games. Throw in slippage on fills and you have cooked up a recipe for disaster. You really want to risk your account for a trade?

Meanwhile ….. over in fantasy land Europe, the Pol’s still pretend and play around like a solution to the continents problems are at hand. What they are missing is simply this: it’s not a liquidity problem it’s a solvency problem. Greece is gonna cost Europe a trillion Euros; in a country with roughly 11 million people, even if they were better workers than the Germans, there is no way that amount of money owed by 11 million people evahhhhhhhh gets paid back. Extend and pretend all you want, it ain’t gonna happen. Eat the losses and let’s get on with it.

But sadly, that these Pol’s would allow people for generations to suffer so that greedy bankers who made bets can recoup their collective bond losses at the public’s expense is nothing short of criminal. And until this changes, nothing is going to save Europe.

Tomorrow is NFP Friday; my favorite time of the month. Based on data received lately, I don’t know how the liars at BLS [Bureau of Lies and Statistics] can spin there way to a rosy number. In the “choom equity market” though, remember that bad news is good news because Weimar Ben stands at the ready for more QE. Nothing makes the prop desk traders over at Vampire Squid drool more than the thought of more money for the stock market.

Because as everyone knows, you are too stupid to know how bad things really are if only your stock portfolio is up and showing a 0.001 % gain. Nothing else matters, and with this new found sense of financial delight, you will happily [and blindly] go out and spend money and vote for Chalky Soetero in November. See how good things can be if only you would let them be good?

Back in the real world, away from Chalky Soetero and his “Choom gang”, things are a lot more clear; the jobs situation is worse, the inflation situation [especially food] is worse, Europe is in the process of going over a cliff, and of course FaceBook stock is 30% [or more] lower than a week ago.

So, put on that Bob Marley album, sit back and relax; I’m sure things are gonna work out.

Have a good day everyone.

-vegas

MICROSECOND TRADING: TUESDAY EDITION

                                         Out In Force Today

Another day where the Central Planners were out in force in the gold market. Not content to gobsmack it down $20 in Asia and early Europe, the rock got rolled back up the hill for another move down.

The problem with piggy-backing them is that they care not about profits/losses; they only care about getting the price down. If they are $10 or $20 [or even more] early they don’t care; you and I should.

Since last week you have to be blind and/or stupid not to be able to see them in the market above 1580. It slowly climbs and then BOOOOOOM! Down $2 or more in a second or two; climb again rinse and repeat. Cover under 1580 and start fresh again.

“Errr, we only represent customers and do no proprietary trading”

“Yea, sure; by the way is my check in the mail?”

Gold continues to be plagued by extremely sharp moves both up and down in a fraction of a second. You get yourself on the wrong side of one of these, and it isn’t a very easy task to then try and make it back. What goes out of your pocket in a heartbeat might take many hours or even days to get back, and that’s if you are lucky.

This is what I call a lack of “trader volatility”; multiple trend moves within the same day in the same direction. Without it you have almost no chance of making losses back during the day if you get on the wrong side of a trade. What we get now are micro-bursts; gold pops up $5 in 3 seconds, spends the next 3 hours going up $2, and then drops $6 in 10 minutes. Very tough trading scenario.

Still, I think what will drive the market until the next Fed meeting [and Greek elections] will be one of perceptions about QE3; will they or won’t they? Thing is, this is about there last chance to do anything before the election and make it count [if it works, which is a big if]. So, the market is particularly interested to see what Weimar Ben has up his sleeve.

Any thoughts the Cntrl-P button isn’t pushed and it won’t be a pretty picture for gold.

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

ROLL ROCK UP HILL REDUX

                                       Attention Gold Buyers

I’ve had this nightmare dream before; I’m driving along and everything’s fine and then out-of-the-blue the rocks come falling down crushing my car and me inside. You wake up and realize it ain’t happenin’, but nonetheless for a few seconds it’s a little disturbing.

How many times have we seen this scenario: sharp rally, crush shorts, turn common tech indicators bullish, get public long [again] at or near the top within 100 hours?

As the world falls apart and specifically Europe implodes, the smartest people in the room have just bet, in the last 48 hours, that Weimar Ben will hit the Cntrl-P button over at the Mariner Eccles building and start QE3 in June. If we don’t get it, a whole lot of people are gonna be trapped inside my dream.

I’m going to go out on the proverbial prediction limb here.

I think we have seen the low in gold up and until the Fed meeting in June. I can see about 1550-1557 on the low side and maybe 1610-1625 on the upside until then. But here’s the rub; if we don’t get QE3 from the Fed in June, and 1530 -1525 subsequently gets taken out, we are headed for a major debacle in price on the downside. And with that comes many months of price congestion and basing before gold can ever hope to go higher.

Around the 1580 level and higher today I have seen the “nibble nibble BOOM!!” phenomena from the Central Planners. There’s no doubt in my mind they were heavy handed in the market today. What do you suppose that means?

While the entire world goes ga-ga over the FaceBook IPO today [expecially California State Tax Apparatchiks], Greece is toast, Spain implodes, and European GDP is falling rapidly. Granted we needed some kind of rally because so many people have piled into the short side of gold.

[Here’s a thought; what if FaceBook opens higher and closes lower? What happens then?]

But remember this: in a bear market [not just gold but any market] the rallies are killer – they come out of nowhere and they are vicious – and they convince a whole lot of traders that the trend has just changed and now we can pile into the long side of the trade. If you look at a daily chart of gold this is the type of action we have seen since 1800.

Ultimately, after the stupid money has piled into the wrong side, price rolls over and we get the rinse & repeat cycle we have seen ad infinitum nauseum  since last Fall; buy the rally get stopped out [pick number of days here ___ ] later.

You can rationalize a lot of things, but you can’t ignore the math; Europe is complete toast and the U.S. [add Japan too] is next. Stocks are so overvalued, pumped up via the Fed to get Chalky Soetero reelected, and give the illusion that things are just fine.

We have started to see stocks roll over world-wide; practically every major stock index is lower on the year. When the complete “risk off” comes, just remember gold isn’t immune.

Meanwhile … Chuckle of the day before the weekend.

Have a good weekend everyone.

-vegas

Update 3:15PM Chicago Time

In case you were wondering why I have Friday rules, I present EURUSD as prima facie evidence of what the Central Planners can do when conditions are thin and stops are on the plate. At 2:00 P.M. we had a melt up stop hunt in the EURUSD of about 60 pips within a few minutes on zero news.

Whatever can make your weekend can destroy your weekend. I wonder how many Euro traders are crying in beer as I write; only it won’t just last a few minutes, it will be there all weekend into the open on Sunday night. Been there done that once in 1980; ain’t ever happened since.

Sometimes it may seem to those who are new to trading and creating wealth that my methods can be restrictive and that I may miss some profit opportunities for no apparent reason. Lesson #1; first do no harm, then make money. I rest my case.

The Dow 30 closed near the lows of the day as FaceBook closed at $38. Another pump and dump scam Ma & Pa Kettle will eventually lose money.

Over the weekend [probably Sunday] I’ll have a special post. Tune in for details.

FED = INSANITY

                                 Go Ahead, Figure Out The Fed

“Fed Says Economy EXPANDING MODERATELY.”

“What planet are you guys living on?”

Seriously, from missing on about 90% of all economic data in the last few months, I wonder with my mouth wide open which economy they are talking about. That these guys live in the bubble of Chalkyville [Washington, D.C.] there can be no doubt.

Moving on to gold, complete confusion always takes center stage when Weimar Ben opens his mouth and waxes eloquent about the economy. Not to disappoint, gold gapped lower $10 on the Fed release, thus raping stops below the earlier day low of about 1635. Central Planners I’m sure had a lot do to do with that move, and a few seconds later backed away and let the hedge fund community do its schtick.

But once people with brains gave it some thought, gold rallied sharply in seconds. Out the window on the way down; up elevator on the way up. Take stops out on the downside then go back and get the buy stops from the old high; move back a few bucks from that and now you have in 3…. 2…. 1…. zzzzzzzzzzzzzzzz  into the close.

For cryin’ out loud, [as I write] we still don’t have but about a $20 range!

“Hey anybody still want to trade? C’mon guys, you can still make those losses back.

Easy Peezee!”

Think anybody got hurt today in this Fed induced trading mess? Exactly as planned.

Think for a minute about what I said in an earlier post about the 3 main goals of market manipulation; 1) keep gold out of the news [especially on news days], 2) hurt all speculators as many times as possible [long and/or short], and 3) make other market participants do your bidding so the real fingerprints of manipulation are absent.

Again today, they did it in spades.

Have a good day everyone.

-vegas

WAITING FOR MR. MARKET

                                                Mr. Market

Another useless trading day as pretty much every heavy hitter is biding time waiting for tomorrow’s Fed report. Yea, we got the usual squeeze the shorts; crush the longs; go to sleep in 3 …. 2…. 1 …. drift into the close today. Thanks for showing up.

And lest you think gold has been a nightmare to trade lately, it could be worse; you could be trading EURUSD which had a whopping 73 pip range [as I write] and is firmly stuck between 1.30 and 1.3250 for what seems like forever. You want to see real market manipulation? What’s going on in the Euro makes gold look like child’ play.

All eyes are on The Bernank as he decides tomorrow whether to print faster or slower for the next few months. Expect nothing, range wise, into the minutes which will be released sometime around 1:15 P.M. [Chicago time]. At that point we are either on our way to testing 1612 – 1600 or about to melt up to the 1670 area; depends on how aggressive the Fed wants to be in printing money monetizing upcoming Treasury auctions.

My best guess is that they stay right where they are at, but include some language that gives them wriggle room if things get “worse” [stop laughing]. At some point the Central Planners come in and let loose with some heavy sell orders and gold gets smacked down. Sell stops get set off; the charts look horrible; they sit back and congratulate themselves on a job well done.

Of course, maybe Weimar Ben likes his job and figures Chalky is going to need a little help in November, so he speeds up the printing press. Hey, it can happen, and if it does watch the glorious fireworks on the upside.

Regardless, the aftershocks will probably last at least for the rest of the week and into the next before the market fixes its eyes on something else. We’ll see what happens.

Have a good day everyone.

-vegas

JUST ANOTHER MANIC MONDAY

                         Sometimes Things Aren’t What They Seem

News out of Europe over the weekend means just one thing; economic conditions, despite all the happy talk amongst the politicians, are deteriorating rapidly. Seems the spin among the elite isn’t quite the view the bond and equity markets share.

So of course, this all carries over into gold trading; only not quite what you would expect. Asia opened very quite and remained that way into the European session open. In about 32 hours of trading we still had about an $8 range. That all changed as Europe opened and gold went down $7 in 3 minutes [1640 to 1633].

“Wake up everybody!”

My first question is what happened to the “Lemmings in Asia”?

“You know guys, disappearing like this every day is as annoying as it was when you bid it up every day. Geeeeeeeeeesh, get some consistency will ya?”

Of course, it wouldn’t be a normal day if the Central Planners weren’t in the market. After all, who besides them would sell 300,000 oz. of gold at the market through JPM on a consistent basis and keep doing it?

But there are crosscurrents as well that are hurting gold: most notably forced sales by financial institutions that need cash to meet margin calls on their sovereign European debt. You can only carry toxic [name your favorite European destitute government here] debt for so long before you have to sell something to carry it with leveraged margin.

Gold goes from manic state to recovery state in a matter of seconds; rinse and repeat and you have a pretty good synopsis of the last 7 days of trading. Going forward, things are just gonna get crazier as the Fed releases minutes of their Tuesday/Wednesday meeting on Wednesday afternoon.

With stocks crapping out and breaking some widely viewed moving averages [most notably the 50 day simple MA], US bonds yielding record lows, and Spanish 10 year debt at or over 6% yield, the trade is begging for QE 3 from Weimar Ben on Wednesday. If we don’t get it, or get some hint of it to come, 1600 looks like it could get tested.

Make no mistake; the Fed has no choice but to print more money. Forget the spin and realize if they take away the party punch the equity markets are going to melt down in an election year.

“Yea, like that is going to happen.”

At some point here, sooner rather than later, gold is going to explode to the upside and the Central Planners will have nobody to blame but themselves. Even they will eventually run out of money and find themselves the “chump” at the poker table.

Have a good day everyone.

-vegas

NO EBB JUST FLOW

                                     It’s The Way Gold Trades

Melt up melt down it doesn’t really make any difference; same crap different day. I said yesterday I thought we were just in the eye of a hurricane.

“Batten down the hatches mate!”

Welcome to centrally planned trading; the only thing we don’t know after today is the price level from which Weimar Ben, the boys at the JPM prop desk, and the dealers privy to the inside info are plotting the next waterfall. Because tomorrow is Friday, don’t look for anything but position squaring into the weekend.

But come next week, all the sell stops that have been set today from long positions, will get taken to the woodshed amongst the wailing and gnashing of teeth. I’m guessing the high number from which selling commences to be something just short of maybe $1695, but hey, they don’t email me and ask for my opinion (yet).

“I know, I know, the charts look good right now. But they will make their own charts and make you think we are headed to zero; you’ll sell and that’s that.” I got recent history on my side.

To any normal observer, you could take the daily chart, show them the $29 daily range today and they would say, “Wow, must have been a lot of action today – you know up, down, all over the place huh?”

“Errr, not exactly.”

Ebb has left “Green Acres” and hasn’t been seen since 2011; Flow is in charge. The dealers cover and then back away; the public piles in along with some [chumps] hedge funds; the dealers sell along with the Fed [yes Dilbert they are in the market]; momentum dies away and the market drifts lower; selling ensues and your sell stop gets hit. Rinse and repeat forever dude; it’s the new paradigm.

Fact is the majority of the day’s range happened in 45 – 50 minutes; the rest is just noise and a few stops. The recently updated and revised algorithm missed getting long at the bottom today by about a buck fifty; close but no cigar. Sometimes you miss some. I still made a little, but not what I wanted because I didn’t get in where I really wanted to.

But the point I want to make is that you are either there when it moves or you ain’t; you aren’t going to get the opportunity to get good fills and pick your spots. It’s either elevator up and the doors just closed with you 5 feet away, or it’s a rowboat over the waterfall and the next 200 feet down are going to be interesting; this is what we are faced with in today’s marketplace.

So, don’t expect Ebb to help you; fear that Flow might kill you.

Have a good day everyone.

-vegas

A DESPERATE ACT

                                       Thank You Weimar Ben

After a relaxing weekend of pulling the wings off insects and settling down from my dealer induced frenzy of last week, I came into today’s trade bullish as the algorithm was in “buy mode”.

These last couple of months the U.S. session of trading has been almost demonic in its moves. We have gotten some of the most violent spikes/drops the market has seen since electronic trading began about a decade ago. Today was no different.

Ok, Weimar Ben did his part by promising to continue to print money ad infinitum nauseum, but who didn’t already know this? What choice does he have? Let’s face it; the guy is desperate to get Chalky Soetero reelected, because if he isn’t, the Bernank might have some career problems.

“Hey, who’s up for printing more money??”

“RISK ON!!!!!!!”

There just isn’t anything you can do, from a trading standpoint, to accurately assess $20 + moves within a matter of minutes. Sometimes you get a part of it, most of the time you don’t. Try making a career out of buying rallies and selling breaks and let me know how that turns out.

What the algorithm attempts to do is fade the minor trend inside the bigger intermediate trend.

It’s not that the algorithm can’t deal with spikes/drops; it can and does very effectively. The problem comes from extremely fast and large spikes/drops, which skew the momentum data.

As a professional trader, there are a number of factors that always have to be at the forefront of your mind during the day; the range and where we are at in it, and the possibility of reversal and double reversal days. Add to this the algorithm and you have a very effective trading method.

When market spikes/drops go through the algorithm exhaustion levels and exceed daily range expectations, you have to be extremely careful in your approach. What we have seen today is typical of the last couple of months of trading.

Sure, just looking at the range of the day and you would think it was pretty easy being long today and making money. A closer look at the action tells a different story. I still made a few pennies today, but again the very fast and large spikes/drops play havoc with the algorithm.

Add to this the sheer panic of those caught on the other side [today the shorts] and you are dealing with “the crazy people”; and for my money the dealers look good next to them.

Have a good day everyone.

-vegas

SURPRISE!! POLITICIANS HATE GOLD

                                     Got Gold Chalky Soetero?

Let’s see, trillion dollar deficits per year as far as the eye can see? Check.

Oil prices rising driving inflation? Check.

Weimar Ben printing money like no tomorrow? Check.

Along with the Fed the BOJ and ECB printing money as well? Check.

You and I both know the table is set for gold to spiral higher rather quickly in the near future. The political gold cabal has literally thrown the “kitchen sink” at the market and all they got the market down is about 8% and about 13% from the all time high last September?

“That’s it? That’s all you got to show for the market manipulation of JPM & HSBC; the margin shenanigans of the CME; the stealth drops in the wee hours?

Seasonally speaking, March is usually a weak month for gold, with the lows generally seen mid-month. If that holds again this year, then the lows around 1632 will hold and from here we will base and go higher.

As I have stated in earlier posts, my only fear for gold comes from going lower on the year [1562] for the first time in 11 years. Selling could materialize rather quickly from the GLD and all the moving average lemmings who would sell. If that happens, who knows where it would stabilize.

Having said that though, emerging market Central Banks are strong buyers of physical gold at these levels, and with all the rumored selling of Weimar Ben and the gold cartel, how much more can they throw at the market before they are forced to capitulate and buy much, much higher?

The world is printing money at a record clip that would make the old rulers of Zimbabwe blush. It’s only a matter of time before the dam truly breaks and prices race higher. A close over 1802 / oz. and the gig is up. Sometime in 2Q 2012 and I think this gets taken out and from there the fun can truly start on the upside.

Be patient and let Chalky’s policies make you rich.

Have a good day everyone.

-vegas

WELCOME ZOMBIE EUROPEAN BANKS

                                    I Would Say Definitely Not

“We got a margin call? You mean the ECB wants more collateral against our worthless soverign debt crap government securities?”

“Duhhhhhhhh - I guess we’ll just sell our gold!”

As www.zerohedge.com  has so importantly pointed out, “the ECB has increased its margin calls on European banks by EUR162 million this week…”

So, just where do you think these illiquid, bankrupt banks are going to find the scratch to cover this? [Hint: sell gold.]

In addition to this zombie mentality, while everyone is focused on the sell off, USDJPY is quietly rallying quite strongly, thus hammering the Yen against the U.S. Dollar and causing all kinds of problems in the cross trade in the Pacific Rim; especially China.

Did somebody just say China??

Yea, I did and its implication is maybe the growth won’t be there like everyone thinks going forward. Can you say weakness in precious metals? How about AUDUSD?

Right now, we are less than $75 / oz. from being lower on the year. Gold has been higher 11 years in a row. I raised this issue in a previous post about the possible effects of the ETF GLD; what happens when millions of people hit the sell button and redeem their GLD shares thus forcing the fund to sell spot gold in a hurry (2 day settlement)?

If you think having a bunch of banks sell gold to the tune of a few hundred million Euros can “rock the bullish boat” in gold, what do you think happens if hundreds of metric tones hit the market in a matter of days? [Hint: it won’t be pretty.]

Don’t get me wrong, I’m not predicting here; what I am doing is trying to point out that every market has 2 sides and to not get pig-headed and think gold can only and forever go higher each and every day.

The irrefutable financial fact is that Chalky Soetero continues to run the U.S. economy in to the ground while running record monthly, quarterly, and yearly budget deficits. Weimar Ben is printing money like there is no tomorrow; hell bent on keeping the stock market from declining so as to make you feel “prosperous”.

 This is centrally planned trading.

We all know governments all over the world hate gold. It prevents them from debasing currency and thus buying votes and promoting crony capitalism.

So, welcome zombie banks to the selling spree in gold. What history will eventually show is that you sold the wrong asset. Some people just won’t listen.

Have a good day everyone.

-vegas

DEPRESSED TRADING

                                          Milton Trades Gold

Join with me, dear readers, in hoping the Asian trade tonight finally goes negative on gold. Like lemmings over a cliff, these guys buy it religiously every night, and just like the sun coming up in the East, the dealers sell it in the European and/or U.S. sessions. Oyyyy!

Of course, last night was like every other night this year, with gold drifting higher only to sell off slightly before a sluggish U.S. session that saw prices meander most of the day. How’d you like that $15 range today? [Oh wait, almost $17 since the blip up after hours at 2:30 PM so the dealers could take out some buy stops. “Thanks, please come again!”]

Rumors from the Fed, leaked to the WSJ, that further Fed easing isn’t out of the question rallied stocks, which to Weimar Ben is all that matters at this point.

“ALL ABOARD, risk on is departing the station!!”

Quick, violent price spikes/drops continue to plague this market and play havoc with stop placement. Add to this dealer slippage, and you have today’s trade. The algorithm did remarkably well today, considering the circumstances and type of trade; but the algo doesn’t measure stop placement.

Have a good day everyone.

-vegas

ALMOST A NORMAL DAY

                                         In Trading Especially

Gold almost had a normal day.

With crude oil wilting today, there really wasn’t much selling pressure in the market, except on knee-jerk reactions to crude going down. Keep your eye on tomorrow’s prepared Congressional statements by “Weimar Ben”, as if I need to remind you what happened last time he went before Congress.

It could be pretty dull trading tonight ahead of this, so don’t be surprised to see a small range. While I don’t expect him to outright call for more QE, he isn’t going to turn off the printing press of easy money either. Support for more easing and we could easily see gold above 1800 by the end of the day. We’ll see what happens.

If in fact we get the small range into his testimony, one way or the other I would expect some kind of price fireworks to commence. Just be prepared for it.

Have a nice day everyone.

-vegas