"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat

Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput


Wednesday, November 13, 2013

The Bubble Keeps Getting Bigger

It is almost comical watching stocks soaring into the stratosphere negating one negative technical warning after another and reaching levels that defy rational thinking, yet here we are.

The investing world has been perfectly conditioned by the Central Bankers to buy every single dip, throw caution to the wind, make the word "risk" archaic, and continue to shove stocks higher and higher and higher with no end in sight. It is absolutely astonishing to watch this thing unfold.

Apparently all that is needed to make the very concept of a bear market in stocks obsolete is for endless money printing. There appears to be no consequences whatsoever to this madness as it is now the new normal.

Maybe we will see 1800 in the S&P 500 before the month is out. Who knows? As a trader you have to go with the money flow and the chart but as an observer with a sense of history, you have to shake your head in both bewilderment and sadness. Bewilderment that so many otherwise intelligent individuals see nothing wrong with a near-permanent money creation scheme and sadness, that so many can be herded into something which has no rational basis other than the fact that it is going up.

I do need to make one quick comment - I have stated that the broad universe of investors see no inflation signs whatsoever. Yet, one thing should be very evident - the stock market is a perfect picture of near runaway inflation but in paper assets.


  1. Dan

    Totally correct.
    When Bernanke said he would drop money from helicopters, we now realize it would be over Wall Street, not Main Street.
    We are seeing the first signs of inflation, when the herd gets spooked in the equities coral they will literally stampede into something else flattening everything in their path.
    It will be like watching people on the top of a burning building, running in a blind panic from one side to the other.
    Sad indeed.

    1. QE was a back door bailout of Wall Street, per the recent testimony of ex-Fed MBS buyer. Very sad. The silver lining to this all is that there are still incredible reward relative to risk opportunities out there, given how much money is sloshing around.

      If you haven't seen the website www.ounce.me , it's worth a check as it catalogues the performance of the metals versus "cryptocurrency" like Bitcoin, which seems to be behaving quite favorably given the circumstances.

  2. Dan, it's obvious FED TBTF are coercing as many investors as possible into paper crap before the proverbial hits the fan. Many choose to go for the ride but once you've gone over the cliff there's no point leaving the bus, your going down regardless. The irony in all this is that same paper is used to short Gold the asset the FED TBTF cannot manufacture, so the battle continues. Could Gold go a bit lower yes but risk reward it's looking better and better. The persistent blogger pushing DOW S&P out performance since 2009 might well study the charts and if he looks carefully he may see the that kind of value in anything commodity related right now. Buy low sell high and be patient. Hold and accumulate.

    1. rlm;

      I agree with you. Their game plan is to indeed force investors into equities. It is part of the psychological con game. When this bubble bursts, it will be horrific. I just do not know when it will occur.

    2. I don't know if the analogy is correct, but to me it's similar :
      authorities with their manipulation helped create the greatest bubble of last decades in the US stock market, because there is just nowhere else to go. People looking for yield are all obsiously herded there.
      It reminds me the real estate bubble, in US, or in Spain, or now in Armenia. Armenian "rich" people are building new buildings everywhere. In order to sell them. Till now, a bit of the diaspora helped the flow. But there are more and more buildings. Empty buildings. Prices are already starting to stall. Economy here is so broken that it was the only place those people thought they could make easy money. People don't study history anymore.
      Even the most recent one. They are already doomed.
      @concord, no I'm not at a hotel...my wife is armenian :)

  3. No one can hear your rational thinking over the deafening sounds of the Fed printing presses. $5 Trillion on the Fed balance sheet, and what have we gotten for it?....

  4. Economists and PhD's will be discussing the "Bernanke Miracle" for the next 50 years.

    Every Central Bank from now on will be using the current "QE Model" next time a major crisis erupts.

    Never before in history has so much money been printed, which ended up landing in the right spot: Into increasing wealth of people's brokerage accounts.

    The fact that the little guy has not seen any benefit is actually self-perpetuating the boom, because as long as the little guy continues to suffer with lackluster jobs and stagnant earnings, the Fed will keep its foot on the gas "until morale improves".

    All this happening, and the 10-yr. yield as been under 3% for the longest number of consecutive months in world history. Money has never been cheaper for this long.

    And at the same time, commodity prices are in virtual freefall, causing even more profiteering opportunities for Fortune 500 companies whose margins are expanding at a record pace.

    I mean really, I could not think of a better scenario for making sure there is a constant Wall of Worry to keep pushing stocks up and building wealth for those who are in a position to create jobs.

    Simply put, it is a miracle.

    1. "Simply put, it is a miracle."
      Mark, you seriously don't think US stock markets are headed towards a bubble? You don't think this will pop eventually? You think this miracle of paper printing with zero real growth will endure indefinitely and the dollar tree will grow above the skies?

    2. Yo Mark

      Wall of worry? I sure don't see it anywhere in the equity world.
      As a gold investor I know what a wall of worry looks like !

    3. LOL wall of worry?

      Aside from the odd analyst and blogger voicing oncern all I see is an almost unanimous corus of cheerleaders heralding each and every new high with shouts of glee from the talking heads.

      This ain't no wall mate. That was scaled just after 2011, this is Moon shot phase!

    4. FED miracle BS, just like a mouse on a treadmill that money is not producing anything tangible TBTF may have had more fun taking the $'s to Navada US is going down, the money is going nowhere, share buy backs, distorted share values produce nothing but bubbles. I suspect someone at the FED thinks if they starve main street eventually the economy will pick up, it ain't going to happen. China with a huge low cost workforce will take the lead along with European technology it's game over for the US. The FED knows it just doesn't want to admit it failed!

  5. Dan - higher interest rates, higher inflation, or a cut back in government spending will bring down this stock market.

    Yelled will have to make some huge choices.

    My question to you - man of the charts - in your humble opinion - when does our debt start to go exponential?

  6. Dan -

    Everyone now hates gold. Hedge funds, dan n., martin armstrong, jim rogers, goldman sachs says its a slam dunk sell. No one is bullish. But look at Cisco's sales projections, earnings today. Yikes!! If that is indicative of the economy as a whole and Janet y says tapering is off - where would that put gold In your humble opinion? $1450?

  7. Follow up of my last long trade in gold.
    Summary :
    - I saw a potential support in the daily time unit (1270), confimed on the monthly time unit (mlh inf pitchfork upwards)
    - first we broke that level down but not on the daily close. A look at the 4h time unit eventually gave me a potential buy signal : Bollinger going from phase 3 (both down) to phase 4 (end of impulsion, lower volatility, inf bol reversing up), allowing a stop loss near 1260.
    - the 1 hour time unit confirmed this potential buy signal via a bullish divergence on the MACD. So I got long at 1270.

    Now, despite Bols going up on the 1 hour and MACD going up both 1h and 4h, we are on a price resistance level and near the Bol sup 1h (1291), so I've just sold 1/3 of my position at 1286 $.
    My stop loss is raised at 1267 $.
    That's it : I secured my trade, i.e I can't lose money anymore on this trade. It's win little or win more. It's my philosophy for trading. First : don't lose money. Then only : try to make some.

    Why am I contrarian most of the time in a trend? (here bullish in a bear trend). Because the way I trade allows me to put a stop loss very close to the reversal point. Entering a market following a trend brings the problem of putting a stop loss often way too far for a good risk reward ratio, which is uncompatible with my rule number one : don't lose money.
    Now I'll keep my 2/3 remaining and drop another 1/3 if I have a signal of reversal on the 1 hour or 4 hour candlechart.

  8. Regarding the stock market one only need look at a 3 year chart of the SPOOS to know we are nearing the terminal end of this so called miracle.

    Notice the ever declining weekly volume since 2011 along with the shorter ranges?


  9. I honestly believe that what the Fed is doing is so irrational that it pushes you toward conspiracy theories to truly understand what is going on...ie they know exactly what they are doing and it will collapse when they want it to.If a few bankers and crooks like Corzine had faced due process and justice I might think differently. Sadly its really hard to know what to think any more.Great blog

  10. What can not continue will not continue; sparks

  11. These comments could have been written when the dow broke 13,000 again. when will the "collapse" come? There are no more places to stuff money. The distortions in the capital markets are unprecedented. No more money to be made in bonds. There is so much cash being generated. It is not allowed to be injected into the real economy. The Fed wants it to stay in the financial shell.

    As I have been saying, the globalists are intentional in their actions. They are using the monetization as an opportunity to consolidate as much wealth as possible before war. This can go on for several more years when the new system will be introduced.

    These people are not stupid, they control and lie to us. We believe they are misguided. But they are so intelligent they are getting away with stealing the world and convincing us they do not know what they are doing. We laugh at our captors.

    Understand that this is being done in a very methodical fashion. We are the suckers at the poker table.

    Hedge your physical, gird your loins, and be prepared for higher stock prices. This will be the final pump and dump under the current system. The globalists want the average guy in again before they bankrupt them once more. The average idiot still is not in, he lost too much last time. I guess he will be back in at Dow 20,000, having sold at Dow 8,000.

    War always is the cause for the globalists' reason to redo financial systems, and war will be used once again.

    History repeats over and over again, because humanity always thinks this time will be different.

    1. you went further than I did ,and most eloquently.Very interesting,thanks

    2. or rather, sadly, humanity doesn't even study history anymore.
      There are much better TV programs such as the Simpsons.
      Why care about history?

  12. Second target for my next 1/3 to be sold at 1305, unless MACD 4hour candlechart reverses / crosses its signal for example.
    Stop loss raised at 1272.
    Everything's fine on this trade.
    Good night,

  13. Some headlines from today to further celebrate the economic miracle !
    "Lockheed Martin to cut 4000 jobs"
    "Kohl's reports lower profit outlook"
    "Wal-Mart Lowers full-year forcast"

    But wait...WMT, XLY both up today , RECORD BREAKING HIGHS !
    TWTR..a company with no earnings, also up !

    All of this as the acrid stench of fear lingers over the trenches of the gold and commodity investors.
    They will all someday whisper Bernanke's name in reverent hushed tones and..well...ahem...I am running out of ideas !
    Sheesh Mark, writing this way is not easy !

    1. Dean- It took me a while to appreciate the subtle genius in Mark's posts. Sincerely.

    2. Dean, I think Eph gave a perfect reason for all those headlines,

      "The globalists want the average guy in again before they bankrupt them once more. The average idiot still is not in, he lost too much last time."

    3. Hubert

      Very true. I guess all we have to do is ride the wave, and the tricky part, know when to get out.

  14. Cast your votes for the dumbest statements of the day, folks. Is it McKinsey or Yellen? Yep, it is a tie as they are both bald faced liars or morons, or both? sparks

    1. Tie. Can't pick both are completely either stupid or more likely the only way to continue with their jobs and now risk their reputations.

  15. Texas line explosion now bullish for Tesla. That dirty gas and oil stuff. It is so hard to watch this stuff unfold. Truly a different world. Like the aliens landed took over, put in place a media circus and it is blasted from rooftops, bankers going power mad. I believe that it goes on till implosion. What do they say ..
    Greed from wall street, intellectual pride central bankers, and plain old stupidity and socialism from the white house. We are done.

  16. Hmm..seems to be a rise in pipeline related incidents...how odd. Same with rail cars..could the two be connected ? ...could...Nah !...we all know there is no such thing as market manipulations, hidden agendas and conspiracies.

  17. I now know why XRT and XLY hit all time highs today despite gloomy news from Wal-Mart and Kohl's.
    Everyone is now shopping at Neiman Marcus and Saks Fifth Avenue !!
    Who needs discount stuff anymore !
    Dang...sometimes the most obvious trends are the hardest to see.

  18. Eric Sprott is out with another prediction again with $60 SILVER and $2,400 GOLD. It's hard not to notice these forecasters while searching through economic news and comments. So he's a BILLIONAIRE eh? What's the big deal? A BILLION DOLLARS is nothing anymore and he can't even dent this market that throws TRILLIONS around. Soon we are going to be talking QUADRILLIONS. Maybe there is INFLATION after all? If so then GOLD really should be around say $5,000 or $7,000 right now. Something is just not right all across the market spectrum.

    1. Based on the performance of gold, silver and their shares the six months I doubt very much Sprott is a billionaire anymore.

    2. Concord

      A lot of wealthy types have been caught in this one.
      I think Sprott is trapped like everyone else, only worse. How do you say "I was wrong" and then try to unwind a PM fund with 100's of million $ of investor funds.
      Strange how with the best analysts/traders and strategists at his disposal he is getting his ass kicked just like the rest of us lowly types. He is only one in a long list of well knowns who is being humiliated.

    3. And he's known as the Godfather of PM's. Obviously he's trying, like many, to redeem themselves. Let's just hope they're right this time, would be hilarious if all the big dogs jump in at $1,000, only to see gold dead cat bounce then head to $800 over the next year or two.

  19. dear dan

    thank you so much for the gift of your insight.

    any way you could take this brilliant observation, of the djia, being the truest measure of inflation available, other than the grocery store, to a higher level?

    "dan's proprietary index to true inflation, versus government figures: his new dow jones inflation tracker."

    just my poor stab at humor. people are sounding way too serious for good health. smiles.

    keep up the good work.

    you are my favorite adviser, out of scores of competitors:

    the gift of the pits.

  20. @steve : look at a standard daily gold price chart with standard Bollinger Bands.
    Where did gold prices decide to reverse, first down, then up, since the bands are in a range?
    That's why I say Bollinger Bands can and imho should be used in TA as described in my last post.

  21. @Dan,
    in a nutshell :

    Do you have any opinion on

    1) "It makes me wonder if the good ole boys have a large enough position to shift to long side manipulation of gold. If not now, it is soon."
    Jim Sinclair.

    What strength do "the good ole boys" represent? Significant or powerless? (They are not a category of the Comex :)) Will there come a time soon when "the good ole boy" force will revert its position on the gold market from bear to long, and would it have a significant impact on gold's trend?

    2) http://jessescrossroadscafe.blogspot.com/2013/11/comex-registered-gold-falls-to-587235.html

    What happens if Comex Registered stocks really get close to zero? (and they don't find a way to replenish the stocks anymore...)

    Thanks for your lights :)

  22. I sent this article to Sinclair :


    The trend is there. The threat as well. After China's declaration, if one doesn't see black swans circling around the USD like vultures checking if dinner is ready yet, I don't know what more you need.

    Question : will most people be lured into those two things instead of physical gold forever?

    1) stock markets

    2) http://voiceofrussia.com/2013_11_14/Virtual-currency-getting-real-5734/

    What flows into 1) and 2) sure doesn't flow into gold...

  23. Strange demand strong price low...http://www.marketwatch.com/story/silver-coin-supplies-buckle-on-fever-pitch-retail-buys-2013-11-15?link=MW_latest_news

    1. The supply and demand data for PRECIOUS METALS along with whether miners are actually suffering losses depends on who interprets any data. Right now all the data like the JOBLESS CLAIMS, CPI, etc. is skewed. Does anyone have the facts?

  24. Mark

    1800 easily, when the mania stage arrives 1800 will look like a low point. We ain't seen nothin yet.
    You are right about the gold crash…so…time to buy?

  25. I love to continually be on the right side of the trends. As the population becomes more and more dumbed down, it becomes easier to make money (on the macro trends).

    The average guy is barraged with GMO food, chemtrails, vaccines, dumbed down education, High def TV, porn, etc, so he can't think straight anymore. They are just herd followers. These are the same idiots that nimble traders go up against.

    The USFed and Treasury are promoting studies that show how QE has not had an impact on stock prices.

    Why are the globalists providing these "vital" studies? Because when there is a DOW 30,000 blow off top, they do not want to be blamed for it and its subsequent collapse.

    The QEs have actively promoted this once in a lifetime pump and dump by making stocks the only game in town. Not only have they actively promoted the stock run up, but the QEs are designed to get everyone into stocks.

    The globalists know what they are doing, and they want to get eveyone back into stocks, so they can collapse prices at some future date and use that as an excuse to take the nations's pension assets.

    This is obscene, but the only thing more obscene is to know what is going on and not profit by it. Everyday, my ooptions are up another 1-2k. It is getting boring.

    I keep looking for a pullback to load up more options, but it is not happening. The equities look fabulous right now.

    Gold may drift up and post another 13-handle, but the right shoulder are telegraphing new lows this late winter and spring.

    1. That's why Mike Maloney, David Morgan, and guys like Robert Kiyosaki who are all involved in aggressive marketing of precious metals, ACN, and other types of sales are correct with their message that this will be the greatest transfer of wealth in history. They are doing quite well and have strong portfolios with BRK/A, PCLN, GOOG, AAPL, CMG, BIDU, PNRA, SBUX, LNKD, along with other equities.

      Just remember: Cash is trash so owning ounces or shares is much better.

  26. Eph

    Looks like there will be no pull back, I would be surprised to even see a day where they are flat.
    I just attended a general video conference from a well know broker/analyst.
    A bull's horn just about came out of the screen and poked me in the eyes.
    They are predicting 4.7% GDP in the USA for 2014.
    Throw a dart at the S&P and you will make money no matter where it lands.
    They are saying the market is no where near being over valued.

    You are right Eph, they have created a fool's paradise, 30k on the DOW will be easy, the euphoria will be unlike anything we have ever seen before or even imagined.
    Pity the farmers, miners or anyone else that provides anything meaningful.

  27. The DOW is going to 20,000. Where else can you get any return on your money? Certainly not government paper. Only logical the rush is to corporate paper. How are bank's negative % rates inviting? The invisible man Armstrong has foreseen these things clearly.

    1. Anonymous; Armstrong is a letter writer and I am still waiting for an audited track record of his exploits over a 3 year period; do you think I am holding my breath? have a good weekend from sparks

  28. GDX/GLD ratio plummeting towards the lows again while "stawks" continue to make new lifetime highs.

    Just what Ben and Janet wanted.


    1. Mark - I get the rhetorical trope of mimicry (of perma-bugs). But there might be some good trades in the miners coming up? Certainly worth keeping eyes on. HUI:GOLD finished the week at .1763, which is pitiful, but over 6% above its low in early October. Some miners logged decent earnings Q3 earnings, are not burning cash on poor grade projects, etc. With many a retail muppet trying to recoup on gold losses by shorting miners or trading volatility, one could be in for a surprise. One could argue that the Gold Mining Bear is getting tired, or at least crowded. DUST was at what...85 in late June when gold was under $1200 for a day...~90 bucks from today's close. Today DUST is about $33. The easy money is gone in that trade. Certainly you can eke some more from it, but it's eking.

      Also-with regard to $2 gas--I would guess that Bakken Shale's break-even isn't low enough to warrant that. Just be thankful you don't have to buy gas in Italy.

  29. one more item befor I start my weekend and that is that I am very, very tired of hearing that pm's are in a 12 year bull mkt; I do not trade 12 yr time frames and I do not think anyone else out there does; we are in 3 yr bear mkts for copper, gold, silver and 6 years and counting for platinum; the Chris Martensons, Schiffs, and a multitude of stk jkys calling for $175+ crude and $3000 gold are a very tired act; do you all kind of get the feeling that they were so quick to bad mouth fracking and so forth and blah blah, but again, what and where and how much have they ever made trading energies? oh, nothing, oh I am surprised; same thing goes for the grains and beans and please, stop the murder because you guys are all killing me; take away the big ag welfare bestowed on the parasites and corn is 2, wht 3, beans 5 and that is the truth; you guys ever been in Iowa, Mizzou, Il? Unbelievable how much more they could grow if they really wanted to; guess what? the demand ain't there ladies; bye, steve in sparks

  30. Fresh, all-time, record highs for XRT and XLY as well as the Dow Transports and DJIA.

    Who the heck needs gold when you have the "Resilient Consumer" breaking all time records in spending, thus pushing the retail stock indexes up in the fastest, steepest, longest bull market in that sector's history?

    Man oh man, if the doomers had just told all of us to jump into consumer discretionary at the 2009 lows, ALL OF OUR PROBLEMS WOULD BE NOW OVER.


    1. Mark is spot on. Judging by how the miners were mostly in the red today even thought gold was inching up is indicating bullion will fall next week, seen it many times before. The next and final leg down could be upon us. However, we shall see we know gold always has a surprise up its sleeve. But 3 failed attempts at 1290 is also not a good sign for the yellow metal.

    2. 4hour time unit, the MACD keeps going up, I have no reason to close my long trade. Bollinger Bands were in a range when prices hit 1291 (see last comments, I mentioned that target / resistance), so bounce back normal. Now the Bol sup is going up and heading towards 1300. I have no signal to sell yet on 1h or 4h time units. I'll wait with my 2/3 remaining long.

  31. Tesla's CEO wins entrpreneur of the year. Just like Steve Jobs they hail. Invest in this dip, all hail Caesar, the king has come!!! LOL

  32. Wake me up when we hit 200OOOOO
    On the Dow, until then feed the public more bread and circusses while we tap their phones, read their emails, devalue their $ , and slowly put less product in their packsges, destroy their ability to make $ and kill them with no healthcare by blowing up the banks. Damn that NRA. Can we just get this over with and start rolling the guillotines already?

    1. Guillotine? Someone said Guillotine? :) If we are back in 1790, then I recommend to read this book :

  33. It is important to understand that you can trade both markets in a trend, and in a range, but not the same way. Detecting a market in a range is not as easy as one thinks, just via prices. Some advanced indicators can indicate you with anticipation when and where prices are likely to get into a range before you see it on the price action. Name one? Bollinger Bands.
    Have a nice weekend,

  34. Sorry if this has been posted already (haven't had time to keep up lately) but I saw this on Agora's 5-min forecast. Yellen is a gem.

    Here’s something you’re not likely to hear Yellen say today: If you’re a saver, you’re selfish and must be punished.

    Erik Townsend is a retired software entrepreneur turned commodities trader who has a weekly spot on Jim Puplava’s Financial Sense podcast. He attended a talk by Yellen in San Francisco some time back.

    “She was talking in her lecture,” he recalls, “about how if there was anything she could do to figure out a way to make interest rates negative, she would do that, because she feels that that’s what we need to do to make credit as easy as possible for the people. And I asked the obvious question that none of the San Francisco liberals were asking, which is, what about savers and investors? Doesn’t that punish them?

    “And what she said didn’t surprise me that much. She said, well, we’re coming to the point where we have to consider the role of people who have significant savings and their responsibility in society, that it really is selfish to be hoarding it and that we need to create incentives through government for people to spend their savings, because that’s exactly what we need in order to rejuvenate the economy.”

    There you have it: Little old ladies who are upset because they can no longer collect 5% on CDs? They’re “selfish.” Banks that borrow from the Fed at less than 1% and plow the proceeds into 10-year Treasuries paying 2.75%, pocketing the massive spread? They’re “systemically important” financial institutions, dontcha know?

    The part about “sucks to be you” was merely implied.

  35. Hilarious.

    I hope Yellen punishes the "savers" by continuing zero bound policy and also start punishing the banks keeping their cash reserves there, and start demanding that the banks start loaning the money out to small businesses instead.

    If that happens, you will see a gigantic explosion in economic growth and the Dow at 20,000 in no time.

    Commodities will fall because of the new investment and technologies which will allow us to double and triple production no problem.

    It will be a great time for everybody, except if you are a gold mining executive.

  36. Mark

    Double commodity production?…like create a rain making machine…unlimited oil at $25.00/barrel ?
    Ever hear of the Ogallala aquifer ?
    Want to beat up on the farmers so your beloved consumers can all have cheap TV's.
    What America really needs is about 10 solid years of widespread drought. Oh how attitudes would change.


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