"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


Friday, May 9, 2014

Draghi Wreaks Havoc on the Euro

I might add to the title the following words, " By Design".

ECB President Mario Draghi, apparently was feeling the heat from Eurozone manufacturing interests, exporters and some politicians, all of whom have been complaining and moaning about the relative strength of the Euro.

It was apparent that his remarks yesterday were designed to try to do something about that and judging from subsequent market price action, it worked!

The Euro fell from up near 1.40 ( a key level in my view that they will not tolerate ) all the way to down below 1.375. That is a drop of nearly 2% in the currency in two days' time. Not bad for a few minutes of speaking! 

I honestly could not handle power like that. I would run around my yard commanding it to mow itself and my flowerbeds to weed themselves if I had that kind of control over stuff! I would also command the tires of the cars that keep speeding through my neighborhood to go flat.

Seriously, look at the chart and the damage that Draghi was able to inflict on the Euro. He flipped the ADX indicator into a bearish mode and while not yet able to get the currency to trend lower, he managed to turn the ADX line higher. That will need to be watched because, IF THE EURO CANNOT HOLD CHART SUPPORT, and this is a big if, we might have just seen the high in this currency for some time. Again, I am not sure but am certainly watching this closely mainly because of the heavy weighting of the Euro in the USDX index.


  1. This is irrefutable proof that in today's "Glorious Age of Central Banking", virtually any market can be moved by mere "Words".


    Hey, growth stocks selling off a little two quickly?


    Open Pie Hole and mention something about "stimulus needed" to target GDP, and a Doug Noland - style "Rip Your Face Off Rally" ensues.


    Interest rates getting a little high?


    Create a "manufactured crisis" like Ukraine, Greece, Cyprus, or whatever. Immediate reaction is that investors pour billions into the U.S. Treasury market, creating massive "put the money to work" problems for PIMCO and DoubleLine.


    CRB Index getting too high, inflation creeps up to 3%


    Any central banker starts flapping his/her gums about "price stability" and "tapering" and instantaneously, gold, grains, and crude oil get slaughtered and enter a bear market within weeks.

    Proof positive that we will look back at this time in history and wonder why it took so long to guide the economy in a perfect trajectory by simply "meatballing" the Algo Greyhounds by uttering a few choice words, preferably on options expiration day, to exert the maximum force possible.

    How easy is that?

  2. Gee,Dan,,those low to highs cycles are almost perfect.

  3. This comment has been removed by a blog administrator.

    1. Sneha debil, it's second time you pollute this website.
      The third time I'll launch a DDOS on your moronic server and you can only come and prosecute me where I live.
      Just make my day.

    2. I'll drink to that, Hubert; swb

  4. There might be some opportunity to go short the Nasdaq here.


    both CDur heading down, MACD crossed, and Stochastics crossed down (latter not on the chart), confirming a possible break through the 4000 area soon.
    It is interesting because we can see a kind of Head and Shoulders forming, i.e if 4000 breaks it will also be bearish, with a target around 3600 area.

    I'll keep you posted if I short, but I think I'll ut a sell order near the downwards resistance in the 4100 area.

  5. Silver looks bad...
    The market is coiling (see bollinger bands), so a nice impulsion might be just ahead.
    At the look of it, it's the horizontal support at 19 $ which seems most threatened at the moment.

    Contrary to last time we hit 19 $ and I enter the market long, I will not do it this time.
    At that time, bollinger bands were horizontal, including the 2day timeunit. Now both are heading down, especially the 2day chart sup bollinger diving towards prices.
    Also the graphic resistance on price tops was around 20 $ which gave me some room for my risk reward ratio, whereas now it is already near 19.50 area...
    So...I'm rather monitoring prices and am about to short silver with a target of +/- 16.50 for starters, should the weakness get stronger. Of course I'll try to do it close to the downwards resistance, with a good signal on the faster time unit.


    1. Agreed. Plus we are entering a weak period of the year historically for the pmtls. We can even break $16.50. Slope of hope.com just put out a new blurb on Silver. Falling wedge support is at $12.5. They have a nice chart depicting the pattern.

    2. Yes Hubert, I remember the last time you basically bought the dead nuts low in silver and it gave you no heat at all as it promptly rallied pretty sharply. Have a good wknd! swb

  6. one can cry wolf so many times …

  7. I am thinking that whomever went short the monday after elections in Crimea taking advantage of the massive accumulation of longs on the friday before the elections , may want to reverse that trade at some point … I was a bit surprised that with the heavy week we had in the Ukraine … gold did not close higher , perhaps , its a pavlovian effect on the Crimean elections … toguether with the obvious sell off in the euro and short squeeze in the dollar … anyway some food for thought for whatever is worth , we may see gold trade higher on monday IF things don't change in the Ukraine … I don't think the events in eastern europe are going to be one isolated event that is going to go away just like Syria did … I have said this before , this is Europe , and things don't get resolved as quickly here . They may change for the better , but one thing is for sure , the US / Russia relationships , took a turn for the worst , there is a huge amount of theatre here , but I somehow don't see Putin and Obama shaking hands anytime soon , if ever … I know I am going to get a lot of pounding here , but I really don't think the market has fully accounted for this , and is waiting and waiting so it can be resolved so we see new lows in gold … In my opinion , its going to be a long year , summer is upon us and Russia looses leverage because of the warm weather … In my opinion , things will heat up as we approach the third quarter .

    1. you know, the first world wars 1 and 2 were declared in the middle of summer...

  8. Well, the boys at King World News never give up.

    This weekend, they are posting even more fantastic predictions of PM prices.

    Sprott now predicting $400 silver. Heh, it can't even close above $20, trading heavy as a brick right now., LOL..

    The "Disasterous Collapse" they are referring to is already here.

    In the gold and mining sector.

    The West is dishoarding for a good reason. The PM bubble is over, investors are looking for opportunities in areas which are showing strength, not weakness.

    Like U.S. equities, and the fantastic generational reversal low that the U.S. Dollar put in last week.

    1. Mark,

      Is that a forecast on the USD?

      The time frame is too long for an internet bet, otherwise I'd those odds that it's not a 'generational' reversal.

      I believe that the USD will trade lower than 79.8 at some point in the next 25 years and I do not believe it will trade as high as, what 150 . . . 200? in the next 25 years either.

      Also, " The West is dishoarding for a good reason."
      So, the people in Asia are just stooges for buying?

      I was reading something recently that chronicled a fictitious young Indian couple that received a dowry in gold when they married in the 1960s. They are in their golden years now, and looking to cash in for retirement. In Rupee terms their gold dowry had increased several thousand percent, tax free with zero counterparty risk.

      Now if only that George Forman grill my cousin Greta gave us for a wedding gift could do the same thing, we would be all set.

  9. How did the S&P look at the beginning of 2009? Would anybody had bought it if they solely relied on the charts and trends? They'd be considered crazy, since all of the lines were pointing down. Yet, the thing went up 300% over the next 5 years. It was us, the gold (scum) bugs that were proven crazy and not the main stream investors. well, now it looks that all of the lines are pointing downwards for the PMs, and you have the same guys that were in gold jumping the fence and calling ridiculous prices for silver at $12 or so. Everybody and their sister-in-laws are waiting for the final flush out in gold at $1100, or $1000 or even $800, yet it might never come. This is almost as ludicrous as calling $400 in silver, just around the corner. What happened to the contrarianism? Eventually, what is up, will go down, and what is down might go up.
    I also lough at the many KWN "experts" and "veterans", but just because they see $8000 gold imminently, it does not mean that it must crash down.

    1. Exactly Abraxas. What happened to "buy when there's blood in the water"? Some here seem really good at predicting what happened last year but I think the near destruction of the PM stocks has left many "once bitten, twice shy".
      Hi Mark,
      The west is dishoarding paper derivatives, not gold. Most in the west have no clue what real wealth is. One day when words fail to move markets and when real goods require ever increasing piles of paper to bid for them perhaps they will understand. At some point the rubber will meet the road.


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