"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


Thursday, March 1, 2012

Unleaded Gasoline continues to charge higher

S&P 500 keeps marching higher - shrugs off downside reversal

Yesterday the S&P 500 give a hint that it might be forming a sort of interim top as it shot to a brand new 52 week high only to move steadily lower throughout the rest of the session closing below the preivous day's low. That constitutes a downside reversal day on the price chart, normally a powerful bearish signal.

Once again, as has often been the case in this market, once the liquidity spigots are wide open, no downside followthrough was seen. Early in the overnight session there was some light selling but nothing heavy. Today, this market is once again working on testing yet another new 52 week high. The session is not over yet so we might still see some late selling efforts but no matter if that does show up, the perma bulls once again have prevailed in this one way market.

(I wish to interject here that no matter how high the US stock market might run and how long the rally lasts - you will be fortunate if you ever hear the word, "OVERBOUGHT"  pronounced by the talking heads, whom I might add are always SWIFT TO PRONOUNCE GOLD AND SILVER OVERBOUGHT. It seems that the stock market can never become overbought since that is equivalent to some sort of financial blasphemy). Nope, overbought is a one way term reserved for the gold and silver markets by these yahoos.

I am noting however that the bond market is showing some heavy selling pressure in today's session. Whether that too will last is anyone's guess, particularly with the Fed through its primary dealers fooling around in that market and working to artificially distort interest rates.

Note on the bond chart the market dropped to the bottom of the 4 month old trading range and is trying to bounce. My guess is that the crony pals of the Federal Reserve, the primary dealers, are buying furiously to try to prevent long term interest rates from getting away from their control.

What the dishonest Fed is trying to do is convince the investment/trading community that the economy is in decent shape and is moving in the right direction ( here is their subliminal message - GO AND BUY STOCKS; GO AND BUY STOCKS; GO AND BUY STOCKS), so that they can get their rising stock market and pull up consumer confidence, but is not in good enough shape to have long term interest rates begin a steady climb. That would be a gigantic NO-NO. "OH, it is good but not that good". Subliminal message repeats - GO AND BUY STOCKS BUT DO NOT SHORT THOSE BONDS.

If this bond market breaks down, it would signify a change in psychology among the interest rate community and illustrate the need for a new subliminal message crew from the Federal Reserve.

Gold holds at support near $1700

Gold thus far is holding quite well on the technical price charts as the $100 break in price has apparently revived the huge physical market buyers who are seeing value in the metal near the $1700 level.

A closing push through $1725 would be constructive and would set the market up for another test of the resistance barrier near the $1750 level, which held the market in check prior to last week's breakout.

Considering the spanking that this market received yesterday, it is showing very good resilience.

Silver back to knocking on the door of chart resistance again

This is a rather remarkable price chart and what can only be called remarkable price action on display. As you all know by now, silver was absolutely obliterated yesterday resulting in the total erasure of the huge breakout rally from Tuesday. Such occurrences are very uncommon from a purely technical analysis perspective. More often than not, such a breakout will see some initial profit taking followed by another burst of buying as momentum based buying kicks into high gear.

To witness a market completely undo such a breakout on massive volume  and then to experience only minor additional downside pressure is also something that one rarely sees. We are getting a bird's eye view of something akin to a Supernova in the sense of its rarity.

Silver bounced right off the former resistance zone near $34 noted on the chart and has now returned directly to the same exact resistance barrier that held it in check prior to this Tuesday's breakout ($35.50).

I have to say that if the bulls in this market can blast through this $35.50 - $35.70 level once again and prevent an intraday dip back below this level, those same shorts that rammed it down yesterday once they capped it at the highs, are going to be shell-shocked and that is putting it mildly. Once again you can see how critical this former resistance barrier is on the charts.