Wednesday, December 8, 2010

Bullet Points (no, not real bullets, yet) on the Mid-Week Menage

The noise out in finance-land is becoming deafening. So much, that one can barely keep up with events as they occur. Whether that is the plan of the criminal oligarchs or not, things are sure getting interesting. we present bullet points for today's mass screwing:

  • Overnight, gold and silver are sucker-punched, supposedly by JP Morgan, which is trying to suppress prices of what are now competing currencies. The assault continues into the day (see below).
  • Certain members of the House of Representative express doubts about whether they will vote for the "tax deal" that President Obama and the Republican leadership worked out on Monday.
  • 10-year note yield hits 3.37 midday, backs off to close around 3.24, but is up a full 100 basis points (1%) from just a month ago.
  • Julian Assange, founder and head of WikiLeaks is still being held without bail in UK; lawyer seeks to fight extradition to Sweden where he faces trumped-up charges of "sex crimes."
  • In response to Visa and Mastercard shutting off Assange's access to his money, hackers shut down credit card web sites.
  • Planned bank run in Europe turns into a colossal failure, hardly worth mention.
  • More criticism of Fed's Bernanke interview surfaces, most claiming he lied about "not printing money" and laughable commentary about being 100% sure he can handle his job.
  • China ready to hike interest rates 50 basis points on Friday or Saturday, in direct opposition to Fed's QE2
  • Stocks flounder all day as Fed only monetizes $2.1 billion, smallest POMO in weeks.
  • Market spooked by alleged huge FBI raids on hedge funds, though no arrests occur.

Dow 11,372.48, +13.32 (0.12%)
NASDAQ 2,609.16, +10.67 (0.41%)
S&P 500 1,228.28, +4.53 (0.37%)
NYSE Composite 7,750.32, +10.68 (0.14%)

In opposition to the smallish headline numbers, declining issues outnumbered gainers on the day, 2829-3641. NASDAQ New Highs: 165, Lows: 25; NYSE New Highs: 125, Lows: 28. While the gap between the new highs and new lows is still quite large, the shrinkage today from the advantage the past few weeks is substantial. This indicator has been threatening to roll over for some weeks now, but has yet to do so. When it does - and it eventually will - it will delineate a new down-trend for stocks, one that is very long overdue. Even Bernanke's QE efforts cannot keep a market permanently on an upward bias.

Volume was back to sick, anemic levels once again as nobody wants to trade US stocks, or, at least the number of players in the market has diminished and will probably remain at low levels at least through the new year. Trades of size have only another seven or eight sessions remaining in the year to be made, as the Christmas and New Year's holidays blunt all trades and are normally among the slowest trading days of the year. A run on equities for year end is assumed, as prices are abnormally high and being held in space. Options expiration is still a week away, and could be the day (next Friday, Dec. 17) for capitulation, though today serves as a hint of what's coming.

NASDAQ Volume 1,783,785,000
NYSE Volume 5,241,274,000

Crude oil backed off a little more, losing 41 cents, to $88.28. The damage done in the precious metals markets, however, was more severe, likely the effort of highly-leveraged manipulators (JP Morgan), dropping gold $18.20, to $1382.20 and silver losing another 27 cents, to $28.38. Both gold and silver had made new multi-year highs on Tuesday and the powers that be could not stomach losing so badly on their short positions, thus, the coordinated attack.

For gold and silver bugs, who buy and hold the PMs as hedges against currency risk, the moves were meaningless, actually presenting a buying proposition as global currencies continue their race to the bottom. CNBC hosts asked if the moves were indicative of a bubble, especially in gold, the best contrarian indicator we've seen in some time.

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