Weekend Edition: Historic Rally Stalls At End Of Week

Anticlimactic was Friday's market action after a sustained two-week, post-Brexit collapse rally sent the Dow and S&P 500 to new all-time highs.

Stocks finished with one of their their weakest performances of the month, though it may just be a pause in an otherwise relentless advance led by central bank buying.

Yes, you're reading that correctly; central banks were the leading participants in the post-Brexit rally, preventing what may have turned into a widespread financial panic had the BOJ and ECB not intervened with either direct purchases of stocks or the same via proxies.

This leads to a time-worn dilemma in market confidence otherwise bandied about as moral hazard.

It's the same as fixing horse races or weighting the balls on a roulette wheel. Rigged financial markets will sooner or later be found to be lacking in both stability and longevity, which, when dealing with life-spanning investments touted by the major brokerages, are - or should be - two major pillars of strength.

If central banks continue to play fast and loose with not only monetary policy and begin to dabble in fiscal policy (well underway) and overtly entering trading markets (also pretty obvious), it may be only a matter of time before the curtain is rolled back and the man in the booth behind the controls is revealed as a faker, a fraud, a charlatan, and the foolishly following investors taken in by the scheme.

In simple terms, caution continues to be the best friend of anyone with reasonable means. Hard assets appear once again to be not only safe, but sure.

Many in the financial arena thought that the world was ending in 2008, though afterthought now is clear that an era of unbridled intervention by central banks was only just beginning.

How and when it ends are open questions, but certainly, valuations are stretched to extremes, data - along with stock prices - is being manipulated, and individuals investors have long ago headed for safer havens.

The game may go on for years more, which is likely the path of least resistance since there's so much riding on a continuation of current politics and economics. The thought that the larger the debt and fraud (and both are enormous), the greater the fall may or may not be a truism.

What's working now may be reversed in the near future. One glance at YTD charts of either gold or silver tells you that a paradigm shift may be already underway.

Friday's Closing Numbers:
Dow Jones Industrial Average
18,516.55, +10.14 (0.05%)

NASDAQ
5,029.59, -4.47 (-0.09%)

S&P 500
2,161.74, -2.01 (-0.09%)

NYSE Composite
10,773.12, -13.51 (-0.13%)

For the Week:
Dow: +369.81 (+2.04%)
S&P 500: +31.84 (+1.49%)
NASDAQ: +72.83 (+1.47%)