President Backs Cautiously Away from Syria; Markets Exultant

Tuesday night's address to the nation was - for lack of a better term - illusory.

While President Obummer tried his best to appear calm and in control, he was anything but. Russia's Vladimir Putin had outmaneuvered him on the Syria strike issue by proposing that Syria put its chemical weapons under supervision of international parties.

Meanwhile, the House of Representatives was backing far, far away from the unpopular choice to attack Syria, "in a measured way," as Secretary of State John Kerry might put it. A no vote on whether to give the president the authority to attack Syria was all but certain in the House and might have faltered in the Senate as well.

Thus, laughably, the president advised congress to delay its vote on authorization for use of military force for two weeks. Issue settled. Syria will not be assaulted by US arms, the president saves some face and congress gets off the hook as well. There probably will never be a vote on authorization. The Syria chemical attacks, which the administration so vociferously denounced as brutal, heinous, inhume and so outside the realm of civilized conduct that the Syrian government needed to be punished for them, will be back page news by the end of tomorrow so that congress and the president can move onto what they were trying to cover up with a war strike: the budget and debt ceiling twin fiascos.

Those will come soon enough and command daily, screechy headlines from the breathless media whores, but before them, the Federal Reserve's FOMC meets next Tuesday and Wednesday, after which it will purportedly announce the great tapering, or, as it's being called on Wall Street, taper-lite, suggesting that the Fed will reduce its monthly bond purchases from $85 billion a month to somewhere in the neighborhood of $70 billion. Ho-hum. One supposes that the world can survive without an additional $10 billion of monthly liquidity. Somehow, we'll all find a way to survive.

With all these grand developments, Wall Street pros took the opportunity to ramp up stocks in advance of the next options expiry, in hopes that can can make another quick buck before the Fed pulls away the punch bowl.

The Dow was up another 135 points on the day, the third straight session in which the blue chip average was higher by more than 100 points, giving it a gain for the week, thus far, of 404 points. The NASDAQ and S&P were weighed down by Apple (AAPL), whose latest "earth-shaking" announcement was not any new products but merely enhancements and new pricing for existing ones. The stock was punished severely, down 26.93 points on the day.

Back at the Dow Industrials, the index will be reshuffled after the close of trade on September 20. Being kicked out are Bank of America (BAC), Hewlett-Packard (HPQ) and Alcoa (AA), replaced by Nike (NKE), Goldman Sachs (GS) and Visa (V). Because of the way the index weights stocks, giving more weight to high-priced ones than low-priced ones, Goldman Sachs will become the third most-important stock on the Dow, with Visa becoming the second most-important.

In other words, with five financial firms now represented in the 30-stock index, get ready for Dow 20,000. There's no stopping it now, especially when the index can arbitrarily kick out losers and replace them with their favorite pump primers.

There is no honor, nor shame, amongst thieves.

Dow 15,326.60, +135.54 (0.89%)
Nasdaq 3,725.01, -4.01 (0.11%)
S&P 500 1,689.13, +5.14 (0.31%)
10-Yr Bond 2.92%, -0.04
NYSE Volume 3,341,576,250
Nasdaq Volume 1,679,120,750
Combined NYSE & NASDAQ Advance - Decline: 3573-2957
Combined NYSE & NASDAQ New highs - New lows: 344-80
WTI crude oil: 107.56, +0.17
Gold: 1,363.80, -0.20
Silver: 23.17, +0.156

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.