Metals, Stocks Rebound; Oil Continues Relentless Rise

After a one-day hiatus from the usual upward trend, stocks, and especially gold and silver rebounded in the midst of the liquidity-fueled rally, though the move in the metals - especially silver - was stronger than the one in equities.

Keeping the lid on stocks somewhat throughout the session were lingering fears of an oil price shock, as WTI crude rose again, mostly on nothing but idle speculation over the situation in Iran, which is largely unfounded and without credibility as the closure of the Strait of Hormuz by the Iranians would be tantamount to economic suicide since they also use the strait to ship their oil produce.

Nonetheless, oil was up almost $2.00 on floor trading and wholesale gas prices rose by another nine cents, a cost which will almost all be passed along to the (un)happy motorists.

The national average for unleaded regular stood at $3.78/gallon according to AAA, with the highest price on the mainland being found in California ($4.33) and the lowest in Wyoming, at $3.17. The states of Oregon, Washington, New York and Illinois are closing in on the $4.00 mark, despite national consumption having dropped to historic low levels over the past six months.

Also putting a damper on investor enthusiasm was today's big miss on the ISM Index, which came in at 52.4 for February, after a reading of 54.1 in January and expectations for 54.7, though that was tempered with another solid reading on initial unemployment claims, which again came in at 351K. Last week's 351K was revised upward to 353K.

Even though gold didn't even come close to recovering the losses from Wednesday, it is still above its trend line and the price of silver moved back above what everyone believes to be key support/resistance at $35.50.

With little on the calendar for Friday, traders will be looking for any kind of catalyst. Perhaps our friends across the pond in Europe will provide some theatrics. They've been eerily quiet for almost two full days... seems like an eternity.

Dow 12,980.30, +28.23 (0.22%)
NASDAQ 2,988.97, +22.08 (0.74%)
S&P 500 1,374.09, +8.41 (0.62%)
NYSE Composite 8,175.20, +61.95 (0.76%)
NASDAQ Volume 1,887,835,875
NYSE Volume 3,910,319,750
Combined NYSE & NASDAQ Advance - Decline: 3532-2096
Combined NYSE & NASDAQ New highs - New lows: 244-30
WTI crude oil: 108.84, +1.77
Gold: 1,722.20, +10.90
Silver: 35.66, +1.02

Much Ado About LTRO, or, Ben-Zero Bernanke's Attack on Gold (and silver)

As mentioned here yesterday, the turbid markets were about to get a lot more interesting with the ECB's LTRO and Ben Bernanke's testimony before the House.

What a fascinating and interesting look inside the workings of coordinated central bank policy it was.

Europe's LTRO went off, as expected, without a hitch. According to the Wall Street Journal:

The European Central Bank released the results Wednesday of the second round of its long-term refinancing operation. A total of 800 banks participated, and the ECB allotted €529.53 billion in the three-year refinancing operation.

This was more than the €489 billion the ECB loaned out to 523 banks in December on the same terms, 1% over three years. Giddy-up!

Perhaps the "struggling" banks - which will now park most of the money at the EBC for a 0.75% annual loss - thought that this was their last chance at almost-free money and more of them jumped at the chance, despite the stigma associated with suspect, "bailout" money, which is part of the reason why so many people the world over despise bankers. They will take when money's cheap, but they will not loan it out to businesses or individuals despite usurious rates of return. Rather, they will take a loss in order to retain their lofty position as worthy of "salvation."

Thus, the banks have become the scourge of the earth, keeping their wealth to themselves and impoverishing every man, woman and child on the planet in the process.

So, no big news there. More of the same by the kleptocracy.

European equity markets responded with a large yawn, finishing mixed, but mostly down, the worst hit being the UK's FTSE.

Buoyed by the success in Europe and a positive second revision to 2011 fourth quarter GDP (up to 3.0% after an intial reading of 2.8%), US stocks opened with a mild upside bias.

Then came round two, when the central bank plans really came together. As soon as Ben Bernanke started speaking, gold and silver began dropping, fast, like $3.50 in just over an hour for silver, from $37.50 to $34.00 the ounce.

Gold was off by as much as $80 in the same time span, and oil also took a hit, but - get this - oil recovered to finish the day with a gain. the precious metals, anathema to central bankers, recovered a bit, though not much.

The widely-spread rationale was that Bernanke was not his usual dovish self, as he didn't signal that any further quantitative easing (QE) was forthcoming from the Fed. Naturally, this cover story flies in the face of the Fed's lax monetary zero interest rate policy (ZIRP), Operation Twist and the ceaseless, clandestine money-pumping which the Federal Reserve has engaged in for the last three years running.

As a bonus, the central bank market interventionists even managed to take a little steam out of stocks, as all major US indices finished lower, but nowhere near the percentage losses suffered by those crazy gold and silver investors who believe - rightly - that the PMs are actually money and a better store of value than fiat money which is printed on demand by the globalists. Interestingly, trading volume today was the highest seen in weeks.

Perhaps precious metals investors should have known something bad was about to happen when Texas congressman and presidential candidate Ron Paul harangued Bernanke on inflation, monetary policy and the role of the Fed, brandishing a silver coin and telling the chairman that the Fed would eventually "self-destruct."

Here's the fascinating video:



A few more experts weighing in on today's "gold smash" included Jim Sincliar, who called today's action "window dressing" for more QE, and Sprott Asset Management's John Embry, who called out the bullion banks as manipulators.

The situation could not be more clear. Central banks will print, print, print until they've inflated away all wealth, and they will hate gold (and silver) and keep prices artificially low, until the day comes when they dump all their worthless paper assets en masse and buy up every last ounce of the yellow metal.

Until then, don't fall for the "no new QE" stories. The printing presses will run non-stop. They have to, since the global bankers, with tacit permission from the pals in government, have produced a no-win situation by trying to solve a solvency problem with liquidity, throwing more debt on top of already too much debt, as if pouring more water onto a drowning man is supposed to help save him.

Dow 12,952.07, -53.05 (0.41%)
NASDAQ 2,966.89, -19.87 (0.67%)
S&P 500 1,365.68, -6.50 (0.47%)
NYSE Composite 8,113.55, -58.00 (0.71%)
NASDAQ Volume 2,092,803,750
NYSE Volume 4,389,318,500
Combined NYSE & NASDAQ Advance - Decline: 1726-3925
Combined NYSE & NASDAQ New highs - New lows: 230-40
WTI crude oil: 107.07, +0.52
Gold: 1,711.30, -77.10
Silver: 34.58, -2.56

Dow Finally Closes Above 13,000 as Silver Breaks Out

Fueled by ever-larger injections of liquidity from the world's central banks, US equity markets have been disconnected from economic reality for some time, but today's shrug of the shoulders to two key economic reports has to make old-time "investors" wondering if hard numbers actually mean anything anymore.

Prior to the open, the Commerce Department released durable order data for January, which showed a 4.0% decline over the prior month. (Shrug shoulders if you trade stocks)

At 10:00 am, S&P/Case-Shiller data on home prices came in with a loud thud, matching the durable number at -4.0% for December. The widely watched index of home prices has now exceeded the post-crash lows and is at its lowest level since February, 2003, a 33.8% drop from the peak. If there is a recovery in housing, it certainly is well-hidden.

Despite the negativity of stubborn reality, stocks managed to post small gains across the board, with the Dow Jones Industrials closing above 13,000 for the first time since May, 2008. (cue fanfare here)

So, now that everybody can pop the champagne and don their "Dow 13,000" beanies, what's next?

Just in case you've tired of the constancy of the stock market, hovering around Dow 13,000 for more than a week in a very slow-moving, retarded kind of way on abysmally-low volume, take heart! Things are about to get a whole lot more interesting beginning Wednesday.

That's the day the ECB unleases its latest attempt to advance liquidity and goose markets (and inflation) with the second installment of the LTRO (Long Term Refinancing Operation), in which European banks will be offered up to EUR500 billion in three-year loans at the bargain-basement price of 1% (how appropriate!).

Back in December, the ECB did the same thing, and EUR489 billion was snatched up by some 523 institutions, though much of the money was eventually parked right back at the ECB, earning a measly 0.25%, resulting in small, albeit manageable losses for many of Europe's largest banks. To the banks, the 0.75% negative carry seemed a good enough deal to have funds on hand should the crisis deepen or a rogue trader muck up the balance sheet.

Ideally, the ECB would like the funding banks to snatch up more of that juicy sovereign debt that continues to float around in the Eurozone like so much flotsam and jetsam, but the LTRO also carries something of a stench of its own, via the equity markets, where the takers of the nearly-free money are cast under a dubious light.

No matter the particular cases for individual banks, tomorrow's "funding" should be making headlines about the time US stock markets ring their bells of jubilation.

Also tomorrow, America's central banker, Ben Bernanke, chairman of the Federal Reserve, will be before congress, making his required testimony before the House Finance Committee. Since the chairman's stuttering mouthfuls usually carry significant weight for the financial markets, he might make some news, though probably not, being the conscientious type who only prefers to move markets the old fashioned way, by getting the printing presses rolling full boar in the basement at the Fed.

Thursday and Friday feature a full meeting of EU ministers, with the $2 Trillion "firewall" topping the agenda.

Now, to the casual observer, these events may not evoke much excitement, but financial market players will be glued to their tubes, pads or whatever electronic means they have of staying abreast of developments and there just may be some fireworks. Of course, there may not, as these bulwarks of capitalism are about as open-minded and free-speaking as corpses in straightjackets.

On the other hand, any kind of adventurous talk or under-over funding take-up could move markets substantially, which is just what some traders would like to experience, rather than the Chinese water torture of the past seven or so sessions.

Meanwhile, what equity traders hate to admit, is that silver has been outperforming just about every other asset class in the known universe, up 30% on the year and breaking through resistance today on a powerful move forward.

In an interview with King World News, chartist Dan Norcini notes that silver has breached resistance at $35.50 and broken above the 50-day moving average. Today's 4% move higher was largely due to shorts having to cover their positions. Norcini says shorts are panicked and the next resistance level is around $40/ounce.

In the below video, Jon Najarian of Options Monster explains how the big players are looking for a breakout in silver. Enjoy.

Dow 13,005.27, +23.76 (0.18%)
NASDAQ 2,986.76, +20.60 (0.69%)
S&P 500 1,372.18, +4.59 (0.34%)
NYSE Composite 8,171.84, +28.29 (0.35%)
NASDAQ Volume 1,755,641,125
NYSE Volume 3,487,070,500
Combined NYSE & NASDAQ Advance - Decline: 2805-2796
Combined NYSE & NASDAQ New highs - New lows: 253-21
WTI crude oil: 106.55, -2.05
Gold: 1,788.40, +13.50
Silver: 37.14, +1.62

Dow 13,000. Fail. G20 Wants $2 Trillion Firewall; 1% Tip from a One-Percenter

Today was another in a seemingly-endless series of ridiculously small gains or losses for stocks, but, if one looked at the major indices early in the day, one would have thought any kind of gain or even getting close to unchanged was out of the question.

Stocks sold off right at the open, but suddenly, miraculously, once the Dow bottomed out with a 100-point loss, the entire market reversed and headed higher.

Some of the commentary surrounding the market reversal seem to suggest that it was due to the NAR's release at 10:00 am ET of pending home sales, which witnessed a 2% gain in January. Such commentary should be immediately dismissed as pure rubbish, for a number of reasons, the first being that real estate is such a small sliver of the US economy - and generally divorced from stocks - that the number doesn't move the Dow 120 points. Also, the January gain comes on the back of a 1.9% decline in December, and the warm weather this winter likely threw off all of the NAR's seasonable adjustments.

Probably the utmost reason that the theory concerning the move upward for the Dow being caused by pending home sales should be disregarded is that the bottom and subsequent move higher occurred 15 minutes before the NAR news. The Dow was already nearly 40 points off the bottom by 10:00 am.

No, the turnaround was more than likely the result of pump-priming by a gang of primary dealers, who, in a lightly-traded market, as this is, have more than enough firepower to move stocks in any direction they please, and the current pleasure is being positive, as it almost always is. The idea that the the major brokerages and big banks would like to engender more participation from individual investors, who have lost faith in Wall Street since the financial crash of '08 and haven't returned, is real, and the best way to get investors back in the mood - in the small minds of big bankers - is to manufacture rallies, such as the current one, which is about a 25% move since the start of October.

The trouble for the bankers is multitudinous. Nobody believes in their ways of doing business; there isn't enough disposable income in most households to really consider stocks as investments; there are too many headwinds, like Greece, the rest of Europe, Iran, high gas prices, lingering unemployment and more, and; the market sure looks toppy at this juncture.

Lastly, volumes for the better part of the last two months have been nothing but pathetic. Today was more of the same, so trying to entice individual investors back in is akin to finding volunteers for cliff diving. It looks dangerous, and nobody wants to go first.

To get an idea of how stalled out this market has become, consider that on Friday, February 17, the Dow closed at 12949.87 and today at 12,981.51. That's a move of less than 32 points in five days, and the repeating pattern of being down in the morning only to rally at some unknown time - though also in the A.M. - isn't exactly an inspiring feature.

So, after spending most of the day above the 13,000 mark on the Dow, the cheerleaders at CNBC will have to root again tomorrow, for the seventh day in a row.

Over the weekend, financial representatives of the G20 nations met in Mexico and came up with the notion that Europe needs to erect a $2 trillion financial "firewall" to keep its contagion from spreading. That's all they seem to know how to do, these top-level bureaucrats, spend money to keep Europe's debt conflagration from inflicting collateral damage. Next time you hear the word "firewall" your response should be "stupid," because a firewall, by definition, is purposely set up to keep everything enclosed. In other words, anything inside the firewall will burn to a crisp. The term, and the idea are almost as revolting and ignorant as the much-bantered-about term, "ring-fence."

Now that the globalist elitists have their global economy and things aren't going so well, they want to revert to feudalism. Well, at least, via their ancestry, it's something they actually understand.

And, finally here's a story about a one-percenter, a rich banker, leaving a waitress a - you guessed it - a one percent tip. Talk about callous.

Dow 12,981.51, -1.44 (0.01%)
NASDAQ 2,966.16, +2.41 (0.08%)
S&P 500 1,367.59, +1.85 (0.14%)
NYSE Composite 8,143.56, -8.41 (0.10%)
NASDAQ Volume 1,761,845,125
NYSE Volume 3,492,574,750
Combined NYSE & NASDAQ Advance - Decline: 2682-2894
Combined NYSE & NASDAQ New highs - New lows: 230-25
WTI crude oil: 108.56, -1.21
Gold: 1,774.90, -1.50
Silver: 35.52, +0.19

Playing the Market, Twitter-Mob Style; Mogambo Guru Returns

It was certainly an exciting - if uneventful (depending on perspective) - end to the week, as the pumpers on CNBC breathlessly kept viewers in a strange state of animated suspense and anticipation over whether the Dow would actually close above the "psychologically important" (only to them) 13,000 level and the wrangling over details of the latest Greek bailout continued apace across the pond.

But, a funny thing happened on the way to 13,000 - or rather on the way down away from it - this morning, shortly after 10:00 am ET.

With the Dow at what would become the highs of the day, a sudden about-face took place, sending the index screaming for mercy in a 37-point drop over a roughly ten minute span.

Moves like this are not uncommon in the world of fast-paced HTF algos (a subject which has been noted here all too often in the past), but today's event might have had a bit of a different skew. Yesterday afternoon, a group of individuals (no names, please) decided to have a bit of fun, or mischief, possibly at the expense of the well-heeled crowd that convenes on Wall Street regularly.

A plan was concocted to see if a bunch of unrelated, inconspicuous internet users could have an effect on the HTF algos, which, as we know, track headlines from the likes of Bloomberg and the Wall Street Journal, but also follow trends on social websites like Facebook and Twitter.

The idea was that everyone would Tweet, at precisely 10:03 am, "Greece defaults" and see if the dumb algos would fall for the bait. The tweets went out, not all at the same time, and not uniform by any means, though the 10:03 time-stamp was extended, with various mentions of Greece defaulting flowing into the Twitter-verse in earnest for about twenty minutes.

Whether the tweeters actually managed to trip up the HFT traders and their zipity-do-dah algorithms is now and will likely forever be a matter of speculation, but if there were an actual cause and effect, it brings some interesting - and scary - possibilities to the table.

Suppose such crowd-sourced media were actually effective in moving the algos, thus affecting the price of an entire index? What then would be the effect on an individual stock? Were a group of people intent of making some money with this trick, it might be easier than anyone imagines, somewhat akin to elevator whisper campaigns designed to take down candidates in local elections or the old pump-and-dump strategies that were so effective in the early dotcom days of the internet, circa 1998-2001.

A plan could easily be put together to move a stock a few points in one direction or another, with appropriate bets placed by those "in the know." If truly effective, the profits could be staggering. Truth is, that's probably what has been happening in the US markets and elsewhere for quite some time, but especially theses days, as the market seems less than reluctant to trade on rumors and headlines rather than fundamentals.

Whatever the case, today's experiment via Twitter might raise a few eyebrows and give people some ideas. As for 13,000 on the Dow, the CNBC presenters and those with an emotional tie to the number will just have to wait until next week.

The other major development of the day also took place on the internet, and actually happened on Thursday, when the frightful visage of the Mogambo Guru suddenly reappeared sporting his own blog. The majestic Mogambo Guru (MMG) had been a regular typist and word-twister of financial follies on the Daily Reckoning for a long time, though he had taken an absence from penning the occasional witty and irreverent column (OWAIC).

Now that he's back and regularly submitting his thoughts to the public via a blog there should be little doubt that his hordes of faithful followers (HHOFF) will flock to his work like... ummm, bees to honey, or something like that.

Welcome back, oh great, glorious, hallowed, devious and mischievous Guru! Your absence left a hold in the fabric of time and space, but we're sure you'll be promptly attending to mending it.

Just a few quick notes for the weekend:

Today's volume, which has been horribly anemic on a regular basis anyway, was fairly ghastly today, the lowest in a decade, notes ZeroHedge.

There's a meeting of the G20 in Mexico City over the weekend in which the big fight is supposed to be between the IMF's Christine Lagarde and the finance ministers and representatives of Germany. The IMF wants more dough and the Germans are tiring of spending so much. Besides the main event, the undercard features thousands of police in riot gear protecting the one percenters from rock-hurling Mexican hooligans and potentially, armed drug cartel operatives. One has to admit that setting a meeting of world leaders in a place as dangerous as Mexico City offers a bit of intrigue, to say nothing of its inducement to all kinds of mayhem.

Dow 12,982.95, -1.74 (0.01%)
NASDAQ 2,963.75, +6.77 (0.23%)
S&P 500 1,365.74, +2.28 (0.17%)
NYSE Composite 8,151.96, +15.72 (0.19%)
NASDAQ Volume 1,641,587,000
NYSE Volume 3,367,789,000
Combined NYSE & NASDAQ Advance - Decline: 2827-2792
Combined NYSE & NASDAQ New highs - New lows: 281-11 (Really?)
WTI crude oil: 109.77, +1.94 (pain at the pump)
Gold: 1,776.40, -9.90
Silver: 35.34, -0.22