Wednesday, October 14, 2009

Leading The Sheep To Slaughter

DOW 10,000. The biggest CON job in financial history. Unless they own Gold and Silver, I doubt the average American investor feels any wealthier today. Call it what you want, smoke and mirrors, accounting fraud, or bald faced lies, this BEAR MARKET RALLY has deception written all over it. It's the eye of the hurricane and the sun is high in the sky.

"Better batten down the hatches," chimes the crusty beach dweller.

"Why, the storm is over," quips the New Yawker.

"No,'s not," replies the hurricane veteran as he reattaches a storm shutter.

"But, the wind has died and the sun is out," squawks the weather genius.

"You're not from around here, are you?" asks the crusty beach dweller wryly.

Dow closes above 10,000 for 1st time in a year
NEW YORK — When the Dow Jones industrial average first passed 10,000, traders tossed commemorative caps and uncorked champagne. This time around, the feeling was more like relief.

The best-known barometer of the stock market entered five-figure territory again Wednesday, the most visible sign yet that investors believe the economy is clawing its way back from the worst downturn since the Depression.

The milestone caps a stunning 53 percent comeback for the Dow since early March, when stocks were at their lowest levels in more than a decade.

"It's almost like an announcement that the bear market is over," said Arthur Hogan, chief market analyst at Jefferies & Co. in Boston. "That is an eye-opener — 'Hey, you know what, things must be getting better because the Dow is over 10,000.'"

It was the first time the Dow had touched 10,000 since October 2008, that time on the way down.

The Dow peaked at 14,164.53 in October 2007, then lost more than half its value after the financial meltdown last fall. At its low point, the average stood at 6,547.05. The breathtaking rally since then brings stocks to roughly break-even for the past 10 years.

Some market watchers see 10,000 as an illusion because there are still lingering threats to an economic recovery — rising unemployment, weak consumer spending and a battered housing market.

The investors who have driven stocks higher since March are the pros: hedge funds and institutions whose furious selling hastened the collapse of the market in the first place.

And red flags are showing up in the technical charts that professional investors use as they make their trading decisions. The Dow sits about 18 percent above its average of the past 200 days.

"The market by all technical indicators is completely overbought, just like back in March it was completely oversold," said Rich Hughes, co-president of Portfolio Management Consultants in Los Angeles.

On the other hand, Wall Street analysts say 10,000 is more than just a number — it can have legitimate psychological implications.

A recovering stock market soothes the psyche as people watch their portfolios and 401(k) retirement accounts being replenished. And if people start spending again, that may persuade more investors, including some reluctant pros, to go back into the market.

"Psychology plays a huge role in investing, so when you're trying to overcome the huge levels of panic and fear that we've seen over the last year, psychology shouldn't be discounted," said Carl Beck, a partner at Harris Financial Group.

Who said CON job? Oh yeah, I did. The stock market is a very poor barometer of economic health. This entire BEAR MARKET RALLY has been staged by the government and Wall Street with money not worthy of the game Monopoly. At least in Monopoly, we know it's just a game. DOW 10,000 is just a number, but to the talking heads on financial TV this is just the tool they need to sell Americans on the notion that "the coast is clear".

"Time to spend again."

Hopefully, the majority of Americans are on to this CON job. Besides, who can afford to spend? If you and I printed money like the Fed, we'd all be in jail. Reality DOES NOT justify the DOW being at 10,000. And sometimes, reality bites. Ignore the fundamentals at your own peril if you insist on boarding the DOW train.

Markets seldom roll over and die when you expect them to. Many have expected the DOW to die long before we got here. I count myself among those. The topping process in a market can sometimes take weeks because the early shorts are usually the "nervous shorts" and they tend to get shaken from their trades forcing the market ever higher. This is what BEARISH RSI DIVERGENCE signals. The DOW could tip over tomorrow, but we wouldn't be surprised to see it stumble higher for a few more weeks.

Another Day... Another Record High For Gold
By Ed Steer, Casey Research
In a private letter to clients yesterday, Ted Butler had this to say about the Bank Participation Report... "What JPM did in the past month [since the September BPR - Ed] is contrary to everything that Chairman Gensler has spoken out against since he has been in office. The current [and forever] silver investigation came as a direct result of the Bank Participation Report of August 2008... and my urgings for readers to write in to the Commission. This new BPR is much worse than that one. JPMorgan is now short almost 30% of world silver production. This at a time when mining companies are retreating from hedging their production."

Oh... and one more layer of icing on this particular cake. The current position limits per trading entity [for all months] is 6,000 contracts for gold, and 6,000 contracts for silver. According to this Bank Participation Report... JPMorgan and HSBC are short 116,790 contracts in gold and 35,874 in silver. If they followed the CFTC regulations, the total short [or long] position allowed is 12,000 contracts total for both banks. So, they are currently 104,790 contracts over the position limit in gold, and 23,874 contracts over the position limit in silver.

The CFTC will not even enforce these limits. At the moment, there are effectively no limits in gold or silver. The bullion banks are allowed to short whatever quantities of gold and silver on the Comex that's necessary to control their respective prices... and that's exactly what they've been doing for the last 20+ years!. And you wonder why the prices of both metals are going nowhere [relatively speaking]. And your gold and silver mining companies haven't lifted a finger to help you. Not one of them has written a letter to the CFTC and complained. The words 'fiduciary duty' [as it applies to their shareholders] appears to mean nothing to them.

In other words, Gold and Silver should be MUCH higher in price...particularly Silver.

US Dollar Crashes Through Major Support Level
By: Dan Norcini
This evening in Asian trade, the Japanese Minister of Finance once again restated the new view out of Japan that the level of the Yen is no longer an obsession with the monetary authorities of that nation. His comments were interpreted by the Forex markets that intervention to stem the advance of the Yen is most unlikely. With that, market participants wasted little time bidding the Yen into a strong advance.

Those statements of his, combined with that of Federal Reserve Vice Chairman, Donald Kohn, that the US economy would not experience a quick or sharp recovery out of its recession, were both read by traders that US interest rates were not going anywhere anytime soon. Carry traders then beat the Dollar down below critical support near the 76 level on the USDX as they rushed into higher yielding currencies such as the Aussie and Loonie. The Euro also shot up to another new yearly high.

It is looking more and more like the current Administration has set on a course of deliberate destruction of the US Dollar and with it, the economic might that the US has enjoyed since post World War II. As said many times on the pages of this web site, the profligacy of the US has inescapable consequences and we are now seeing a rapid acceleration of the same. The fall in the Dollar is picking up momentum and that is why we are witnessing gold moving into new highs.

But gold is more than a Dollar phenomenon – Gold priced in terms of British Pounds and in Euros is relentlessly moving higher as both Great Britain and Europe, the fading West, are debasing their currencies as well.

Protect yourself from the theft of your wealth by these conscienceless politicians and monetary officials for they have sold their citizenry down the river and plundered them in the process far more thoroughly than Attila and his army of Huns ever did to Rome of old. At least the Roman inhabitants were aware of the rape and pillaging of their substance – when the general public finally awakens to the despicable looting of their treasures by these reeking buzzards, they will rush into gold with a fury that will shock even many of the readers of this site.

As we suggested in our Dollar chart posted here Tuesday, a move below 76 could send the Dollar sharply lower quickly. Bullish Divergence still marks the Dollar chart, and we remain cautious at this time with regards to the Precious Metals at these levels. That the Dollar was down sharply again today for the third day running, and Gold was essentially flat, is noteworthy. The battle rages on.

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