The “powers that be” were unusually busy this week. They had to turn things quickly while maintaining the status quo. And their success is based solely on our lemming-like desire to keep the game going.
Everyone knows that the equity and commodity markets have been levitated by QE, POMO, etc. Just look at JPMorgans perfect quarter. Every dip has been bought because of the implicit guarantee of money pumping liquidity, period.
But commodity prices threatened the whole ball of wax. With most every commodity doubling since the start of QE last year, demand destruction was hurting everyone. So “they” tinkered with the structure of trading through liquidity and leverage in order to take some of the speculative edge off prices. They were successful with several of the “hot” trading vehicles losing upwards of 10% in one day. Do you think that markets react this way “naturally”? Unprecedented.
This dulling of the speculative ferver, if allowed for more than a very short period of time, would soon bleed into the equity market as the margined and speculative players raised cash to cover the change in the game. And if the stock market dropped for more than a few days, confidence would get hit, the recovery would die a quick death and deflation would take hold of asset prices. Newly confident individuals and other investors would be bagged. Spending, hiring, investing would stop and anger would seethe from downtown Manhattan to the Upper West Side. Everyone knows this cannot happen, yet.
So here we are. We’ve made back almost all that was lost in the equity market during the week yet we remain near multi-year highs. And the “edge” has come off of the hot commodity prices. Once again, the major indices held above their latest breakout levels, just like almost every pullback in the past two years. Virtually all primary trends remain intact. We are back to the same old big pre-market run and then low-volume levitation in the stock market.
It has been an emotional week for the market with chest thumping on all sides. But the warning shots have been fired.
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you think the jp morgue is on the right side of silver yet? this is what its all about.its jp morgue the real tbtf, the fed WILL NOT LET THEM GO DOWN. jp morgue is thee largest processor for the national food stamp act, as well as other governmental processes as well. they will fee themselves back to solvency on the backs of taxpayers. you say manipulated, i have to say well orchestrated,ya know,being a musician and all………..great truthfull post . thanks
Its hard to get bearish here
There is still too much money hiding in the safety trades TLT XLP FXY FXF XLU XLV . It can also be argued that many fund managers were hiding in Silver , and Oil, out of pure fear. Its a demographic thing. Many fund managers are in their mid 50’s, and overdosing on the Glenn Beck fear bubble. Allocation readings and margin levels aside, there is a TON of fear out there. And the bearish commentators , blogs, and TV commentators remain the most beloved by the populace.
This last pullback was led by EEM . Every major emerging market nation bounced substantially today. If that is the lows for EWZ RSX EPI FXI , then, the SPY and QQQ will likely retest recent highs
This is the same pattern we saw in the August bear trap. Emerging markets getting pummeled for no good reason. When they found a capitulation bottom , it supported the US indexes, before QE 2 even started.
I don’t want to remind you of your morning rants everyday, but today you questioned the sustainability of a dollar rally beyond a day or two. Maybe this German nonsense will sustain it for a little longer. But then again, you always say nothing matters but America. 🙂
i just want to say that DB is your WIRST mother in law nightmare. they take the academy award for fucking manipulation,! period
But, China may finally be the straw that breaks the camels back of this darn Crazy Commodity/copper bubble. Everything looks like a very good set up for one horrible, ugly commodity crash…but I have been saying that for over a year at this site…I can’t believe that it has been a year already since I wandered onto IBankCoin. Bubbles…they just drive me crazy…what the heck will be the pin that pops it? Monsoon season? China Trade Data? The Clam seeing that he is doing the same mistake of the Fed Head in the early 1970’s? Anyway, at least I get a downward bias until we get near 1300ish SPX for a few days…it’s hard to be a bear.