Wednesday, 28 September a.d. 2011
Sobriety visited the stock market today, & no one was much pleased to meet her.
Dow made raggedy attempts to rise, but about 1:00 Reality & Sobriety began selling, and from there it was all downhill & Katy-bar-the-door. Dow sank 1.61% (179.79 points) to 11,010.90, vomiting back all yesterday's gains & part of the day before's. S&P lost 2.07% (24.32 points) to 1,151.06. Gone are the visions of the Great Bucket taking away all the sovereign debt problems, & returned are the grim facts of economic outlook.
In Europe the eurocrats are leveraging the crisis to further their schemes of centralizing more power. Wow, now there's a surprise.
US DOLLAR INDEX yesterday made the "final kiss good-bye" to its breakout point, and today gained 41.4 basis points (0.5%). Dollar's liable to run strong for a week or so, & today was already tapping on 78. The 50% retracement of the decline that began mid-2010 & bottomed in May 2011 is 80.58.
The Franken-currency, the euro, continues to tumble since falling out of its trading range earlier this month. Today closed down a hair at 1.3545. Count on seeing 1.3000, and wait on 1.2000. Japanese yen remains on the upward side of a breakout and above its 20 dma. Closed today at 130.66c/Y100 (Y73.53=$1).
It's a good thing markets are so tough to parse, otherwise the Riviera would be chockablock with successful investors & the room prices would skyrocket. But as it is, just about the time you think you understand what the market is doing, it pulls out the rug & your forehead dives into the concrete.
Take silver & gold. They fell today, right sharply. Silver lost 140c, most of yesterday's 157c gain, to close at 3008.4c. Oddly enough, Friday's close was 3006c, about the same. Gold closed Comex at $1,616.10, down $34.50. Clearly, resistance at $1,675 yesterday has proven victorious, but gold couldn't be broken below $1600 -- today's low hit $1,598.60. So you look at that & the last few day's trading, & naturally your little mind extends that fall indefinitely out into the future. But the premium on US 90% silver coin rose yesterday, and today again. Now wholesalers are buying 90% at 85c an ounce under spot & selling at 25c over. Look over your shoulder, too, at that Gold/Silver Ratio, which broke out over 45.50 resistance and has traded as high as 54.481.
These things argue AGAINST lower prices. Silver defended 2950c today, too, & if it can hold that, then Monday becomes a spike bottom. Gold defended the $1,600 level in like manner. So far, so good, but the past 3 days action also might be a reaction to a low, rolling over & turning down once again.
As I said, if this was easy, we'd all be living on the Riviera, smoking two dollar seegars, drinking Ripple, eating gooey-center bon-bons & driving big Chevys. Scoping these markets is all the more tricky because so many huge traders use computer programs, which exacerbates, accelerates, and exasperates every move up or down.
But I am anticipating. For now silver & gold remain in a down trend and have done nothing to contradict that. Be patient, keep your money dry and ready to buy more silver & gold.
-- Silver and gold must be bought.
- Franklin Sanders, The Moneychanger