An email arrived in my box early today with the single word "Election" in the subject line. I opened it to read, "Hold on to your seat, Dorothy, because Kansas is going by-by."
To such prophetic genius, what could I possibly add?
Markets are not, contrary to what some economists contend, rational, any more than the people who make them up are rational. Today, for instance, the US dollar index rose and stocks fell on the news that Bernard O'Bama had been re-elected. If people had any foresight, they'd see that O'Bama's policies will gut the dollar, & they'd sell that dog. On the other hand, to the extent that stocks represent underlying real assets, the dollar depreciation will send their price up. Those gains will be illusory, due only to inflation, but they'll probably gain, unless, of course the prospect of another four years of government regulation, ethanol schemes, green pipe dreams, & stimulus packages to nowhere drives stocks down to the earth's core.
I look at the Dow chart & am impelled to burst out the same thing my mother blurted out the first time she visited our log house here, before we renovated it & doubled the size: "I don't think this can be fixed!" Turned out she was wrong, but I believe I am right.
Dow chart is green & puking sick. Dow today dropped 312.95 (2.38%, huge!) to 12,932.73. It sliced through the 200 DMA (12,991.63) like the guillotine through Marie Antoinette's ivory neck. Its jaws of death are eating jaws of death: it has formed a broadening top formation within a broadening top, offering a two-fold witness of its intent.
S&P500 sank 33.85 (2.37%) to 1,394.53. It looks no better than the Dow.
And measured in Gold, stocks broke down emphatically. Look at the chart here: bitly.com/WvZpUV The Dow in gold formed a long-lived diamond, broke down out of it in August, fell like your glasses out of your shirt pocket down a well, caught, rallied a little, then today collapsed through the uptrend line of that little rally, AND traded below the last low. I don't think this can be fixed.
US dollar index jumped up again today, as high as 80.924, nearly that 81 I've been looking for, & is trading now at 80.742, up 11.6 basis points (0.15%). That boosts the buck slightly above its 200 DMA (80.64). Either it will stall here, or clear 81 and head for 82, maybe 81.50. Momentum indicators are headed up, but technical indicators are chancy, chancy when a market is manipulated by central banks.
The euro saw no joy in Comrade Obama's election, socialist as it is. Euro sank through the crucial 62 DMA (127.87) and ended at 127.79, down 0.27%. I don't think this can be fixed, either.
Yen gained 0.53% to 125.09 cents per 100 yen, and appears to have turned up. Oh, not for any big rally, just turned up instead of sinking like an anvil in quicksand. I don't think the yen can be fixed, either.
Watching markets, sometimes things are really hazy. You can peer & peer & simply can't make out any form. The last year or so has been that way. Other times, all the klaxons blow & the bells ring & you'd have to be blind & deaf to miss what's going on. Today was one of those latter days.
Silver & gold danced the same steps today. Both kissed their old support good-bye, both reached new highs. Yes, both closed lower, too, but all lower closes are not equal.
Silver lost 36.8 cents to end at 3165.1. Low came at 3135, which, not coincidentally was it had been stymied climbing up from below, & where it broke out & gapped up on Tuesday. Same holdeth true for gold, but the bottom was our well-known old friend, $1,706.60.
Likely silver & gold have one more leg down in this correction, but that may be truncated. They cannot close below $1,700 & 3135, without demolishing my interpretation.
Both silver & gold pierced their 20 day moving averages (3229c & $1,722.24), so they are trying to break that tripwire for a higher move. Both have successfully pierced & remained above their downtrend lines.
Unless silver & gold gainsay all these up-pointing signs by closing lower, we have a sinewy, scrappy, leather-tough rally in our future.
Stop mooning about not buying Tuesday or Monday at the lows and BUY. Sooner or later you have to take a risk, and the odds just don't get no better than this.
Colorado & Washington voted to legalize marijuana. I find that enlightening. Neither these states nor any others will challenge the federal tyranny on the police state or unconstitutional money or foreign wars or interference in the economy or the liberties of the citizen, or assassinations or torturing prisoners, but that smoking dope, now that's another matter. We'll fight the feds down to our last roach, Buddy! We believe in freedom, after all. Got to get that head right! Wonder what they do when the feds flex their muscles & withhold their highway funds & other subsidies? That'll be fascinating.
I don't think this can be fixed.
Here's a little lagniappe for y'all: Grace Harbor Farms MSM Cream from Grace Harbor International, Custer Washington. (360) 366-4151, www.naturallygentle.com. Contains goat milk, MSM (methyl sulfonyl methane, a natural source of sulfur), avocado oil, jojoba oil, peppermint oil, rosemary oil, eucalyptus oil, lavender oil, tea tree oil, vitamin E, and Grapefruit Seed Extract. Not only does it have powerful antibiotic & antiseptic properties that will kill dandruff, skin funguses & infections, but it also relieves aching joints. This stuff will make you leap tall buildings at a single bound and not come down till July. Try it. Mark that I have no financial interest in this recommendation. I mention it only because my wife & I are addicted to it, and we do NOT smoke it.
Argentum et aurum comparanda sunt —
Silver and gold must be bought.
— Franklin Sanders, The Moneychanger