I reckon FEAR, old rank, steaming FEAR, sent Salvador Dali and his irrationality packing. Looks like Bodacious Ben's peeping & muttering satisfied nobody, & what's worse, scared the market AND the horses.
Japanese Nikkei stock index dropped -- gag! -- 7.3% while we slept in Tennessee, & the Hong Kong Hang Seng index fell over 2%. The wave of selling washed clean around the globe: German DAX down 2.1%, French CAC down 2.07%, Euro Stoxx down 2.12%, London FTSE down 2.1%.
Let us always remember & never forget that yesterday the S&P500 & the Dow posted the first half of a Key Reversal (intraday rise to new high with lower close). So. . .what happened today?
Dow traded as low as 12,180 before it rallied back (Fine job, Nice Government Men! Float that ax head!) to close down only 12.67 (-.08%) at 15,294.50. S&P500 fell to 1,635.53 then recovered some to close down only 4.84 (0.29%) at 1,650.51.
Down? Did I say "down"? Yes. Well, how down?
Dow as in "broke the ascending trendline beneath." Down as in "scared the 20 day moving average" (now 15,085 & 1,630). Down, as in broke.
Y'all bear in mind that stocks compose a huge market, & usually don't turn very fast, crash only seldom, so this is liable to unfold slowly. Mmmm . . . come to think of it, if it DOESN'T unfold slowly that would be even worse news for stocks.
Y'all listen, now, & don't forget this no matter what market it is, stocks, gold, silver, bananas: stocks have gained over 15% this year. That ain't normal. When you see performance like that, run the other way, cause a break is coming.
Durn! I'm trying hard not to be mean & crow, but I'm just not succeeding. I'm trying to rein in my grin & keep reminding myself "One day up, next day down, guard your equanimity" but it's just not working. I've been spitting out black crow feathers for the better part of a month, & it feels right good to be on the right side today. I had to cough up all that before I look at the Dow/Gold & Dow/Silver charts or I'd never stop crowing.
Dow in gold fell 0.205 oz (G$4.24 gold dollars) to 10.987 oz (G$227.12). In itself this may not sound significant, but it gapped down thru the uptrend line. Broke clean through it.
Dow in silver scraped off 1.65 oz or 0.24% to end at 679.94 oz ($879.09 silver dollars). Let's take a look at that chart -- Well, what have we here but another broken trend line.
Crowing & cackling aside, these are the sort of breaks that ought to follow through lower, &, of course, they need that confirmation. Reason all this mattereth so largely is that the Dow/Gold & Dow/Silver are quite reliable indicators of the direction of metals against stocks. They are saying that metals are about to gain a lot of value against stocks.
US dollar index took a body blow today. Lost 58.4 basis points (3/4%) to 83.70 and has broken its sharp uptrend line, but that might mark nothing more than a routine correction.
Yen gapped up 1.16% to 98.13 cents/Y100. Stocks fall, yen riseth. (Y'all reckon the hot money has been borrowing yen on Abe's promise he would keep on cheapening them & buying stocks with the proceeds? If so, the hot money got hotter today.) Euro rose 0.6% to $1.2933, not terrible far from the 200 dma at $1.2986. Has the dollar turned down?
I looked at those gold & silver Comex warehouse inventory charts on Nick Laird's www.sharelynx.com, and sure enough, gold inventories have dropped sharply (ca. -18%) this year, although silver has not.
I got to tell y'all, there ain't nothing normal going on in the silver & gold markets. Gold today closed up $24.40 (+1.78%) while silver rose -- ready for this? -- 3.6 cents (0.16%) to 2249.4c.
Every time markets challenge the same resistance or support, that line becomes more likely to yield. I'm looking at the 5-day gold chart, and I see not one, not two, not three, but five (5) challenges of $1,395. I also see 'twas driven down to $1,360 twice. This won't persist much longer. If I had to bet, I'd bet on gold piercing that barrier & shooting higher.
Silver seems strangely subdued in all this. Ratio closed at the high end of the range today, 61.883. Silver has been contained between 2200c & 2290c the last three days, but today couldn't get higher than 2267c. Scratch your head! Silver's performance against gold does tend to move same direction as stocks, but . . .
Stocks broke today for this leg, but probably not for the all-time (don't y'all just love that word?) grand finale top. However, since all the stock markets in the world are skipping in step, it could be brutal. Meanwhile, more evidence accumulates that silver & gold have indeed bottomed. Looking over your shoulder for one last possible plunge down, y'all might start pecking at buying some silver & gold.
Tomorrow, 24 May, is Victoria Day, celebrated in England and Canada as the British sovereign's birthday. Queen Victoria & I share the same birthday. Wait, wait -- not in the same year. She's 128 years older than I am.
On 23 May 1934 Dr. Wallace Carothers, a chemist at Du Pont, first produce Nylon. He later named it for his wife, Nylene.
Argentum et aurum comparanda sunt —
Silver and gold must be bought.
— Franklin Sanders, The Moneychanger