There is some kind of drunken knife fight behind the US dollar index's rise. Today it jumped another 97 basis points (00.99%) to 98.60. If you wan to try to understand it, or just haven't suffered your migraine yet today, go read http://bit.ly/1FHGhIz That's an article from Zero Hedge that David Stockman reprinted on his website. Bottom line is that the Fed's relatively (!) high US interest rates & no QE versus QE and negative rates from the European Central Bank & Bank of Japan have created a shortage of dollars which is driving up the dollar's exchange rate.
You know, here 'tis again. Central bankers are like cockroaches: it's not so much what they steal and carry off as what they fall into and foul up. They're nastier than dermodectic mange, & about as appetizing.
Dollar's jump sent the once proud euro now to a new low, $1.0700 (-1.39%), & has inspired talk of the dollar & euro at par. Yen actually rose today 0.02% to 82.54.
Dollar is in a paroxysm or climax blow off. That does NOT mean its rise will end tomorrow or next day, only that it's in the grip of a buying panic driven by forces outside the market. No telling how long it can last or how high it will go. However, if it goes on long enough it will scare the fed into "doing something," & whatever that is will surely, surely be exactly the wrong thing.
Meanwhile not really connected to the dollar's rise -- wait a minute. Maybe stocks' fall IS connected to the dollar's rise, it that rise really does reflect a short of dollars that's choking off the carry trades around the world that have been funneling risk-free, nearly costless money into the stock market for speculators.
Anyhow, stocks took a beating with a tire iron today, or, as we say, a "tar ahrn." Mercy, Dow lost 332.78 (1.85%) to 17,662.94. S&P500 didn't lag far behind. It lost 32.27 (1.7%) to 2,044.16. To my way of thinking that breaks the back of any stock rally and whispers loudly that we have seen the last & ultimate top in stocks. Just whispers, doesn't shout yet. Both indices broke their 50 Day Moving Averages.
Right on cue the Dow in Gold & Dow in Silver hit the top gator jaw & reversed. This needs confirmation, of course, but if the formations really have been gator jaws (broadening tops), then they should reverse right here.
Dow in gold hit a new high yesterday (remember gold's big drop Friday) at G$318.97 (15.43 oz) & punched barely into the top gator jaw. That's no surprise or cause for alarm, since broadening tops often do that. Main thing is it has dropped back today to G$314.42 (15.21). Chart's at http://scharts.co/1LTqEBF
Dow in silver hit three previous tops nearly exactly yesterday at S$1,479.16 silver dollars (1,144.04 troy ounces). http://scharts.co/1B29dGK
If I'm right, both ought to drop sharply from here.
West Texas Intermediate Crude lost 3.48% today & closed at $48.29, but, y'all won't believe this, remains in the same sidewise range. Hasn't broken down. That implies underlying strength on a day when the dollar gained so strongly.
Same might be said for silver and gold, but it's a lot like passing the compliment, "He don't sweat much for a fat boy." Don't say a whole lot good, & hints that there ain't much good to say.
Gold lost $6.30 today and closed Comex at $1,160.10. Silver coughed up 14.2 cents to 1561.3c. Gold/silver ratio ended Comex at 74.303:1.
Gold/Silver ratio poked its head above the downtrend line but doesn't want to close above it. Still a near thing, though. Much higher ratio would imply silver & gold mean to dive.
Gold hovereth yet right at that 3-standard deviation Bollinger Band line, and at the bottom of its trading channel flowing down from the January high. Today it also tapped at the support line drawn across the shoulders of that upside-down head & shoulders.
I see analysts who have a clear head calling for much lower silver & gold prices, but I can't board that train. Maybe we'll see a trip back to the November low at $1,130.40, but shouldn't go further.
Silver remains in a falling wedge anchored on the January high, & is bumping along the bottom boundary. If it breaks that line it could sink to that November low at 1504c.
Something unpleasant & dark is slinking through the world. Oh, I don't mean only the Nice Government men who are always slinking somewhere, but I mean some sort of financial panic. Dollar shooting up does not smack of stability & order. Has the lingering taste of 2008.
Y'all must never forget that central banks and their scabrous, scrofulous fiat currencies have the whole world living on the edge of a volcano. Just because it didn't blow today doesn't mean it won't blow tomorrow.
On 10 March 2000 the Nasdaq Composite stock index peaked at 5,132.52. That ended the dot com bubble. Same index peaked on 2 March 2015 at 5,008.57.
On 10 March 1893 New Mexico State University cancelled its first graduation ceremony because the only graduate had been robbed & killed the night before. (Is that really true?)
On 10 march 1629 England's King Charles I prorogued Parliament & did not recall it for 11 years. When they got back, boy! Were they mad!
On 10 March 49 B.C. Julius Caesar crossed the Rubicon and invaded Italy, aiming to overthrow the Roman republic. He is alleged to have said when he crossed, "Alea jacta est!" I've thrown the dice.
Argentum et aurum comparanda sunt —
Silver and gold must be bought.
— Franklin Sanders, The Moneychanger