Fellow mushrooms, here's a perfect example of how our Monetary Masters work us. Last Wednesday the FOMC announcement hit the hyperbolic US dollar in the head with a nine pound hammer. (I'd been telling y'all the Nice Government Men couldn't let that rising dollar rise forever.) Today Comrade Fed Vice-Chairman Stanley Fischer says he expects the Fed to start raising interest rates sometime this year.
This shameless shilling is nothing more than the Good Cop/Bad Cop routine that police use to terrorize people under interrogation. The Fed is continually promising to raise interest rates, then pulling back the promise. Their dadburn lips ought to be worn out on the right and left but not in the middle, since they spend so much time talking out of both sides of their mouth.
Today's message, for those who will read, says, "Whoops! The dollar has dropped about enough, & might get out of hand. Let's make a speech that will talk it back up."
Instead of the Gang that Couldn't Shoot Straight, they're the Gang That Couldn't Think Straight.
The US dollar index fell another 87 basis points (0.89%) to 97.30, reminding me that whatever market riseth straight up also falleth straight down.
This is serious. Dollar index closed below its 20 DMA (97.44) and below that internal mid-channel line. Y'all remember that in January when the dollar blew through its upper channel line, I flipped the channel line over to make a new upper channel line just twice the width of the old. Target then, when it broke out about 94, was 100, and 100 it hath made. Time to drop back to the channel's bottom boundary, about 94.
Dollar is also monstrously high above its 200 DMA, now 87.36. Now is the time to let out all that air in the price. This will take a while. Chart: http://scharts.co/1HEYhF1
Euro took advantage of the dollar's distraction to close above the downtrend line that has ruled its wretched existence since December. Rose 1.23% to $1.0946. That's right at the $1.0903 20 DMA but the euro really needs to climb above the apex of the last even-sided triangle, now about $1.1350. The euro may rise, but only from dollar weakness & not from euro strength. They are having a time corralling even little Greece, which contributes about 1.26% of its GDP and has 2.2% of its population. What will they do if Spain or Italy gets a burr under its economic saddle?
Yen rose a well-mannered 0.25%, not hurting anybody's feelings or threatening anybody's exchange rate. Closed at 83.53, keeping its head down. Has a leetle, discreet rally going.
Accelerated by a falling dollar the inflation markets did well today. West Texas Intermediate Crude rose 2.24% to $47.49. Still rangebound, but knocking on the 20 DMA's door. Copper blew the top off the cooker today with a 4.54% rise to $2.88. Chart: http://scharts.co/1Fgu1lM Copper is closing in on its 200 DMA at $2.95.
When some great person in history or literature tries some great thing and it fails, we call that a "tragedy." When a market breaks into higher territory, then fails to hold its gains, we call that a "failure."
Dow today reached a high of 18,205, but about 2:00 some rats started climbing down the gangway and the anchor ropes. How DO they know?
Dow wound up 89 points lower than that high, and 11.61 (0.06%) lower for the day at 18,116.04. S&P500 fell even more, 3.68 or 0.17% to 2,104.42.
About them Gator Jaws. Dow in Gold punched down again, back through the top Gator Jaw it had overthrown (but not 3%) & poked through the 20 DMA (G$315.66 gold dollars or 15.27 troy ounces). As all trend & momentum indicators bear unanimous witness, it has rolled over towards the bottom of the mine.
Dow in silver, thanks to silver's relatively greater strength, fell today through its 50 DMA (S$1,380.01 silver dollars or 1,067.35 ounces) and dropped 1.54% to S$1,379.84 (1,067.22). Will move lower.
Today was Paint The Tape day for the NGM (or the bandits on the exchange floor) in gold and silver. I'll explain in a second.
Gold closed Comex $3.20 higher at $1,188, but silver only rose 1/2 cent to 1687.2c. Mmmmm.
Then in the aftermarket gold trades at $1,191.10 and silver at 1706c. Painted tape closes. Said silver price truly speaks loudly, since it is above resistance at 1700c. Now silver has pierced its 20 DMA (1609c) and 50 DMA (1674c) & closed above that neckline we have watched so long, AND closed above its last high at 1686c. If silver can't rally on this, it can't rally. http://scharts.co/1xdNalk
Where's gold? Above its 20 DMA (1,180.18) and ready to take on resistance beginning at $1,190. It has also broken out of its downward trading channel reigning since the January high. This comes after it slid down its 3-sigma lower Bollinger Band & punched through the 2-sigma version.
What lies ahead? Ground gold has fought back and forth over more than no-man's land, time after time. From $1,190 to $1,223, the last high, gold must pick its way through landmines. Not as far along as silver, but following up close. http://scharts.co/1C5R3Yz
Gold/silver ratio dropped again, cutting into but not closing beneath its 200 DMA at 69.74! Closed Comex at 70.413. Gapped down on Friday, and confirmation today makes that look like a runaway gap. Listen to this, hear me: the gold/silver ratio closed BELOW its uptrend line from the April 2011 low! That means two things.
1) If you EVER want to trade gold for silver, here's your last chance for this round.
2) Gold & Silver are flashing the brightest buy signal you're likely to see. Stop waiting and buy some.
Argentum et aurum comparanda sunt —
Silver and gold must be bought.
— Franklin Sanders, The Moneychanger