I reckon Wall street, and maybe America, worships Mammon, so they need their own catechism to train their worshippers, a Mammon-Catechism. First question ought to be, "What is the chief end of central banking? Answer: "The chief end of central banking is to profit the banks, bleed the nation, and control the economy forever."
'Twas a good week for stocks, sort of, an unequivocally good week for the US dollar index, a great week for palladium, and a rotten week for gold, silver, & platinum. How many wise gurus on Wall Street expected a Trump victory to spark a stock market rally?
Let us think first about fiat currencies, those bloodsucking vampires sucking on the carotid arteries of the world, evil angels of statism & banking arrogance.
The US dollar index hit a 13 year high at 101.38, rising 38 basis points today (0.38%). Behold, the chart, http://schrts.co/OkJ5UT
The dollar's Trump rally, grounded upon expectations of higher interest rates, has painted a dramatic rising wedge on the chart's face. It hath reached the heavy resistance at 100.50 & tried to pierce that ceiling. I observe merely -- not knowing a thing in the world and being only a nat'ral born durned fool from Tennessee -- that them rising wedges right regularly break DOWN. I recall also the 3% rule, that a breakout hasn't occurred until a market goes 3% past the last high. For the US dollar index that would be 103.07. Now may be the dollar index will merely correct here, then poke right through that resistance & climb for the wild blue yonder, but either way expect it to correct.
To give y'all an idea how manipulated currency exchange rates really are, here's a picture of the Euro priced in US dollars for the last 24 months, http://schrts.co/OkJ5UT
Notice anything about the highs? Right, they all end about 115. Notice that the lows mostly like about 108, with one sharp fall to 105-ish? Central banks are corralling the rate into a range.
Here's the yen back to 2014, http://schrts.co/xX2aUX
Here the range top is about 100 cents to 100 yen, with a wild range down to 79.50. All that steep decline rested on Japanese government/central bank announcement they would cheapen the currency. For its steep rise back to 100 this year the yen can probably thank its "safe haven" status. Now it's been pushed off a cliff rolled in chains. Gapped below its 200 day moving average and appears headed for 85 again.
Please ponder interest rates with me. Fed policy since 1980 (that's 36 years, for you arithmetically challenged folks) has suppressed interest rates. When you've been pushing down a spring that long, what happens when you let go? Something like this, http://schrts.co/B51eyu
Here appeareth the yield on the US 30 year treasury bond. Mark that it hath risen off its all-time low in July, broken out of the range, and now gapped up through the downtrend from 2014, headed for the downtrends from 2011 and 1980. Bear in mind that bonds move opposite to yields, so try to picture what this rise has done to bond prices. You can see that here, http://schrts.co/IoR0Nw
This pictures the 30 year bond PRICE, which has tumbled down, down, down since the July high. Yep, we may get a rebound here, but it appears the 36 year trend has a wooden stake through its heart.
Y'all bear in mind that the US bond market is about twice the size of the stock market. Far more people to panic when the avalanche hits. Y'all button up those snowsuits!
Stocks today edged down, but not so far as to lose their small gains for the week. Dow Industrials dropped 35.89 (0.19%) to 18,867.93. S&P500 misplaced 5.22 (0.24%) to end at 2,181.90. Behold the Dow chart, http://schrts.co/Q6KUW0
That little flaggy looking thang stuck right on upper resistance line of the Jaws of Death formation could be a "pennant" that might mark the half way point of the rise, OR it might be a reversal formation. Notice that the RSI is way overbought, volume has shrunk, and the MACD is agonizingly overbought.
Here's the S&P500 chart, with a surprise, http://schrts.co/vtdPMb
Outlined in green is one monster rising wedge or bearish flag begging to break down. But like I said, I ain't no more'n a nat'ral born durn fool from Tennessee, & I ain't no match for them New Yahk trained smarties with their shiny, pointy-toed shoes. Durn, I'm so poor I have to paint my bare feet black & lace up my toes.
Comex gold dropped $8.00 (0.7%) to close at $1,208.50. Low came at $1,201.10. Silver lost 14.8¢ (0.9%) to 1661.3¢. Low saw 1643¢.
Today marks the theoretical end of that cycle I've been watching for the low, but cycles can extend. You need a very rubbery measuring rod for cycles. Anyhow, gold has about fulfilled my downside target at $1,200 resistance (with a possible spike to $1,190). Lo, the chart, http://schrts.co/00N5f1
Silver is a bit trickier. Analog of gold's $1,200 support is the May low at 1583¢. However, silver has clung to that lower channel line. Considering what I expect of silver -- at least matching the 12.5 times rise from 2001 - 2011 from the December 2015 low, that is, $168.75 -- that further 60¢ to 1600¢ doesn't seem to amount to much.
Next week is liable to be quiet. Don't y'all take your eyes off the horizon and the prize: silver & gold bottomed in December 2015 and have begun a rally that will last 5 years or more. THIS is the time to buy,
Now y'all can quit reading here if you don't want to hear me wax sentimental. Today I found two poems I had written to Susan on Valentine's Day. She had framed them. Here's what I wrote to her in 2010:
How many times I've said it, and yet
Some few things are never said enough.
Remains untouched by time,
Beyond weak interest's tiring,
Past age or frailty or growing stale,
Their newborn beauty never ages,
Their wonder charms us still as much
As when our eyes beheld them first.
Love is that mystery,
Love that wonder
That traces lineage & source
Not to mortality or time
But to the One-in-Three
Before all time began.
And to our frailty God condescends
To grant a body for our dull sight
That in this earthly love we might find his light;
So that by you, my love, both soul and body might
To heaven ascend.
But I repeat myself: I love you.
Y'all enjoy your weekend.
Argentum et aurum comparanda sunt —
Silver and gold must be bought.
— Franklin Sanders, The Moneychanger