Have they fooled you yet? The other shoe WILL drop at any moment.
OH WOW! Everybody's HAPPY. The Dow Jones, NASDAQ and S&P500 are ALL UP DRAMATICALLY. So, you're really ready to hang your hat on this manipulated HIGH because it feels good? Even before the markets closed, the talking heads were suggesting this could be a good time to "BUY THE DIP". Folks, get real! We live in a world of cause and effect. So, the KEY question is WHY did this sudden and dramatic market reversal happen? That's an important question to answer! When the experts were asked about WHY today's up tick, they responded "don't know" or "could be short covering" or "could be stock repurchase" or "could be a fundamental rebound". Then, when they were asked where is this money inflow was coming from, NOT ONE OF THEM COULD ANSWER THAT QUESTION! Who's buying? Clearly, nobody knows. And THAT is an important point to note! Very important!
Let's look at the S&P 500.
Look closely at the ABOVE S&P500 CHART. The green line is the 200 day moving average. The S&P500 just "touched" the 200 moving average Friday and then like magic gaps up today! This is what manipulation looks like. (Of course, if you don't know where these key indicators are, then this chart looks innocent enough.)
Or, take the NASDAQ...
Look closely, on Friday, the NASDAQ closed solidly BELOW the 100 day moving average, and again, like magic, today it gaps up above the 100 day moving average!
Let's not forget the DJIA.
In spite of overwhelming weakness, the DJIA also gaps up above Friday's close, but STILL below the 50 day moving average and 8 day EMA trend line. What's really going on here is that the manipulators desperately want to keep these prices above the fundamental bearish signals. They are terrified that programmed trading (black box trades) will kick in and cause multiple "flash crashes". Unfortunately, given the markets' true condition, a very severe flash crash is not out of the realm of possibility. Be warned, this volatility is dangerous! Fortunes will be lost in the blink of an eye.
So, the REAL question is, WHAT NEWS CAUSED THESE UP TICKS? What fundamental demand is behind this market exuberance? The bottom line is, there is none. The magic is these markets are being manipulated at key analytical points to create the illusion that all is well and YOU should invest. Don't believe it? Let's look at similar markets....
The European STOXX Index.
Surprise! NO RALLY HERE!
Now the German DAX Index.
Definitely NO RALLY HERE! In fact, a BIG down gap!
Maybe the French CAC Index is in sync with American markets.
NOPE! WOW! Another dramatic gap down in the French market!
The British FTSE was also down similar to the CAC and DAX, but what about the Nikkei? The Nikkei was up today, right? Of course it was, and it's also 60% owned by the Bank of Japan (BOJ) via many ETFs. Least you forget that the Bank of Japan is only a franchise of the Federal Reserve Bank (FRB), the BOJ will manipulate its currency, bonds, and stocks as needed by the FRB. So, don't get too excited about that.
Meanwhile, the US dollar once again lost ground against most major currencies, even against the Russian Ruble and Chinese Yuan. So, if your currency is losing value, what real gain is there in the stock market. The problem, as we have mentioned many times, is value. The attempt to find real value, or any meaningful price discovery, is nearly impossible in this environment.
The whole world is down while magically the US markets are immune from the global economy. That's a fairey tale for children to believe in. The dollar and treasuries sell off goes on without anyone being the wiser. If your metrics are based on the US stock values or their indexes, you are about to get the shock of a lifetime. Today's gap up, this dramatic up tick, is a warning for the smart money that very big down turns are waiting in the wings. This is ONLY Monday, and there is a lot of week left before the first quarter is over!
But, here's the real kicker! REMEMBER our earlier warning about the Chinese oil/gold/yuan futures contract that would destroy the US dollar? Well, THEY'RE HERE, read it and weep!
The boys on Wall Street may be high (probably drug induced), but those boys in Beijing are not!
Things are changing fast!
Let's look at the S&P 500.
Or, take the NASDAQ...
Let's not forget the DJIA.
So, the REAL question is, WHAT NEWS CAUSED THESE UP TICKS? What fundamental demand is behind this market exuberance? The bottom line is, there is none. The magic is these markets are being manipulated at key analytical points to create the illusion that all is well and YOU should invest. Don't believe it? Let's look at similar markets....
The European STOXX Index.
Now the German DAX Index.
Maybe the French CAC Index is in sync with American markets.
Meanwhile, the US dollar once again lost ground against most major currencies, even against the Russian Ruble and Chinese Yuan. So, if your currency is losing value, what real gain is there in the stock market. The problem, as we have mentioned many times, is value. The attempt to find real value, or any meaningful price discovery, is nearly impossible in this environment.
The whole world is down while magically the US markets are immune from the global economy. That's a fairey tale for children to believe in. The dollar and treasuries sell off goes on without anyone being the wiser. If your metrics are based on the US stock values or their indexes, you are about to get the shock of a lifetime. Today's gap up, this dramatic up tick, is a warning for the smart money that very big down turns are waiting in the wings. This is ONLY Monday, and there is a lot of week left before the first quarter is over!
But, here's the real kicker! REMEMBER our earlier warning about the Chinese oil/gold/yuan futures contract that would destroy the US dollar? Well, THEY'RE HERE, read it and weep!
The boys on Wall Street may be high (probably drug induced), but those boys in Beijing are not!
Things are changing fast!
Hey there, DB!
ReplyDeleteLove following your posts! Appreciate your continued knowledge and insight. So grateful for you!
Quick question: Why are so many saying that oil futures are being traded in gold-backed yuan? What am I missing? My understanding is the contract enables partners to pay with gold or are convertible into gold upon exchange.
Thank you so much!
Ganesha's Girl
If you recall, sometime ago when we discussed the Chinese intention to back their yuan with gold, there was a veiled threat by the US that such an act would undermine the US dollar (albeit US national security), and thus could be considered an act of war. Back then, when the issue came up about the Chinese Yuan inclusion into IMF reserve currency basket, we speculated that the Chinese would not DIRECTLY back the yuan with gold to avoid threatening the US hegemony. With an oil futures contract denominated in yuan and fully exchangeable into gold, essentially the Chinese HAVE backed their yuan with gold. But, they can "officially" deny it but explaining that the contract itself is convertible to gold. But, the market place will soon figure it out that there is indeed an eqivualent yuan value IN GOLD. So, officially the YUAN is NOT BACKED by GOLD, but in a practical sense, it truly is. Semantic always make the best arguments!
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