The headline story Wednesday was the sharp decline in gold (-3.3%) and other precious metals. This was the result of the Shanghai Gold Exchange raising margin's the second time this month, the impending options expiration on the COMEX Thursday, which generally leads to chaos, a much overbought market and, let's face it, Bernanke doesn't want continually rising gold prices to embarrass him Friday. (
: After the close the CME
This must have been leaked to other exchange members. Options traders at the COMEX will feast on this and this is another reason markets are broken and corrupt.)
The undercard was some giddiness over higher Durable Goods Orders which increased to 4% vs 2.5% estimated. Take away transportation (aircraft and autos) and orders were still up .7%. A supporting award goes to the CBO (Congressional Budget Office) which for the umpteenth time adjusted and scored the deficit in the out years lower. These reports are useless "garbage in, garbage out" nonsense which will be revised many more times.
Leading the market charge higher today were the much oversold financial sector and banks (BAC, C, GS and etc) in particular. There have been many analysts pounding the table to buy the group and some finally took notice. But those same analysts have been promoting these stocks from much higher levels with target prices they keep revising lower and lower.
The Treasury successfully auctioned another $35 billion in 5 year notes with a yield of 1.09%. Five years for 1% seems pretty absurd doesn't it? Nevertheless, bond prices overall were lower due to the stock market rally.
Stocks pushed higher in the afternoon led again by the 2:15 PM Buy Program Express. (I may have to copyright this!) The algos and HFTs kicked-in and up we went. You won't hear any complaints from the financial media when these programs push stocks higher.
Volume was substantial although lighter than recent trading days and breadth per the WSJ was quite positive once again.
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is a market breadth indicator that is based on the difference between the number of advancing and declining issues on the NYSE. When readings are +60/-60 markets are extended short-term.
McClellan Summation Index
is a long-term version of the McClellan Oscillator. It is a market breadth indicator, and interpretation is similar to that of the McClellan Oscillator, except that it is more suited to major trends. I believe readings of +1000/-1000 reveal markets as much extended.
is a widely used measure of market risk and is often referred to as the "investor fear gauge". Our own interpretation is highlighted in the chart above. The VIX measures the level of put option activity over a 30-day period. Greater buying of put options (protection) causes the index to rise.
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I'm pretty disgusted with the CME and it's brethren at the COMEX. This is a criminal bunch. When you decide to raise margins again on gold the day before options expiration you'll create maximum impact. Those making these decisions also have contacts with the floor traders if not their own accounts.
This was a well-placed smackdown of gold and with this increase in margin requirements after the markets closed; you can expect more damage Thursday. What a manipulation spectacle. It's quite clear Bernanke and the TPTB don't like gold and the measure these high prices are sending toward official policies. Doing what they can to drive these prices lower is what they want.
The markets are broken.
Jobless Claims on tap for Thursday as if this matters.
Let's see what happens.
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