Jim,

I will add only one observation to today’s maelstrom of press releases and market gyrations concerning Chinese loan/interest rate decisions: Who is now controlling whom? Do we need to know anything else? They pip – we squeak. We are living through a momentous change in world history.

Sincerely,
CIGA Pedro

Jim,

The Yen continues to mark time during the dollar’s strength. This smells like the last push in the dollar before the time window closes to me. The bullish setup in the Yen a few weeks ago and positive technical actions indicates more upside to come.

CIGA Eric

^[1]

Jim,

Yep, but this is only a reflection of price. Force/participation as reflected by volume is much harder to control.

CIGA Eric

Dear Eric,

The reason given by the media are created by the media, not by the markets that run under their own impetus, especially algorithms of the wild-ass hedge funds.

China’s decision to do the right thing has been known all week as the equity market boomed yesterday. This is no wise new news.

Today was a continuation of disappointment from the financial sector that has been responsible for the entire rally since April 2009 that was gifted to the world by the FASB (at the cost of their integrity).

For banks to mark up their worthless paper above its actual cost, where it stands now, is even a stretch for Banksters.

The MOPE on Greece, which does not represent 3% of the Euroland GDP, is what made the dollar look nice today while the bankrupt California, representing 12.9% of the US GDP, was all but forgotten. California, which is totally forgotten today by the media, is a bigger bomb for the US dollar than Greece is for the euro, but the media remains silent on this absolute fact.

The best of all was the WSJ which quoted some genius saying that the US should sell all its gold from Fort Knox because at present levels it would bring in $300 billion that would be useful for financing the US Federal budget deficit.

That would be rich, as it implies three things:

1. It would answer the long standing question about an audit of Fort Knox, or the cellar of the New York Fed for that matter.
2. It would be absorbed by Asian central banks as the quintessence of the way out of the US dollars and into diversification.
3. After the completion sale, gold would reach prices that might even surprise me as the treat of a sale is always more powerful than the sale itself.

Markets today fly violently up and down with volatility, and it is only getting worse each day that passes.

I receive email after email lauding the advantages of following some market/commodity news letter or other to trade gold, not invest in it, when truth be known, the best a non-professional trader can hope for is to break even.

It is an axiom that you, the public, cannot trade for insurance, only for the benefit of your broker.

Respectfully yours,
Jim

Stocks fall on China lending curb, IBM outlook
CIGA Eric

U.S. stocks were having their worst day of 2010 on Wednesday as lending restrictions in China worried investors about the global economic recovery, while a conservative outlook from IBM weighed down technology shares.

Hurray for the U.S. dollar day. As goes the dollar, so goes stocks, commodities and gold in the inverse. The U.S. dollar ETF, UUP ^[2], has once again moved into the September 09 gap. While volume has increased today, it still lags that of the swing highs within the gap. For UUP to turn bullish it needs to break the gap and swing highs (resistance) on an explosion of force or what is called a technical sign of strength. This something it has been unable to do thus far. The force behind the rally will dictate its longevity.

Source: finance.yahoo.com ^[3]

More… ^[4]

Breakdown of U.S. Commercial Bank Credit
CIGA Eric

Brown: Mass. victory sends ‘very powerful message’

"There are messages here. We hear those messages," said Axelrod. "There is a general sense of discontent about the economy. And there is a general sense of discontent about this town"

Clearly messages are being sent, but is anyone listening? One thing remains clear, the message of no more reckless spending will ignored completely as long as bank credit, updated through December 2009, continues to deteriorate under Keynsian decision-making.

Where’s the picture of that gnarly roster?

Breakdown of Total Bank Credit Growth: Year-over-Year Growth for Total Loans, Business Loans, Real Estate Loans, Home Equity Loans, Consumer Loans, and Cash Assets for Commercial Banks in the US:

^[5]

Raise Taxes – No
Cut Spending – No
DEVALUE! – Yes

Source: news.yahoo.com ^[6]

More… ^[7]