First Ballots Are in on Results of Fed Tightening

By Michael Ashton

First Ballots are in on Results of Fed Tightening [as the market votes]

It fascinates me how bear markets all feel alike in some ways. What I remember very clearly from the equity bear markets of 2000-2002 and 2007-2009 is that bulls wanted to bottom-tick the market at every imagined opportunity. Every “support level,” for the first half of each decline at least, saw bulls pile in as if the train were about to leave the station without them on it. Of course, the train was about to leave the station, but it was backing up.

Today, the S&P didn’t quite touch 1810 on the downside, basically matching the 1812 low from January. Bulls love double-bottoms. Of course, many of those turn out not to be double-bottoms after all, but the ones that are look very nice on the charts. So stocks rocketed off the lows, rising 25 S&P points in a matter of minutes after briefly being down 51. The rally was helped ostensibly by comments from the UAE oil minister, who claimed OPEC is ready to cooperate on a production cut. But that isn’t really why stocks rallied so dramatically; after all the news only pushed crude oil itself up about a buck. The real reason is that bulls are crazy maniacs.

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Can the Fed Drop Interest Rates Below 0%?

By Elliott Wave International

Can the Fed Drop Interest Rates Below 0%?
This question is not as preposterous as it may seem.

For the financial markets, the biggest event of the week starts tomorrow: On Wednesday and Thursday (Feb. 10-11) Fed chair Janet Yellen will appear before Congress to deliver her semi-annual Monetary Policy Report.

“It’s huge.” That’s how one strategist put it this morning, in a CNBC interview about the importance of Yellen’s testimony.

Why are all eyes on Yellen? Maybe because by now, almost everyone has forgotten how powerless the Fed appeared in 2007-2009, when none of its measures could stop the financial crisis. Despite the recent market chaos, six years of rising stock prices reaffirmed the notion that the Fed can move mountains. “As the Fed goes, so do the markets” is the current mantra — so, on Wednesday and Thursday, analysts will be listening carefully: Will Yellen mention the ongoing market turmoil?

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Hear That Sucking Sound?

By Biiwii

Hear that sucking sound?  It’s called draining confidence and a market sentiment & psychology shift

Remember all that confidence, beginning as a glimmer in the eye of Bernanke’s big brain (weird wording, but ever heard of the ‘mind’s eye’?) and tended with paranoid attention every step of the way by hands-on policy that simply refused to go away.  Every time the stock market hiccuped there was the macro manipulator in chief; “the HERO” to legions of conventional stock market players.  Well now that confidence is going away.

the hero, ben bernanke

Just as Bernanke was left with Alan Greenspan’s toxic mess to clean up, Janet Yellen is dealing with the aftermath of Bernanke.  She has really put a good face on trying to do the right thing as per a conventional economic recovery.  As noted last weekend in NFTRH 381, I actually have a relative level of respect for her compared to some of her global counterparts.  Okay, that is as doughy eyed as I’ll ever get toward a centralized monetary authority.  This is all about confidence.

Here comes CNBC with the punch line…

Yellen on negative rates: ‘We wouldn’t take those off the table’

That my friends, is another chink in the armor of formerly ironclad confidence this institution had rebuilt around itself in the form of conventional money managers and other peoples’ money.

As recession fears mount in the U.S., Fed Chair Janet Yellen conceded there’s a “chance” of a downturn ahead.

Oh really, she concedes that now?  How about last summer when we, who have got to make our bones in this eff’d up market clearly illustrated the first signs of it?

Machine Tools Fading

Or several Semi book-to-bill ratio releases that were on display for months, for anyone who would care to make the effort of knowing reality?

Semi Book-to-Bill Ratio Decelerates as Expected, Semis Not Under Valued

Now all those conventional economists (including evidently, those at the Fed) are coming around?

And then the punch line…

She also said the central bank is studying whether negative interest rates would help should conditions worsen.

And so, confidence ratchets down one more big notch.

spy vs. gld, stock market vs. gold

US Stock Market; Last Ditch

By Biiwii

The US stock market must hold this level or a bear cycle begins (and SPX for instance, would target 1500 to 1560)

Here are the futures for the US stock market headliners (i.e. the indexes most people look at).  They are now at flimsy but ultra critical support.

spx futures, us stock market

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Gold vs. Silver During Bull Markets

By Steve Saville

Steve Saville on why the price relationship of gold and silver is important as an indicator

This post is a modified excerpt from a recent TSI report.

A popular view is that silver outperforms gold during bull markets for these metals, but that’s only true if the entire bull market is considered. That is, it’s true that silver has in the past achieved a greater percentage gain than gold from bull-market start to bull-market end. However, since the birth of the current monetary system the early stages of gold and silver bull markets have always been characterised by relative WEAKNESS in silver.

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Clueless Fed?!

By Axel Merk

“The Fed doesn’t have a clue!” – I allege that not only because the Fed appears to admit as much (more on that in a bit), but also because my own analysis leads to no other conclusion. With Fed communication in what we believe is disarray, we expect the market to continue to cascade lower – think what happened in 2000. What are investors to do, and when will we reach bottom?

is the janet yellen fed clueless?

To understand what’s unfolding we need to understand how the Fed is looking at the markets, and how the markets are looking at the Fed.

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They Broke the Silver Fix, Part 2

By Monetary Metals

More on the silver price fix

Last Thursday, January 28, there was a flash crash on the price chart for silver. Here is a graph of the price action.

Silver Price Fix
The Price of Silver, Jan 28 (All times GMT)

If you read more about it, you will see that there was an irregularity around the silver fix. At the time, the spot price was around $14.40. The fix was set at $13.58. This is a major deviation.

Many silver bugs are up in arms about how unfair the new silver fix is. That’s nothing new. They were up in arms about the old one. The old one was supposedly manipulated.

One thing is for sure, tactical manipulations can occur. A gold trader in London was found to have pushed the price down in the gold fixing by a few pennies. He had sold a multimillion dollar option, and he wanted it to expire worthless to avoid having to pay. Right after the fix, he bought back the gold he sold, pushing the price back up to where it was. He took a loss on the round trip of the gold, of course, but saved millions on the option which he did not have to pay.

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Flattened Out

By Biiwii

The Stock market is at do or die support

[edit] I just realized that if this chart were in text form instead of graphical form it would say “okay Janet, here I sit… so what was it you were planning on saying tomorrow?  Hmmm?”

With the S&P 500 right at do-or-die support per this chart (absolutely critical, but not particularly strong support), I have done more flattening out after yesterday’s post noting a short cover of GS and a sale of TLT, each very profitable positions.  I just don’t think it’s a market to be caught gazing at your successes in, unless you want to get your eyeballs ripped out.

s&p 500 weekly chart

So shorts on the Pigs (KBE) and the Emerging Markets (via EEV) were also covered today, leaving two moderate and un-leveraged short positions open.

As for the gold sector, I have gotten too many emails from people getting nervous about whether or not to pile in.  ‘No, please have patience on taking new positions, the sector is over bought’ was the gist of my replies.  We covered the sector extensively in an NFTRH update last night.  I took some profits there and hedged the rest.

Cash is my favorite thing right at the moment, after noting in NFTRH 381 that I considered my own cash position to be too low.  Now I am more comfy.

We also covered the stock market and a bit more on gold in an update today.  We talked about remaining calm, patient and realizing that 2016 is going to be a year filled with opportunity both long and short across multiple markets.  There will also be opportunities to preserve gains along the way, and that is what this week is shaping up to be.

As for the chart above, that is one ugly mess and it must not make and hold a lower low to January; and that is exactly the point.

The Scariest Stock Market Chart in the World

By Biiwii

As posted at

Short-term volatility implies anything can happen; long-term the implication of this chart is very bearish unless bond market dynamics are err, addressed

The title is a paraphrase of “the scariest gold chart in the world” (target below $400) someone sent me in 2009, just before the gold price began its $900 per ounce upward journey. So that’s the contrarian caveat and indeed, I hesitate to write bearish things at a time when small speculators are way too short the market and everybody already seems to know how bearish things are.

But the chart is the chart and without further ado, meet the scariest US stock market chart in the world. I was ready to try a long on the SPY yesterday, but decided to wait because of this (being posted here because it never made it into NFTRH 381’s already bloated 42 pages) chart and some others in the face of which I just could not rationalize a bullish stance. Capital preservation is job 1 now, not bullish speculation. I’ll let the bulls prove something first.

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