Wednesday, April 20, 2011

Morning Update/ Market Thread 4/20

Good Morning,

Equity futures continue to ramp overnight on the back of a broken dollar which is plummeting to new short term lows, bonds are roughly flat, WTI oil is climbing again and now just beneath $110 a barrel, gold is setting new all-time records of course - now well above $1,500 an ounce, silver is moving straight up and is now pushing $45 an ounce, and food commodities are shooting the moon today as well.

Let’s put it this way… for stocks to double again, oil, gold, and food would also likely double again. Is that going to happen? Only if our money flat out crashes in value, Zimbabwe style. Perhaps that’s what President Obama meant when he repeatedly stated that we are going to “double our exports in five years?” Can you imagine the impact that would have on the economy and on your personal habits? Devastating – because I will personally guarantee you that your income won’t do the same.

Wonder why oil and the price of everything is rising so dramatically? Look no further than shear panic on the part of the “Fed” who is ramping monetary base literally straight up:

Gold appears to me to have put in a reverse Head & Shoulders pattern that is targeting roughly $1,560 an ounce. Should it make it there, I would then look for a pullback to the multi-year rising trendline that will by then be well above $1,400 an ounce:

Silver is moving in a much more dramatic vertical fashion… this is a dangerous play as there is no telling how high it will go before it gives in. All parabolic moves eventually collapse, but this could be – repeat could be – signaling a rapid devaluation of our money.

The run up in food commodities, of course, will continue to pressure people the world over who are living on the margins. More atrocities are occurring daily – these are sponsored by our own “Fed” who breeds trouble the world over.

The completely conflicted Mortgage Banker’s Association released their phony Purchase Index claiming that it raised – get this – 10.0% in just one week! They really expect me to believe that sales are so volatile that they can rise 10% in one week? Do they think we all have rocks in our heads? Or are they the ones with rocks between the ears? You decide:
A scheduled increase in FHA insurance premiums tripped a 10.0 percent surge in purchase applications in the April 15 week, according to the weekly Mortgage Bankers Association report. The refinance index, boosted by a 15 basis point fall in the average 30-year mortgage to 4.83 percent, rose 2.7 percent. The purchase index improved in March pointing to strength for today's 10:00 a.m. ET release of existing homes data.

(cough, cough, bullshit)

Existing Home Sales is released at 10 Eastern. Keep in mind that it is spring time (duh), and that home sales will increase (duh), but keep the numbers in perspective with the depression that we are in. Also keep the following Option-ARM reset chart in mind:

Very telling for me in the markets, NYSE margin debt increased to its second highest reading of all-time, just behind February of 2008. This should concern anyone long the market as extreme leveraging absolutely creates bubble peaks – think 1929 and 2007/ 2008.

Following the crisis in Fukushima, Japan raised the annual limit that nuclear workers could be exposed to from 100 milli-sievert/year, to 250. Now they are raising it again to 500 – that’s a 500% increase in allowable radiation – a level that is far beyond what any rational person would consider safe. Even the Soviet Union approached the problem way differently – they brought in literally hundreds of thousands of workers in order to limit their expose. Here they are simply dooming a fewer number. But their actions to date are falling far short as yet another day without containment passes.

Huge gaps in the charts again, the NDX just leaped in one overnight session from the bottom Bollinger to the top Bollinger:

Not a market, this is something not recognizable. Price leaps like that are far more frightening to me than stock market declines. That’s because I know why this is occurring, and it is devastating to the vast majority of the population.