The Fed Inspired Stock Market

As the chart below illustrates, the S&P 500 is back at levels not seen since late spring of 2008, or not so long before the financial system briefly visited hell in a hand basket. Is history about to repeat itself? Is it time to go away in May?

Since early 2009 the chart shows the remarkable recovery of the benchmark S&P. The rebound is no doubt due to extraordinary efforts by the Federal Reserve to save its little vipers known as the banks through on going near zero interest rate policy, purchases of dead bankster assets at par, etc. The Fed's lubing up of the system has saved that system (for now) from utter collapse even if GDP is barely showing growth at a rate of .45% per quarter (basis the paltry 1.8% annual growth rate shown in the lastest gov stats).

Still, it's been all good for the stock market and in a perverse sort of way it has rejuvinated the financial lives of people on Main Street America who are invested in paper instruments via 401ks, pensions, etc. I have long maintained that one of the best tricks up the government's sleeve is to created a mirage of prosperity by fueling a bull market in order to make the Dow number look good to all of the mainstream media t.v. followers who get shafted out of receiveing real coverage of the markets. Of course, the flip side is the growing cost of living (inflation) and the not so crazy idea that eventually some sort of a dollar crisis will be sparked by the Fed's actions that could make 2008 look like a walk in the park.

So far, the Fed juice continues to work and the S&P may test it's old all time highs of late 2007 at the rate that things are going.  I won't be suprised if that happens.  Ben bucks are a good thing for Wall Street. So for as long as Ben Bernanke thumbs his nose at and taunts the monster on the horizon known as "dollar crisis", the stock market is likely to benefit, giving new meaning to the phrase, "climbing the wall of worry".

Simply put, I am still cautious but bullish on the stock market -- bullish for all the reasons I hate. Ultimately nothing good will come of the loose monetary policy of the Fed, or the do nothing but yammer and yap about fiscal matters on Capitol Hill. It is really a proposition of embracing the market's madness for whatever you can get out of it. Yes, make those dollars in the phony paper market and covert them to hard assets.

Yes, it is the fake money paradigm, but one that can be used to turn fake money into gold and silver. What fools those alchemists were.

$SPX - Monthly Candlesticks: "


via StockCharts.com
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$SILVER - Daily Candlesticks

While gold staged another powerful move higher on Friday, Silver seemed stuck, with a gain of a little more than $1. This has led to a massive flood of speculation into the $ZSL (ProShares Ultra Short). Those who are going double short on silver seem as if they are failing to realize that silver was tasered three times last week by margin hikes in the futures markets in an effort to reduce volatility. It's only natural that a commodity that is hit with a triple whammy of margin hikes would briefly succumb to a period of consolidation, much like a tased person would fall down at being tased and then (usually) gets back up on his own two feet. I realize that sometimes a good tasering can lead to death. However, the chart below shows a powerful long term bull market in silver that isn't going to be permanently disabled by margin hikes. The silver bull lives on (albeit a bit dazed) and I expect the price to moved ever higher.

As for those silver bears? They are going to be slammed and abused yet again. It will make the activities in a movie like, say, A Clockwork Orange, look like a little girl's teaparty. lol.

$SILVER - Daily Candlesticks: "


via StockCharts.com
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We are the Obama-nation. Feel desolate yet?

Ha! Just rambling on a Sunday morning.

$XAU:$GOLD - Weekly Candlesticks

This is a comparison of the Philly gold stock index ($XAU) and Gold. The ratio has been on a steady decline for years as gold has outperformed the gold mining companies. Remember, mining companies are businesses with their own unique set of risks and problems ranging from labor issues to having to deal with the darlings at the EPA and so much more. The solid black line is the 200 week moving average for this ratio and it has been falling for quite some time even as gold has rallied. Put another way, the doubting Thomas's are wrong to worry about weak gold mining shares as a tell on the future prospects for gold. I say keep buying the actual gold and stay away from the mining shares.

$XAU:$GOLD - Weekly Candlesticks: "

via StockCharts.com

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Trump for President?

My early impression: He's got some scalding rhetoric and a few interesting ideas.

However, "The Donald" has already dropped a lead bomb by suggesting the US default on its debt. He would never propose such an idea if knew that 60% of the debt, according to the US Treasury, is owned by Americans in Social Security, military funds, pension funds, mutual funds, etc. Defaulting on our own debt would be akin to shooting one's self in the foot with a nuclear bomb. He apparently thinks China is the biggest US debt holder and that this would be a good way of screwing them when it would end up being a hands on the ankles moment for most every American. It's actually the US that holds a majority of its debt. (ponzi). He may be a businessman, but he clearly doesn't understand that the US can't simply file for bankruptcy as he has done for some of his businesses in the past. He has a sullied financial legacy in my book. 

I'm still open minded, however (since it's early in the 2012 game), but Trump's default on the debt talk has been pretty dumb and simply betrays the arrogance of an elite who will say anything to feed his need for adulation and to eventually get votes should he really run. I think it's a stretch to say that he's telling it like it is. He's telling it like it is in "Donald's World", which just might be a little different from the world in which we live.  

If you want a businessman in the White House, think a guy by the name of Herman Cain.

Can't wait to see how many subscribers I lose Monday when this is auto emailed to them. Woo Hoo.

Drug Money Makes the World Go 'Round

No wonder Warren Buffett calls Wells Fargo "my kind of bank". Wells owns Wachovia which had a $400 bln business with Mexican drug lords. Sadly, it takes a British paper to connect the dots, though the NY Times gets a little credit for doing some stories on this. Remember, we have fractional reserve banking, so yanking $400 bln out of just one bank = zapping trillions in liquidity. Imagine this on an industry wide scale. This video paints some details. So does this article: http://www.guardian.co.uk/world/2011/apr/03/us-bank-mexico-drug-gangs


It may very well be that  this talk of the banking crisis being caused by a sudden evaporation of drug money is merely conspiratorial hoo ha. But one thing remains true, is that nearly $400 billion in drug laudering actvity did take place at Wachovia and that only a small fine was paid and NO arrests made.

I've been twittering; Get ready for more metals movement

I have been twittering as jkings1. please follow me for up to the minute comments on the markets.

I've more than doubled my options portfolio over the past few weeks. The volatility has created a variety of opportunities recently.

Based on my study of $GLD options open interest, gold leasing rates and demand, we re at a new $1400+ plateau for gold. I see another move that will take us close to $1500 before long. Silver should hit $50 during summer. Metals will only stop if there is a sweeping dollar rally and massive peace around the world. Yes, metals are subject to pullbacks and can and shall do that, but the mega uptrend continues. This has been the on going pattern for a decade. Nothing goes up in a straight line except perhaps Netflix (one of my winning options trades this week). lol.

Overall stock market direction will be biased higher, though as I pointed out a few messages ago, the range would be fairly tight. Then the Japanese earthquake came along and threw a monkey wrench into the works,. I still see a little upward bias, perhaps a few more good rallies to go, but the air continues to get thicker - everything from Fukushima to Portugal and Libya.. I don't think people are fully grasping the impact of the Japanese quake and what it will do to world GDP later in the year.

The weirdest story to date on the Fukushima situation has been about the pink nuetron beams being emitted by the stricken nuclear complex. This situation is still playing out. Pray they really get things under control there soon.

Best,
JimK
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This electronic publication is being furnished to you for informational purposes only and on the condition that it will not form the sole basis for any investment decision and under no circumstances may any information contained herein be construed as investment advice.

©2011by The Kingsland Report.

Buckle Up

In a bizarre twist of fate, I bought SPY puts yesterday, not to profit off of the Japan tragedy, but to hedge some long positions. Since some new subscribers are on board, SPY puts go up when the market goes down. At this time S&P futures are down a whopping 28 points. It's been a couple of years since we've seen this type of action.

My favorite longs, both gold and silver, are taking a beating. Yes they are safe haven plays, but in times of market liquidation, gold and silver will drop as hedges dump to make up for stock portfolio losses. When people need money they also sell everything in sight (for now).

Not even QE happy Wall Street can withstand the overnight 16% drubbing of the broad TOPIX index in Japan. I watched the Tokyo Electric Power (TEPCO) news conference live last night on NHK TV via web stream. It's interesting that Japanese utilities can be quite evasive with the press just as any utility would be here in the US. The Japanese Press Corp was quite demanding. It was refeshing to see reporters demanding answers (no softball questions). But the problem was that TEPCO gave no answers, so NHK cut away half way through saying they weren't getting any new information. Even the Jpanese Prime is in dark wondering aloung. "what the hell is going on".

Conventiional wisdom would say that a dead cat bounce is ahead. and perhaps that might happen in Japan tonight, but the Tokyo market will be under significan pressure until signs point to the nuclear disaster taking a turn for the better. As of this morning, reactor #4 is now at a boiling point and major troubles persist at reactors 1,2 and 3.

If you are good with a minute chart and know how to look at classic RSI today is a good day to play the extremes that we will see in RSI.

You can bet that names in the Uranium sector are going to get hit like Cameco.
Multinationals that do lots of business in Japan will get slammed, like GE, Aflac.
Nuclear Industry names like Babcock and Wilcox will get clobbered.

Not every stock will fall on Wall Street. The solar group is looking strong this morning. We could see some action in exchange group with names like NYX and CBOE catching bids on consolidation rumors.

Remember the adage: You're only as good as your information. I had a bad feeling about the market yesterday and dumped my Apple shares after it failed to rally on news that IPOD2 sales beat estimates by a mile. All day Jim Cramer said the media was overstating the Tokyo nuclear problem which made me all the more uneasy. What does Jim Cramer really know? Granted, I saw him often make a nice salad at the CNBC cafeteria salad bar, but what does he know about nuke energy??? Cameco was also complicit with its conference call statements that it saw no major effect ahead for its business. what?? News radio had too many know it all guests saying that this wouldn't Chernobyl level stuff, etc.

Continue to watch the middle East. Bahrain CDS is widening where they have declared martial law.. Ghadaffi is still running around..


FYI here are the NYSE circuit breakers... http://www.nyse.com/press/circuit_breakers.html


These opinions are today. Lert's hope there is better news tomorrow.

CBS Sunday Morning Highlights Gold

Could the mainstream media be waking up? Gold was talked about as an asset and hedge on CBS Sunday morning. Imagine that: http://www.cbsnews.com/stories/2011/03/06/sunday/main20039768.shtml

Being generous with the estimates, gold is held by less than 1% of investment portfolios. Yes, gold is a vastly under-owned asset. This CBS treatment isn't a sign of a top imho, but a tacit of admission that perhaps the relegation of gold to the trash heap for all these year has been a mistake. We can only hope that some editorial authority in these traditional news organizations might be getting a clue that perhaps the constant plugging of paper products by the banking and brokerage cartels has been what one would call a BIG LIE, or put in a nicer way: IMPRUDENT. lol.

I've been a quiet Blogger of Late

As I just watch with a degree of amazement at what is going on in the world. As I've written before, it's an inconvenience for the average American family to have to pay more for a jar of Cheese Whiz than it is for a third world family to pay more for basic staples. In the third world, you can't adjust the size of a grain of rice, or a bean and give them less for more money but still make it feel like its's a value. Here, all kinds of packaging tricks have been used in an attempt to mask price rises, unless you look at unit prices, as I do. So the rising cost of buying enough food in third world countries to merely survive is quite a problem as we've witnessed in Eygpt. This will also manifest itself in other countries eventually leading to civil chaos and more governmental change.

So if you were planning to take a vacation in Pakistan, certain N. African countries, you'd better revise your reservations ASAP with Travelocity and get going.

There's talk in various circles on the web that China is aiming to raise gold reserves by another 5 tons in the near to medium term. I believe it. We are hurtling towards a new SDR scheme and being a gold power will be important, as I've said before. This is not necessarily in the best interest of the US, so this could be a drawn out affair. But clearly we're entering a period where the dollar's days are in quite a bit of trouble. I'm not going to pronounce U.S. Federal Reserve notes as dead, but a new reality is ahead. (how's that for positive spin?). If the SDR scheme works and the world reprices various assets differently, we COULD see a bit more stability enter the picture. Right now, the harsh reality is that many essential items are priced in volatile dollars. This has led to big moves higher in every thing from energy, metals and agriculture. Can a SDR scheme save the day? We'll watch for developments. I'm skeptical.

Ag remains a great place to be if you're a bull. Metals can only resume their upward climb. The pressure is building based on demand for gold and silver in China. Remember I talked about the Asian put? The US banksters and their accomplice exchanges no longer are in complete control of this game.

As for QE, it remains, Congress and its silly hearing notwithstanding. QE to infinity (orgininally penned by Jim Sinclair)? Believe it.

Friday Night Oldies

Saturday Night Oldies

From the 1965 Moview "Pop Gear". The dancers were great. Then a young Matt Munro... reserved, even a bit stiff but an amazing singing performance - kinda like a singing head. And, of course, a Beatles performance in wide screen color.

This clip is quite telling about the type of culture we had before Vietnam and the invasion of the Hippie Generation. What a concept: dresses and suits and jackets. Seems so old fashioned and quaint. lol. Today, I turn on the radio, or see music videos that promote all sorts of awful things and are quite bombastic. Never a good sign.

The Chase Attitude

It is just a small little post from a "friend" at Facebook, but a gloating little rib about how at Chase you can fly business class while the Cisco salesmen can't. (The names are redacted).
Ny response is the last one in the conversation. Sure to annoy ole David. LOL.

Did you have a nice Scoop of Unemployment Stew????

Pay no attention to the man behind the curtain. Funny how the seasonally adjusted U6 unemployment rate falls, while the non seasonally adjusted U6 rate jumps to 17.3%! Also nice the labor force participation rate drops to 1984 levels. So the 9% headline unemployment rate is a crock. This whole data series is toilet stew - the kind that comes the day after from eating Mexican or spicy Asian the day before.

Maalox Moments

Didn't Perry Como have a hit called Maalox Moments? Oh, forgive me, it was Magic Moments.

Traders will be gargling the Maalox in the morning as the Egyptian tensions flare. Classic sell the riots, buy the eventual overthrow? Look for market volatility at greater than usual doses until Hosni is on a plane to a villa somewhere. If the guy resists in the coming days, he risks being a candidate for a casket. The not running again in September idea is a non starter.

Crude and gold will be important tells in the coming days. 

When food prices rise in high per capita countries it is an annoyance since food is less than 10% of household spending. In poor countries where food costs may end up being 50% of a household budget, the picture is dramatically different. More riots to come elsewhere.  While we're able to pay up and live with more expensive Klondike Bars and Dinty Moore Beef Stew, unaffordable basic staples like rice and bread in far away places with strange sounding names is like showering the fabric of those poor societies with a flammable agent. Then it only takes a spark. Fun world. 

Dow Ekes Out 1.81 point gain Wednesday

Rising off modest weakness. It turns out that Bernanke did see his shadow in Washington. At least six more months of heavy duty QE on the way.

Wall Street Outlook

I don't mean to be sanguine, but Wall Street is a rose colored glasses kind of place.  Something will take the stock market down eventually, but don't hold your breath or bet aggressively for that day, whenever it comes.
The market is making minced meat out of the bears. S&P 1350 soon? Support held Monday, no doom and gloom. It's odd bot business as usual on the street. I don't believe in it, but you'll have your head handed to you shorting the market. Profit taking perhaps on Wednesday, but the pressure and momentum favor the bulls in spite of a future of food inflation problems and other economic woes to come (eg. pensions, states, etc).

Deficit reduction. Sham.  Washington remains so full of b.s. that all of their eyes are dark brown.  As far as I'm concerned it's a big toilet stew down in DC from both sides of the aisle. There needs to be actual debt reduction, not just spending cuts. There also needs to be reform of many systems to enable real economic growth, not this nutty federal spending stimulus that's been on going. All it has done is saved the banks for a while longer, given us tepid GDP growth with little employment gain - the list goes on and on.  The politicians are still in a spending state of mind ultimately.  Even if we saw a boost in tax receipts from a stronger economy, inside the beltway would find a way to spend any new revenue gains. Reduce the debt in the face of $100 trillion in unfunded future obligations? This cycle of unbridled spending and dollar creation will only continue. As a result I am bearish on long term dollar prospects even if we see a 2011 rally as seems to be shaping up.  My feeling is the longer the dollar is propped, the worse the fall will be when the bottom falls out.

Gold. Holding pattern to perhaps a bit lower. I will be more alarmed if $1300 area is broken.  The dollar continues to get the benefit of the doubt in times of crisis and that can hurt us goldbugs a little bit. For now it's as if the gold caravan is stuck at the railroad crossing, gates down, red lights blinking, as the dollar train takes its time moving through. Ultimately the dollar train is on a track to a big cliff, but for now it's chugging along. Don't bet against this dollar scenario. As always, I favor the hard assets. Buy rare coins. Even look at rare currencies. Speculate in the paper instruments like ag and metals futures only if you know what you are doing. The volatility presents good opportunities. ETFs of varying types in stocks, oil, commodities, also present some good plays, but know the risks well.

Coin Crazy

Some ding dong on eBay spent over $3000 for a modern silver Yosemite silver coin graded MS69 by PCGS (shame on them for grading this stuff). News of this transaction has spread rapidly. The online coin news service Coinzine was essentially the first to bring this to my attention. Today I spoke with some good friends who are luminaries in the coin industry and they too were aware that this transaction had taken place.

All I can say is do not not squander your money on this sort of stuff. Email me for guidance on real rarities. Always pay as close to bullion price as you can for something you deem as collectible.

Conditional Buy on Stocks Part 64

I realize that I sound like a broken record, or as some people would say in derogatory fashion: a QE-tard. Let's face it folks, where the stock market is concerned the game is rigged by billions and billions of dollars that are regularly deployed by the Wall Street evildoers thanks to POMO. Yes, one day it will end badly and perhaps with inadequate notice but for now the fed is your friend as we approach Dow 12,000. Woo hoo.

Believe me, I am not wearing my daughter's cheerleading outfit. I really despise why and how the market is being manipulated higher. In many ways the ongoing ascent of stocks defies all imagination and sensibility. More and more folks have been coming out of the woodwork in recent days to proclaim that doom in the market will soon be upon us. I take this almost as a contrary indicator as long as there is QE. Ben Bernanke et al are having a wonderful time thumbing their noses at the Bears, or really those who are simply seeking some sort of rational criteria for what makes stocks go up and what makes them go down. It is never a bad idea to have some out of the money puts or some other hedge against a breakdown within one's portfolio, but that would be for hedging purposes and not for the exercise of essentially stepping in front of a locomotive.

Should some sort of warning sign emerge, we'll be sure to let you know or perhaps we will be just as surprised as everyone else when/if the market becomes unglued.

Conditional buy on stocks continues

No change here. With each passing day in the markets, we will continue to see the Fed do the same thing: injecting money, funny money that is, into the financial system via Quantitative Easing. It's such a simple formula that even a young chimp could do well in the stock market. This manipulation of the markets has worked like a charm. We finished the week with the Dow up for seventh week in a row.  the key basic rule remains: don't fight the Fed. Many a short selling "pro", or hotshot has been severely tested and burned by the bald headed and bearded man in Washington. I love watching the shorts ridicule the :"QE-tards" as the shorts like to call the longs, but thus far the bulls have been winning hands down - not even close. LOL.

QE will end badly someday. Remember, I have made no secret of my disdain for QE but for as long as it goes on it's happy days down on Broad and Wall. Yes, I recognize that all good things eventually come to an end. Eventually, Wall Street's free lunch money will come to an end. But when this will happen is a great unknown. The present round of QE is projected to last through the summer. Once we get to that point I fully expect the Fed to proceed with another round of QE. As Jim Sinclair of the famed JS Mineset website would say: QE to infinity. This is a game that will last for a very long time. Trillions more of QE is on the way over the next few years, or at least until the November 2012 election,

I am anticipating that Wall Street's upward slog will continue with the requisite bumps along the way until the QE picture dramatically changes. IMHO it will take a large dose of sudden doom to derail the QE effect on stocks. Again people this is not rocket science, it is the buying and selling of stocks where certain overriding factors must be recognized.