Something quite interesting happened yesterday, The FED flinched. We have been sailing along on fumes for some time now, kinda like a Chevy Volt. Most professionals I know have been looking for some type of decline to begin here. Everyone knows the economy is a shambles in spite of the outright lies being tossed at us by Barry & Co. I am pretty sure that the FED would like to be able to stop being day traders to keep this thing up here and somewhat of a trial balloon was launched yesterday when the FED minutes were released. I don't think they want to do QE3 and I don't think they wanted the do the prior two versions of it either. In spite of outward appearances to the contrary, these folks are pretty intelligent people. They know what the end game here is if they can't start knocking down the balance sheet.
Unfortunately, when the Balloon was shot down with a LAWS rocket and the market just fell sharply on the release of the minutes, they had to rush in quickly and buy the ES during show time to stop a bad close from happening. It is so blatantly obvious when they do this it is incredible that more ink is not devoted to this. Now that we see today's action so far barring their noon buy programs, it is plain to see the market is speaking loudly that it can't rise without the FED buying futures to support it and masking the truth. As I listened to what had to have been 20 outright lies coming out of Barry's mouth last night when commenting on the Ryan budget plan, it became perfectly clear that we are not ever going to get the real truth about the real state of the economy.
If the FED does ever decide to pull back, the stock market is going to roll over.
The action in GOLD was interesting yesterday, as it has just been clobbered on the news of potentially no more QE3. Of course for those of us who are not biased in either direction this is pretty much conclusive proof of where the manipulation if there has been any in the metals has been, upward. The FED is trying to create inflation, arguing there is manipulation to suppress prices is just ignorant, sorry! The FED is in the business of creating bubbles to establish alternate places for people to go to make money when other areas fall into downtrends. If you can't see that you need to go see an eye doctor. You can't let a blind belief cloud your vision. For God sakes people do your own research about the history of Gold, and stop listening to all the rubbish from the Gold hucksters. Almost every point they make is all based on a theory of an alternate reality that will develop, there is no precedence at all in history for what they are calling for.
The line in the sand for GOLD is still the December low of 1528.8. If we close below that I think the bubble will be well on it's way to the deflation I have been calling for. Where it ends up who knows, but $500 or less is where I suspect this is ultimately going, perhaps much lower. I was long this week and took a very small loss as indicated by the arrows on the chart. One concept in the COT world that is very important is that failed signals are signals in the opposite direction. This failed buy signal is a sell signal. When commercials try and defend a level and fail, we often see huge moves take place. Since the long term cycles now are lining up with a failed COT buy signal, that is a very ominous sign for this market. Timing bubbles is always tough, and I am ticked that I am not short here because of how bearish I have been, but my short term tools did not catch this one. So be it.
I don't think we get into any major problems in the ES until we get under 1380. If we penetrate that level and bounce, I will be looking for a short entry.