Stock futures rise, point to higher opening

Stock futures are rising Monday following a jobs report that has boosted expectations for an economic recovery.

Shrewd investors never loose sight of the secular trends. The big, liquidity-driven stock rally is nothing more than the fourth consolidation pattern with a secular, currency-adjusted down trend. The bounce from the 2009 lows, 54% in U.S. dollar (nominal terms) and 28% in ounces (real or stable currency terms), follows that of 2003, 2006, and 2008. The secular down trend will resume when the window of time closes in the coming months.

U.S. Large Cap Stocks Capital Appreciation Index (LCSCAI); S&P 500 to Gold Ratio:


Source: finance.yahoo.com

COT S&P 500

When time is up, even a liquidity driven market faces headwinds. The white boxes illustrate similar time periods and a break in the up trend of leveraged inflows.

S&P 500 and the Commercial Traders COT Futures and Options Equity Diffusion Index (DI):


Other key markets also support this observation.

COT Japanese Yen
COT 10- and 30-Year Bond

COT Japanese Yen

Bullish setup

Yen and the Commercial Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest:

Fund Raiser Prompts Safety Concern

This year the police department was so short on cash, they had to cancel the training academy for new officers. So to raise extra money, they're selling off almost 40 guns sized from criminals. And for the first time that auction has been moved on-line with the hopes of increased bidding.

Source: newschannel10.com

COT US Bonds 10- and 30-Year

The immovable object meets an unstoppable force.

We have witnessed another test of the neckline defended by significant inflows in the 10- and 30-year.

Shrewd readers have probably anticipated the resurrection of the "Goldilocks" spin. The economic recovery is not too hot as to trash bonds despite the fundamentals, and not too cold to perturb perceptions.

Smart money doesn't care about spin, because it knows that no market can be "controlled" contrary to the dominant trend. This is why the battle, here and now, is so important. Once a technical top is recognized, the game, spin, and bets will be quickly changed.

Watch this one close.

US 10 Year (7-10 Years) and the Commercial Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest:


US TBd (20 Years +) and the Commercial Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest:

‘It’s not the state’s money’

Cut spending or creative tactics to patch budgetary holes? Far too often political expediency translates into little respect for other people's money (OPM).

Give people their money. It's the rallying cry of lawmakers around the country pushing back against states that are delaying tax refunds to shore up their budgets.

Holding on to the refunds allows states to use the money for other purposes, earn interest on it or simply wait until there's enough cash to cover the checks. But the cost can be an unhappy public.

Source: msnbc.msn.com

Mailbox

Eric,

Wanted to Let You know I visit Your Site many times during the day and have to say keep up the great works.Our Alice in Wonderland Economy is mind blowing and Guys like You and Jim give Me confidence, everything I have is in Silver/Gold assets. Thanks for sharing Your Paintings.

Thank You
Bob

Bob,

You're not alone. The strength of convictions from expert to novice will be constantly challenged.

Today's world of credit, electronic transactions, fancy structured products, media driven rhetoric, etc. have all contributed to marginalization gold and silver as a barbaric relic since signing of Presidential Executive Order number 6102 in 1933. As the old saying goes, you can fool some people some times, but you can't fool all the people all the time. As the depressionary box (see chart) wears on and hemorrhage phases (2001-2003, 2008-2009) repeat, people have begun to rediscovered sound money’s role in maintaining and protecting financial discipline.

Those expecting today’s latest and greatest liquidity-based recovery to provide the foundation for the secular advance, and placing their money according to that assessment, are likely due for a rude awakening. The debt burden of the previous secular expansion has yet to be liquidated. Credit market debt as % gross domestic product not only remains well above the second Great Depression highs but also well-contained within the secular up trend (see chart). A combination of debt reduction and devaluation must break this up trend at some point. Unfortunately, no amount of “save me” policies or socialistic programs designed to create the next great society will buffer the pain involved during the transition from a debt to savings foundation. A savings foundation is necessary to spawn the next secular economic advance.

Thank you for your kind words and support,

Eric