Non-Confidence vote in Canada 2pm March 25th, 2011

 It is 2pm Now!

http://www.cbc.ca/news/canada/story/2011/03/25/pol-defeat.html

New All time High in Gold, Silver breaks $38, Expected down move for 1:30pm

This is another all time high day for gold, and silver had a nice move to above $38 today.   So why is 1:30pm so special?  It is the time the official price for silver / gold on the Comex is recorded.  Therefore, as everyone should know already the massive short positions in silver do not want to get margin called which would result on a high price Comex loss.  Leading to a short covering rally or even a short squeeze.  So there is always extra effort on days like today where silver breaks to recent highs to put a lid on prices coming into 1:30.  After this I would expect more stabilized prices.  This has happened in the past and it will happen again, just be aware of the games that players use to control prices of commodities.

UPDATE: Well before I even saw this article from Zerohedge, I predicted that something was up in the silver market.  Like I mentioned previously, 1:30pm is when the Comex records the "official" price.  Well I expected it was just the typical players pushing the market down to save their own skin, well it appears they got help.

And Like Clockwork, CME Hikes Silver Margins Halting Surge - ZeroHedge

The CME announcement can be found here.

The summery of the margin requirement changes are below.



 "As per the normal review of market volatility to ensure adequate collateral coverage, the Chicago Mercantile Exchange Inc., Clearing House Risk Management staff approved the performance bond requirements for the following products listed below."

 This is the strange part, they always claim that it is due to volatility in the silver market however it just goes up.  That isn't volatile.  Any sharp drops are generally caused by these type of actions which allow larger margin requirements.  What this effectively does is postpone the enviable short squeeze in the silver market and allow more shorts to hang in there just a bit longer.  This is the second time this has occurred in this rally of silver.  November 10th CME also hiked its margin requirement. Which resulted in a drop from ~26.50 to ~24.50 before continuing its relentless rally up.  So another correction could be in order but again it will be a buying opportunity as the entire reason for the hike is to allow more time for shorts to cover which means more buying pressure. 

Weekly S&P 500: Technicals showing weakness

Will not go into depth but just wanted to note that MACD has had a bearish cross over, slow stoch is pointing down signally bearish momentum and the RSI confirms the down trend in momentum.

Portugal Parliament rejects austerity plan, government may fall, Silver!

 Some news after hours:

Portuguese Prime Minister Jose Socrates said he presented his resignation to President Anibal Cavaco Silva after parliament rejected the government’s deficit- cutting plan, raising the chance of an international bailout.
Socrates made the announcement tonight in an address to the nation after meeting with Cavaco Silva at the president’s residence in Lisbon. “This crisis occurs in the worst possible moment for Portugal,” Socrates said. - Bloomberg 

This is another blow to the Eurozone, the bailout from the ECB will have to be quite large to handle an economy that large.  In 2009, GDP was $232 billion.  This will put further strain on the global economy that is already dealing with multiple riots and government collapses in the Middle East. US dollar continuing its weakness.  Japan and its current nuclear and earthquake/tsunami situation.  Greece and Ireland requiring bailouts. And the list can go on.



The S&P500 again closed under that 1300 level.

Using an Andrews pitchfork to draw channel lines, it appears that if 1300 can be reclaimed the 1325-1335 range will be heavy resistance as well.  I picked up my usual call options on SDS at strike of 23.  SDS is a 2x bear etf, so these calls are basically put options on the general market.

 Just a review of the Comex inventories for silver.  With the current demand for physical silver it will be interesting how the Comex will hold up over the next 6-9 months.

Current Silver mining holdings AXR.TO, FVI.TO, GPR.TO, USA.VN

UPDATE: SILVER holding above 36, S&P500 near critical resistance, G-7 intervention in Yen, Libya No-Fly enforcement

Silver has proven its resilience in turbulent times.  Tunisia revolution,  Egypt revolution, Libya Civil War, Japan Tsunami and damaged Nuclear power plants, Yemen riots, as well as Bahrain riots with Saudi intervention; just to name a few events.

Historical moment has been reached.  The USD is no longer a safe haven currency (represented with UUP a 2x bull ETF).  Up until now the any time there was any similar event (above) everyone would liquidated assets into USD and wait until the dust clears.  Not anymore, other assets mainly commodities have continued their climb higher.

The USD weakness could result in much lower price by Fall.

 
 Well the breaks came this past few weeks.  So based on technical I have determined I will take a short position in the index within the next few days.  Targets are listed below with the respective indicator.

Volume: Source - SPY:  The bears are out hard.  Watch for volume to provide proof that the price move has strength in it.  If there is another low volume float, start thinking of joining the bear side for the next leg down.

MACD: Momentum is now technically bearish, as the MACD line is below the 0 level.  However, it has started to move back towards the 0 level.  If the MACD line can't get above the 0 level it will be a strong sell signal. However, a strong bullish move will allow the bulls to reclaim this indicator.

Slow Stochastic: This is going to be my key indicator for sell signal.  Ideally I will short when there is an overbought condition.  This will provide additional bearish momentum to the index.

ADX:  As you can see the trend is technically bearish, and the yellow line indicates that the market is trending (>25).

So I will look for a entry into call options for SDS 2x bear S&P500 ETF over the next few days as protection for my silver long positions.

Just looking at the fib levels it is clear that we are not anywhere close to a standard correction.  My expectation is that we will see a 50% retracement.  However, the FED could signal more bond purchases which could result in a faster turnaround.   


G-7 Intervened in the currency markets recently selling Yen to help control the currency's strong bid as the recent disasters have caused a repatriation of wealth. 

The coalition has began military exercises against Libya's military installments to prepare for a No-Fly zone which is sanctioned by the UN. 

A great summery of these events can be seen here: businessweek.com

Japan is threatening further G-7 Yen interventions: Wall Street Journal

OFF TOPIC: Supermoon!

Supermoon!!!

14% larger and 30% brighter.  Rare event, last time this happen was 18 years ago.


In astrology, a supermoon is a full or new moon that coincides with a close approach by the Moon to the Earth. The Moon's distance varies each month between approximately 354,000 km (220,000 mi) and 410,000 km (254,000 mi) due to its elliptical orbit around Earth.^[1][2]

From Wikipedia