Market Rap 03 September 2009

You never give me your money
You only give me your funny paper
And in the middle of negotiations
You break down
-The Beatles

The S&P traded around the midpoint of yesterday’s range the majority of the session. The indices bolted higher in the last hour and the S&P futures closed above yesterday’s high and above the  1,000 mark. The high volume ramp in equities in the last hour was not confirmed by the credit market as credit spreads were generally flat.

S&P e-mini 15 minute

Short Squeeze or Ominous Sign?

Gold remains the talk of the town.  Why is gold decoupling from the correlations in observance prior to yesterday? I find it next to impossible (though all things are possible) that gold is breaking out in anticipation of inflation. There are no signs of inflation as far as I can see. To the contrary, all signs point to deflation. If the inflation trade is on, why aren’t interest rates spiking?

Is the move in gold a flight to safety in anticipation of military action somewhere? If  so, why is oil not spiking?

Does someone know something the rest of us don’t?

Technically speaking, gold will not breakout with any conviction until it clears the $1,000 barrier and holds the line. Until then, we may be seeing a good old fashioned short squeeze. Hong Kong is pulling all it’s physical gold holdings from depositories in London. Are reserves sufficient enough to meet physical delivery?

Astrology or Numerology?

The number 9 has been a focus of these pages for some time. In what is termed a new moon, the sun and the moon will come together (The Beatles, Abbey Road, 1969) on September 18th, 2009. 6×3=18 and 6+3=9, which brings me back to 9-9-09.

Season I Episode II

On 9-9-09 at 9:09:09 Episode II of The Adventures of Mr. Volatility will be released. In Episode II, we are going to take a ride on The Errol Flynn circa 1976. Gold made a massive move higher in the late 70’s. I want to tell you a story about it.

Stay tuned.

Come Together