Sunday, November 4, 2012

Sandy's Painful Parable

"Man masters nature not by force but by understanding. This is why science has succeeded where magic failed: because it has looked for no spell to cast over nature." - Jacob Bronowski
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As many of us in the Tri-state area attempt to emerge from what was left behind in Sandy's wake, the glaring truth of our own fragile subjugation to the unbridled command of nature is painfully evident. We are at her mercy. Certainly, best practices - both of engineering and prudence should be employed and bolstered from her latest example of dominance. But make no mistake about it - she will always romp where she pleases. 
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I suppose the same could be said of markets and the pixie dust of quantitative easing - an argument that I have made in various comparative charts over the last several months. We may for a spell have the perception of control and influence, but like water searching for the path of least resistance - it will find its way - QE or not. 
The US dollar looks to extend its breakout from last week - still closely following the structure and momentum profile of the last secular low. 
Despite the interventive hand of QE3 in September, the Nasdaq continues to trace out the structure of a top - remarkably following the price profile of the S&P 500 in late 2007. In 2007, the SPX had completed a complete retracement of the bear market from 2000-2002. This year, the Nasdaq had completed a 50% retracement of the same bear market. 

Both moves exhibited similar throw-over bull-traps of the retracments - and were also completed in the face of our monetary handlers extreme efforts to restore market psychology.   
As expected, the dollar has found traction - and the euphoria of QE3 is now just an ephemeral afterthough in the commodity markets rear view mirror. Similar to the 91' Nikkei comparative introduced this summer - I expect silver to lead the way to new lows in both the precious metals and the CRB in the coming months. 
 In order of price action: So goes silver - so goes the euro - so goes Spain's bear market rally. 
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“He always thought of the sea as 'la mar' which is what people call her in Spanish when they love her. Sometimes those who love her say bad things of her but they are always said as though she were a woman. Some of the younger fishermen, those who used buoys as floats for their lines and had motorboats, bought when the shark livers had brought much money, spoke of her as 'el mar' which is masculine. They spoke of her as a contestant or a place or even an enemy. But the old man always thought of her as feminine and as something that gave or withheld great favours, and if she did wild or wicked things it was because she could not help them. The moon affects her as it does a woman, he thought.” Ernest Hemingway, The Old Man and the Sea

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As always - Stay Frosty & Humbled


If possible, please help the victims of Sandy by donating. You can go to www.redcross.org, or mail a check to: the American Red Cross, P.O. Box 37243, Washington, D.C., 20013. To donate by phone, call 1-800-RED-CROSS or give up to $10 by texting the word "REDCROSS" to 90999.